Lyon Shipyard, Inc. v. United States

In the United States Court of Federal Claims

No. 13-508C

(Filed Under Seal: November 13, 2013)

Reissued: November 27, 2013 1

_________

LYON SHIPYARD, INC., * Pre-award bid protest; Cross-motions for

* judgment on the administrative record;

* ID/IQ contract for marine boatyard services;

Plaintiff,

* Bannum – standard of review; FAR §

* 15.306(d) – meaningful discussions; Agency

v. did not abuse its discretion in conducting

*

discussions and in failing to reopen

*

THE UNITED STATES, discussions; Agency did not engage in

* unequal treatment in evaluating the

* reasonableness of prices.

Defendant.

*

_________

OPINION

__________

Michael John Gardner, Troutman Sanders, LLP, Norfolk, VA, for plaintiff.

John Bryan Warnock, Civil Division, United States Department of Justice, Washington,

D.C., with whom was Assistant Attorney General Stuart F. Delery, for defendant.

ALLEGRA, Judge:

In this post-award bid protest action, Lyon Shipyard, Inc. (Lyon), of Norfolk, Virginia,

challenges the Navy’s decision to award a contract for marine boatyard services to Marine

Hydraulics International (MHI). It claims that the Navy did not conduct meaningful discussions

and failed to treat all offerors equally. The parties have filed cross-motions for judgment on the

administrative record. For the reasons that follow, the court DENIES plaintiff’s motion for

judgment on the administrative record and GRANTS defendant’s cross-motion. 2

1

An unredacted version of this opinion was issued under seal on November 13, 2013.

The opinion issued today incorporates the parties’ proposed redactions and corrects some minor

nonsubstantive or typographical errors. The redacted materials is represented by brackets [ ].

2

Owing to the urgent need of the parties for a ruling on this matter, the court’s recitation

of the facts and law is necessarily brief.

I. BACKGROUND

The administrative record in this case reveals the following:

In June of 2011, the Navy issued Solicitation (Solicitation) No. N50054-11-R-0002 to

procure the “necessary management, material support services, labor, supplies, and equipment

deemed necessary to provide marine boatyard and industrial support . . . and periodic

maintenance primarily in support of . . . boats, craft, lighterage, and service craft custodians” in

the Hampton Road area of Virginia. The Solicitation organized the work requirements into two

separate lots, Lots I and II 3 – only the latter is the subject of this bid protest. It contemplated the

award of multiple indefinite delivery/indefinite quantity (ID/IQ) contracts to up to five awardees.

Firm, fixed-price task orders would be competed among the five awardees. Each contract has a

twelve-month ordering period, with four one-year options.

The Solicitation advised offerors that awards will be made to “the responsible offeror or

offerors whose offer, conforming to the solicitation, is deemed most advantageous to the

Government, price and other factors considered.” According to the Solicitation, the factors to be

considered in determining the best value were “technical,” “past performance,” and “price.”

Offerors were advised that the “[n]on-price factors (Technical and Past Performance), taken

together, will be more important than price,” adding though that “as non-price factors equalize

among competing proposals, price may assume a greater degree of importance.”

In the Solicitation, the Navy emphasized that the proposed prices should be “fully

burdened,” to include, inter alia, “the potential of escalating fuel costs, all direct and indirect

costs, labor, equipment rental, services, overhead, profit,” etc. The Solicitation required offerors

to propose a composite labor rate, a material handling and a travel rate, as well as rates for boat

storage, lift and towing, each of which were multiplied by a notional quantity provided by the

Navy for evaluation purposes. The Solicitation stated that a proposed price would “be evaluated

independently to determine whether it is reasonable and whether it reflects the offeror’s

understanding of the work and ability to perform the contract.” Price evaluations “include[d] a

comparison of the proposed prices and a comparison of the proposed prices against the

independent government estimate [IGE].” Finally, the Solicitation warned that “[a] price

proposed that is unrealistic, unreasonable, or unbalanced may be rejected.”

3

According to the Solicitation:

Lot II is for marine boatyard services and industrial support for boats, craft,

lighterage and service craft that are either: (1) less than 15 meters or 50 feet in

length as determined by the Navy hull designation, but if no Navy hull

designations [sic] exists, less than 50 feet in overall length, but which cannot be

transported via roadway, but must be delivered on its bottom (via waterway) as

defined by the task order; or (2) is 15 meters or 50 feet in length or greater as

determined by Navy hull designation, but if no Navy hull designation exists, then

50 feet or greater by length overall.

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The Solicitation advised that “all offerors selected to participate in discussions shall be

advised of deficiencies in their offer, and shall be offered a reasonable opportunity to correct or

resolve the deficiencies and to submit such price or cost, or other revisions to their offer, that

may result from the discussions.” It further indicated that “[a] contract award under this request

for proposals (RFP) will be the result of an integrated assessment by the Contracting Officer of

the results of the evaluation based on the evaluation factors and their relative order of

importance.” The Solicitation stated that the Navy intended “to make a best value determination

for contract award,” adding that the Navy “may award any resulting contract to other than the

lowest priced offeror, or other than the offeror with the highest evaluation rating for technical

and past performance.”

On July 26, 2011, the Navy received eight proposals for Lot II from the following: East

Coast Repair and Fabrication (East Coast), Alliance Technical Services (Alliance), Davis Boat

Works (Davis), Associated Naval Architects (Associated), Colonna’s Shipyard (Colonna’s),

Marine Hydraulics International (MHI), Bluewater Yacht Sales (Bluewater), and Lyon Shipyard

(Lyon). Most of the offerors, including Lyon, were incumbents on the prior marine boatyard

support contract.

Between August 23 and September 27, 2011, the Source Selection Evaluation Board

(SSEB) evaluated each offeror’s technical proposal to assess its strengths and weaknesses. On

October 11, 2011, the SSEB reported its preliminary findings to the Source Selection Advisory

Council (SSAC), assigning in its report a consensus rating to the offeror’s technical proposals.

On or about December 9, 2011, the SSEB modified its ratings of the technical proposals

competing for Lot II. After an initial round of discussions focusing on the deficiencies,

omissions and weaknesses associated with the proposals, two of the offerors (Associated and

Bluewater) withdrew their offers for Lot II.

On or about June 15, 2012, additional discussions were held with the offerors remaining

in the competitive range. As part of those discussions, the Navy, in an attachment to an email,

informed Lyon that its “price proposal for Lot II [was] significantly higher than the Government

estimate.” It requested that Lyon “carefully review [its] pricing and specifically note the

following:”

Note 1 of pricing Exhibits which states that proposed rates for each line item are

to be fully burdened (refer to Note 1 for complete wording).

Note 2 of pricing Exhibits which states that ELINS [exhibit line item numbers]

are to be fully burdened to include any required subcontractors and subcontract

effort shall not be priced as material or considered as part of the material pools.

Note 3 of pricing Exhibits which states that it is anticipated that 98% of the boats

are located in the Norfolk, VA vicinity (refer to Note 3 for complete wording).

Note 4 of pricing Exhibits which states that overtime is not authorized under the

terms and conditions of this contract (refer to Note 4 for complete wording).

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Note 5 of pricing Exhibits which states that ELINS are to be fully burdened to

include any required rental equipment (refer to Note 5 for complete wording).

The Navy’s attachment concluded with the following remarks:

Offerors are strongly reminded to ensure all costs associated with accomplishing

this work have been considered and are included in your price. These elements

will not be allowed on individual task orders.

Please do not submit new pricing at this time. Please only submit your rationale

and confirmation that the notes in the exhibits have been accounted for in your

pricing.

You are hereby afforded the opportunity to provide this office with clarifying or

additional information for the areas identified above.

(Emphasis in original).

Responses to the discussion questions were due on June 27, 2012. On that date, Lyon

submitted the following response to the questions raised regarding its pricing:

Lyon Shipyard’s price proposal was constructed utilizing over twenty (20) years

of past experience repairing these very same small boats, including the last ten

(10) years as an incumbent small boat IDIQ contractor. We are very familiar [sic]

all of the vessels and their systems that are included in Lot II of this solicitation.

Our pricing was arrived at using experience and knowledge gained as well as

detailed job cost reporting from numerous past task orders. We have taken into

consideration all aspects and requirements of Notes 1 thru 5 of the pricing

exhibits in arriving at our offered pricing. It should be recognized that the offered

pricing represents the most fully burdened and worst case scenarios that could

arise for any particular task order including length of availability, degree of

difficulty in scope of work, and the potential numbers of subcontractors and

government required specialty tech reps. Our past history explicitly shows that

Lyon Shipyard, Inc. has been extremely competitive in individual task order

bidding. However, we will review and evaluate all pricing offered for mistakes,

completeness, and accountability. Should we deem it necessary to make any

changes to our pricing, we will do so when requested for final offers.

From July 18-20, 2012, the SSEB considered the additional information submitted by the

remaining offerors on their technical proposals and past performance. During this same time

period, a contract specialist reviewed the offerors’ responses regarding price, including the

response provided by Lyon above. On October 18, 2012, the contract specialist established the

competitive range for Lot II, which included the following offerors: East Coast, Alliance, Davis,

Colonna’s, MHI and Lyon. On February 22, 2012, the SSEB produced an evaluation of the

offerors’ past performance, in which Lyon preliminarily received an overall rating of “very

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good.” In a November 3, 2012, memorandum, the contracting specialist further analyzed the

price proposals, finding East Coast to be the lowest bid at $81,098,416.30, and Lyon to be the

highest bid at $[].

On February 8, 2013, the Navy received Final Proposal Revisions (FPRs). Lyon’s price

was unchanged. In a February 19, 2013, pricing memorandum to the file, the contracting

specialist, legal counsel, and the procurement contracting officer reviewed the prices in the

FPRs. Regarding Lyon’s pricing proposal, this memorandum concluded:

Based on my evaluation, I considered the Lot II pricing to be fair and reasonable

for East Coast Repair, Davis Boat Works, Alliance Technical Services, Colonna’s

Shipyard and Marine Hydraulics International while reflecting an ability to

perform the requirements of the solicitation. I did not consider their prices to be

unreasonable, unbalanced, excessive, or otherwise a significant weakness or

deficiency. As reflected in the bottom line prices of these offerors, there are some

wide variances in some of the ELIN prices. Since this will be a multiple award,

additional competition will occur at the task order level. This procurement allows

for contractors competing for award of task orders to reduce prices by proposing

lower prices than what they submitted in their final proposal revision. It is felt

that competition of individual task orders will result in lower prices from the

firms and thereby the potential for Marine Hydraulic International’s pricing to

become more in line with the other offerors and the government estimate and

provide ample opportunity for offerors to receive awards under these contracts. I

considered the differences to be within an acceptable range for an Indefinite

Delivery/Indefinite Quantity procurement of this nature and magnitude.

However, Lyon Shipyard’s price is $[] higher than the IGE and is not in line with

the other offerors. Lyon Shipyard’s price is considered excessive and would be

more difficult to justify as reasonable.

Based on this analysis, the memorandum recommended that the final award be made to MHI.

On February 21, 2013, the Source Selection Advisory Committee (SSAC) convened to

determine its recommendations for award under the Solicitation. On February 28, 2013, the

SSAC issued a memorandum summarizing its recommendations, reflecting the following prices

and ratings for each of the remaining offerors:

Past

Offeror Final Price Technical Rating Performance

Rating

East Coast Repair &

$80,269,356.44 Very Good Very Good

Fabrication

Alliance Technical

$89,074,484.86 Satisfactory Satisfactory

Services

Davis Boat Works $89,061,384.24 Very Good Very Good

Colonna’s Shipyard $103,384,711.08 Very Good Very Good

Marine Hydraulics

$107,005,537.54 Very Good Very Good

International

Lyon Shipyard $[] Very Good Very Good

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The authors of this memorandum indicated that they had conducted a trade-off analysis among

the six offerors for Lot II. The memorandum noted that the IGE for Lot II was $101,780,712.59.

Regarding this estimate, the memorandum indicated that Lyon’s price (and that of another

offeror) “were considerably higher than the Government estimate and not in line with the other

offerors.” On this point, the memorandum continued –

Although their prices were not determined to be unfair or unreasonable, the

Contracting Officer determined that their prices would be more difficult to justify

as reasonable. However, as no specific language existed within [the Solicitation]

to exclude them from further consideration, both remained part of the SSAC’s

trade-off analysis.

The memorandum reflected that the SSEC had compared MHI’s and Lyon’s proposals, and

found that “[b]ecause both offerors have identical Technical and Past Performance ratings and

MHI offers the lower price, the SSAC did not consider it to be in the best interest of the

Government to pay the price differential of []% ($[]) in order to award to Lyon.” The SSAC

added that “MHI represents the better value” and that “there were no circumstances present

which justified paying the price differential to award” Lyon over MHI.

On March 1, 2013, the Source Selection Authority (SSA) made awards to each Lot II

offeror remaining in the competitive range, except Lyon, based on an independent determination

that each offer represented the best value to the Navy In taking this action, the SSA concluded

that “[t]here were no circumstances present which justified paying the price differential” for an

award to Lyon. After receiving notice of the award and a debriefing, on April 8, 2013, plaintiff

filed a timely GAO protest, claiming that the Navy misled Lyon during discussions and

improperly evaluated its proposal. On July 15, 2013, the GAO denied plaintiff’s protest. See

Lyon Shipyard, Inc., 2013 WL 3830050 (Comp. Gen. July 15, 2013).

On July 25, 2013, plaintiff filed its complaint in this court, together with a motion for a

preliminary injunction. On August 7, 2013, following oral argument, this court denied, from the

bench, plaintiff’s motion for a preliminary injunction. The parties then filed cross-motions for

judgment on the administrative record, 4 for which oral argument was held on October 16, 2013.

4

On August 26, 2013, Lyon moved to supplement the record with additional emails and

correspondences between the Navy contracting officials. On September 6, 2013, it then moved

for sanctions, claiming that defendant failed to file a complete administrative record. On that

day, this court ordered defendant to supplement the administrative record with emails, evaluation

worksheets and other documents relating to the evaluation of Lyon’s Lot II proposal. While the

court’s order may have left this point ambiguous, the court did not require defendant to file, as

part of the administrative record, the notes of individual agency employees associated with this

procurement. The court took the latter step because the evaluation process here did not

“include[] the concrete step of individual evaluations,” rendering the “individual’s notes . . .

more akin to drafts that may be excluded” from the administrative record. Tech. Sys. v. United

States, 98 Fed. Cl. 228, 246 (2011); see also Tauri Grp. LLC v. United States, 99 Fed. Cl. 475,

481 (2011). As it turns out, the notes were destroyed as part of a document destruction protocol.

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II. DISCUSSION

Before turning, in detail, to plaintiff’s substantive claims, we begin with common ground.

A. Standard of Review

The Federal Circuit, in Bannum, Inc. v. United States, 404 F.3d 1346, 1355 (Fed. Cir.

2005), instructed that courts must “distinguish [a] judgment on the administrative record from a

summary judgment requiring the absence of a genuine issue of material fact.” Bannum teaches

that two principles commonly associated with summary judgment motions – that the existence of

a genuine issue of material fact precludes a grant of summary judgment and that inferences must

be weighed in favor of the non-moving party – do not apply in deciding a motion for judgment

on the administrative record. Id. at 1356. The existence of a question of fact thus neither

precludes the granting of a motion for judgment on the administrative record nor requires this

court to conduct a full blown evidentiary proceeding. Id.; see also Int’l Outsourcing Servs., LLC

v. United States, 69 Fed. Cl. 40, 45-46 (2005). Rather, such questions must be resolved by

reference to the administrative record, as properly supplemented – in the words of the Federal

Circuit, “as if [the Court of Federal Claims] were conducting a trial on [that] record.” Bannum,

404 F.3d at 1354; see also NEQ, LLC v. United States, 88 Fed. Cl. 38, 46 (2009); Int’l

Outsourcing, 69 Fed. Cl. at 46; Carlisle v. United States, 66 Fed. Cl. 627, 631 (2005).

Bannum’s approach is well-suited to the limited nature of the review conducted in bid

protests. In such cases, this court will enjoin defendant only where an agency’s actions were

arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. 5 U.S.C. §

706(2)(A); see also 28 U.S.C. § 1491(b)(4). By its very definition, this standard recognizes the

possibility of a zone of acceptable results in a particular case and requires only that the final

decision reached by an agency be the result of a process which “consider[s] the relevant factors”

and is “within the bounds of reasoned decisionmaking.” Baltimore Gas & Elec. Co. v. NRDC,

Inc., 462 U.S. 87, 105 (1983); see Glenn Defense Marine (Asia) PTE, Ltd. v. United States, 97

Fed. Cl. 311, 317 (2011); Gulf Group, Inc. v. United States, 56 Fed. Cl. 391, 396 n. 7 (2003). As

the focus of this standard is more on the reasonableness of the agency’s result than on its

correctness, the court must restrain itself from examining information that was not available to

the agency. Failing to do so, the Federal Circuit has observed, risks converting arbitrary and

capricious review into a subtle form of de novo review. See Axiom Res. Mgmt., Inc. v. United

States, 564 F.3d 1374, 1379-80 (Fed. Cir. 2009). At all events, this court will interfere with the

government procurement process “only in extremely limited circumstances.” CACI, Inc.-Fed. v.

United States, 719 F.2d 1567, 1581 (Fed. Cir. 1983) (quoting United States v. John C. Grimberg

Co., 702 F.2d 1362, 1372 (Fed. Cir. 1983)).

However, because plaintiff’s sanctions motion concerned documents that the court did not

require the Navy to file, the sanctions motion must be denied.

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The aggrieved bidder must demonstrate that the challenged agency decision was either

irrational or involved a clear violation of applicable statutes and regulations. Banknote Corp. of

Am., Inc. v. United States, 365 F.3d 1345, 1351 (Fed. Cir. 2004), aff’g, 56 Fed. Cl. 377, 380

(2003); see also ARINC Eng’g Servs., LLC v. United States, 77 Fed. Cl. 196, 201 (2007).

Moreover, “to prevail in a protest the protester must show not only a significant error in the

procurement process, but also that the error prejudiced it.” Data Gen. Corp. v. Johnson, 78 F.3d

1556, 1562 (Fed. Cir. 1996). To demonstrate prejudice, “the protester must show ‘that there was

a substantial chance it would have received the contract award but for that error.’” Alfa Laval

Separation, Inc. v. United States, 175 F.3d 1365, 1367 (Fed. Cir. 1999) (quoting Statistica, Inc.

v. Christopher, 102 F.3d 1577, 1582 (Fed. Cir. 1996)). 5 “Finally, because injunctive relief is

relatively drastic in nature, a plaintiff must demonstrate that its right to such relief is clear.”

NEQ, 88 Fed. Cl. at 47; see also Banknote Corp., 56 Fed. Cl. 377, 380–81 (2003); Seattle Sec.

Servs., Inc. v. United States, 45 Fed. Cl. 560, 566 (2000).

B. Were the Actions of the Contracting Officer Arbitrary, Capricious or

Otherwise Contrary to Law?

Lyon argues that the Navy violated FAR § 15.306(d) by failing to conduct meaningful

discussions about its price proposal. Lyon further argues that once the Navy determined that its

proposed price was “excessive” and “more difficult to justify as reasonable,” FAR § 15.306(d)

required the Navy to reopen discussions. Finally, Lyon asserts that the Navy improperly

evaluated the offerors’ price proposals because it “unequally considered task order competition

in justifying its award to MHI,” failed to consider Lyon’s historical task order pricing, and made

an “apples to oranges” comparison between Lyon’s price and the independent government

estimate. The court will address these arguments seriatim.

As the parties agree, agencies generally are required to conduct “meaningful” discussions

with all responsible offerors that submit proposals within the competitive range. See 48 C.F.R. §

5

Federal Circuit cases teach that this prejudice analysis comes in two varieties. The first

is that described above – namely, the ultimate requirement that a protestor must show prejudice

in order to merit relief. A second prejudice analysis is more in the nature of a preliminary

standing inquiry. In this regard, the Federal Circuit has held that “because the question of

prejudice goes directly to the question of standing, the prejudice issue must be reached before

addressing the merits.” Info. Tech. & Applications Corp. v. United States, 316 F.3d 1312, 1319

(Fed. Cir. 2003); see also Myers Investigative & Sec. Servs., Inc. v. United States, 275 F.3d 1366,

1370 (Fed. Cir. 2002); Overstreet Elec. Co., Inc. v. United States, 59 Fed. Cl. 99, 109 n. 5

(2003). Cases construing this second variation on the prejudice inquiry have held that it requires

merely a “viable allegation of agency wrong doing,” with “‘viability’ here turning on the

reasonableness of the likelihood of prevailing on the prospective bid taking the protestor’s

allegations as true.” McKing Consulting Corp. v. United States, 78 Fed. Cl. 715, 721 (2007); see

also 210 Earll, LLC v. United States, 77 Fed. Cl. 710, 719 (2006); Textron, Inc. v. United States,

74 Fed. Cl. 277, 284-85 (2006). Because of the central nature of the allegations of error here, the

court concludes that plaintiff has met this preliminary “standing” threshold – and defendant does

not contend otherwise.

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15.306(d); see also Elec. Data Sys., LLC v. United States, 93 Fed. Cl. 416, 432 (2010); EP

Prods., Inc. v. United States, 63 Fed. Cl. 220, 226 (2005), aff’d, 163 Fed. Appx. 892 (Fed. Cir.

2006); Dynacs Eng'g Co. v. United States, 48 Fed. Cl. 124, 131 (2000) (“The law is well-settled

that discussions between a contracting officer and offerors must be meaningful.”). Such

discussions “are intended to maximize the government’s ability to obtain the ‘best value’ in a

contract award based on the requirements and the evaluation factors set forth in the solicitation.”

Dynacs Eng'g Co., 48 Fed. Cl. at 130; see also 48 C.F.R. § 15.306(d)(2); ManTech Telecomm. &

Info. Sys. Corp. v. United States, 49 Fed. Cl. 57, 71 (2001). However, the FAR emphasizes that

“the contracting officer is not required to discuss every area where the proposal could be

improved” and that instead “[t]he scope and extent of discussions are a matter of contracting

officer judgment.” 48 C.F.R. § 15.306(d)(3); see also Elec. Data Sys., 93 Fed. Cl. at 432; EP

Prods., 63 Fed. Cl. at 226; PGBA, LLC v. United States, 60 Fed. Cl. 196, 217 n. 25 (2004), aff’d,

389 F.3d 1219 (Fed. Cir. 2004).

While paying lip service to this discretion, plaintiff asserts that the Navy officials here

were obliged to let it know that its price was excessive. But, “there are very few affirmative

requirements for discussions,” CRAssociates v. United States, 102 Fed. Cl. 698, 716 (2011), with

the main exceptions arising in FAR § 15.306(d)(3), which obliges the agency: (i) to conduct

discussions with all offerors in the competitive range if it holds discussions with one of the

offerors in that group; and (ii) to discuss “deficiencies, significant weaknesses, and adverse past

performance information to which the offeror has not yet had an opportunity to respond.” FAR §

15.306(d)(3). FAR § 15.306(e) also lists some discussion requirements in the negative – for

example, that the agency “shall not engage in conduct that – [f]avors one offeror over another.”

FAR § 15.306(e)(1); see also Elec. Data Sys., 93 Fed. Cl. at 432; Kerr Contractors, Inc. v.

United States, 89 Fed. Cl. 312, 329 (2009) (“This regulation does not permit a procuring agency

to engage in unequal discussions.”). Moreover, it is well-accepted that discussions may not be

misleading. See CRAssociates, 102 Fed. Cl. at 716 n. 18; Bank of America, Metro Mach. Corp.,

99-1 C.P.D. ¶ 101, at 6-7 (1999); SRS Techs., 94-2 C.P.D. ¶ 125, at 6 (1994).

Contrary to plaintiff’s claim, there is no rule – either explicit or deriving from the notion

that discussions must be “meaningful” – that required the Navy to discuss every weakness

appearing in Lyon’s pricing proposal. See CRAssociates, 102 Fed. Cl. at 717; Geo–Centers, Inc.,

97-1 C.P.D. ¶ 182 (1997); Ann Riley Assocs., Ltd., 97-1 C.P.D. ¶ 122 (1997); see also Fort

Carson Support Servs. v. United States, 71 Fed. Cl. 571, 604 (2006) (“T]he FAR provision

requires a discussion of ‘significant weaknesses,’ not all weaknesses.” (quoting FAR §

15.306(d)(3))). In particular, the Navy was not obliged to advise Lyon that its price was higher

than those of its competitors. Rather, an agency is obliged to discuss an offeror’s price only if

the price submitted ‘“would preclude award to the firm.’” DMS All-Star Jt. Venture v. United

States, 90 Fed. Cl. 653, 669 (2010) (quoting Gen. Dynamics-Ordnance & Tactical Sys., 2009

C.P.D. ¶ 217 (2009); see also Elec. Data Sys., 93 Fed. Cl. at 432. Such was not the case here.

To be sure, FAR § 15.306(e)(3) gives the contracting officer discretion to inform an

offeror that “its price is considered by the Government to be too high, or too low.” But neither

that provision, nor any other, requires the contracting officer to discuss a proposed price that is

not considered a significant weakness or deficiency. See Elec. Data Sys., 93 Fed. Cl. at 434;

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Dynacs Eng’g, 48 Fed. Cl. at 133; Public Facility Consortium I, LLC, 2005 C.P.D. ¶ 170 (2005);

AJT & Assocs., 2000 C.P.D. ¶ 60 (2000). 6 The Federal Circuit made this clear in JWK Int’l

Corp., rejecting the notion that an agency must always discuss prices because their adjustment

could materially enhance a proposal’s potential for award. In so concluding, that court reasoned

–

Because both cost and non-cost factors must be considered and the agency has

full discretion to rank the importance of the factors, a downward cost adjustment

may not always affect the award. Therefore, cost is not always material, and does

not automatically mandate discussions.

JWK Int’l Corp. v. United States, 279 F.3d 985, 988 (Fed. Cir. 2002). 7 Based on these

precedents, the Navy was not required to discuss plaintiff’s price because the agency had

determined that this price was at least arguably reasonable, albeit too high. Therefore, plaintiff’s

arguments regarding the lack of meaningful discussions fail to persuade the court.

Nor was Lyon misled in terms of how the agency conducted discussions here. In the

first round of discussions, it was advised that its “price proposal for Lot II [was] significantly

higher than the Government estimate” and that it should “carefully review [its] pricing.” While

the discussion points went on to list potential issues that Lyon should examine in regards to its

price and indicated that Lyon should not submit new pricing “at this time,” this in no way

suggested that Lyon need not consider reducing its price in its final offer. Lyon appears to have

understood this, as it responded to the first round of discussions questions by indicating that it

would “review and evaluate all pricing offered for mistakes, completeness, and accountability,”

adding that “[s]hould we deem it necessary to make any changes to our pricing, we will do so

when requested for final offers.” As a seasoned government contractor and a ten-year incumbent

of two prior similar contracts, Lyon should not have presumed that it did not need to modify its

final price because the Navy failed to raise any concerns about its high price in the second or

third rounds of discussions. At the time it made its best and final offer, Lyon had no reason to

think that the IGE had changed and every reason to believe that its price was still well above that

estimate. Nor, contrary to its claims, did it have any reasonable basis upon which to assume that

the Navy would evaluate it offer based on historical task order prices, rather than the “fully

6

Plaintiff notes that in Banknote Corp., the undersigned wrote that an agency must also

inform an offeror that its cost or price is high when that cost or price is “excessive.” 56 Fed. Cl.

at 385. Further review, however, reveals this statement to be inconsistent with the FAR, which

instead focuses on whether the price is unreasonable or is considered a “significant weakness or

deficiency.” Elec. Data Sys., 93 Fed. Cl. at 434; see also Patriot Taxiway Indus., Inc. v. United

States, 98 Fed. Cl. 575, 588 (2011); Tech Sys., 98 Fed. Cl. at 262.

7

See also DMS All–Star, 90 Fed. Cl. at 669 (“unless an offeror’s costs constitute a

significant weakness or deficiency in its proposal, the contracting officer is not required to

address in discussions costs that appear to be higher than those proposed by other offerors”);

AshBritt, Inc. v. United States, 87 Fed. Cl. 344, 372 (2009); Banknote Corp., 56 Fed. Cl. at 385.

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loaded rates” required by the Solicitation. Simply put, Lyon made a business decision not to

adjust its price and should not be heard to complain now when that decision led to the loss of the

contracting opportunity, particularly as the Solicitation warned that “as non-price factors

equalize among competing proposals, price may assume a greater degree of importance.” See

Tech Sys., 98 Fed. Cl. at 263 (rejecting a similar argument).

Undeterred, plaintiff complains that the Navy should have reopened discussions with it to

discuss its price. But, the decision whether to reopen discussions is largely a matter left to the

agency’s discretion. The Matthews Grp., 2013 C.P.D. ¶ 148 (2013); King Farm Assocs., 2012

C.P.D. ¶ 6 (2011); ES, Inc., 95-1 C.P.D. ¶ 168 (1995). To be sure, it has been held that an

agency should reopen discussions with an offeror, if after the evaluation of best and final offers,

the agency “identifies concerns pertaining to the proposal as it was prior to discussions that

would have had to be raised if they had been identified before discussions were held.” Al Long

Ford, 2006 C.P.D. ¶ 68 (2006) (citing DevTech Sys., Inc., 2001 C.P.D. ¶ 11 (2000)); see also

CIGNA Gov’t Servs., 2010 C.P.D. ¶ 283 (2009); Ewing Construction Co., Inc., 2010 C.P.D. ¶

108 (2010). But, this requirement applies only to significant weaknesses or deficiencies of the

sort that would warrant discussions in the first place. See AT&T Corp., 2008 C.P.D. ¶ 65 (2007).

An agency need not reopen discussions simply because it perceives some weakness in an

offeror’s best and final proposal. See W.M. Schlosser Co., Inc., 92-2 C.P.D. ¶ 8 (1992); see also

Data Gen. Corp. v. Johnson, 78 F.3d at 1561. More specifically, a reopening of discussions is

not required where “a weakness, which was not addressed during discussions, subsequently

becomes a determinative factor in choosing between two closely ranked proposals . . .” Planning

& Dev. Collaborative Int’l, 2007 C.P.D. ¶ 28 (2007); see also Gracon Corp., 2004 C.P.D. ¶ 58

(2004); Hines Chicago Inv., 2004 C.P.D. ¶ 5 (2003). Here, the court sees no evidence that the

contracting officer abused his discretion in determining not to reopen discussions with Lyon.

Finally, plaintiff argues that the Navy treated the offerors unequally because it considered

MHI’s task order pricing in evaluating MHI’s price, but did not do so in evaluating plaintiff’s

price. 8 As defendant points out, however, the Navy referenced MHI’s task order pricing not in

evaluating its price, but merely in determining that its price was reasonable. The Navy, of

course, also concluded that plaintiff’s price was reasonable, albeit without considering its task

8

In arguing that its task order pricing had always been very competitive, plaintiff cited

to attachments to its complaint and an affidavit made by one of its employees. However,

plaintiff never sought to supplement the record with these materials. Supplementation is not

accomplished simply by attaching a document to a complaint or a brief. See Murakami v. United

States, Order No. 99-55C (Fed. Cl. June 18, 2001) (refusing to treat materials attached to a filing

as supplementation, indicating that “[t]o hold otherwise would be to render the concept of an

administrative record a nullity to be bypassed at will simply by including an affidavit as part of a

brief.”). Even if the court were to consider these materials (on the assumption that the pricing

information they contain was before the agency), they would not indicate the existence of a

prejudicial error here. Under the Solicitation, that plaintiff’s prior task order pricing had been

competitive and had led it to receive many task orders was not relevant to the evaluation of its

price, which, again, was $[] more than the next highest-priced offeror.

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order pricing. Both prices were considered reasonable and hence, there was no unequal

treatment and certainly no prejudice. Even if the Navy could be viewed as having considered

task order pricing in directly evaluating MHI’s price or in conducting its best value

determination, plaintiff has not come close to demonstrating that it was prejudiced by the Navy’s

conduct in this regard – that but for this error, “there was a substantial chance it would have

received the contract award.” Alfa Laval Separation, 175 F.3d at 1367; see also Bannum, 404

F.3d at 1351; Allied Tech. Grp., Inc. v. United States, 649 F.3d 1320, 1326 (Fed. Cir. 2011). In

this regard, plaintiff seemingly dons blinders to the fact that its price was more than $ [] – or []

percent – higher than MHI’s. And that substantial difference existed without any reduction in

MHI’s price to reflect its past task order pricing. Since the proposals of the two offerors were

otherwise rated the same, the court finds that plaintiff has failed to demonstrate that any alleged

error made by the Navy in evaluating its price was prejudicial. 9

III. CONCLUSION

This court has considered and finds unpersuasive plaintiff’s remaining arguments. Based

on the foregoing, the court GRANTS defendant’s cross-motion for judgment on the

administrative record, and DENIES plaintiff’s motion for judgment on the administrative record.

Plaintiff is not entitled to the relief requested. 10 The Clerk is hereby ordered to dismiss

plaintiff’s complaint. 11

IT IS SO ORDERED.

s/Francis M. Allegra

Francis M. Allegra

Judge

9

The same can be said of plaintiff’s assertion that the Navy engaged in an “apples to

oranges comparison” of plaintiff’s final proposal price and the IGE. While plaintiff argues that

the Navy incorrectly used task order pricing from the prior contract to calculate that IGE, it has

not demonstrated that it was prejudiced by this “error,” either in the evaluation of its price

(which was deemed reasonable) or in the award decision (which plaintiff lost because its price

was significantly higher than that of MHI).

10

Even if the merits of this case were otherwise, the court would be disinclined to grant

plaintiff any injunctive relief because of the importance of this contract to national defense and

national security. See 28 U.S.C. § 1491(b)(3); see also Science Applications Intern. Corp. v.

United States, 108 Fed. Cl. 235, 248-49 (2012).

11

The court intends to unseal and publish this opinion after November 27, 2013. On or

before November 27, 2013, each party shall file proposed redactions to this opinion, with

specific reasons therefor. See CRAssociates, Inc., 102 Fed. Cl. at 698 n. 1 (discussing the proper

scope of such redactions).

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