Fcn, Inc. v. United States

REDACTED OPINION

In the United States Court of Federal Claims

No. 13-616C

Filed: March 14, 2014

Redacted Version Issued for Publication: April 4, 20141

* * * * * * * * * * * * * * * * * * *

FCN, INC. *

* Post-Award Bid Protest; Air

Plaintiff, * National Guard; Mass Notification

v. * System; Price Realism;

* Government-Furnished Property;

UNITED STATES, * Injunction.

*

Defendant. *

*

* * * * * * * * * * * * * * * * * *

William T. Welch, Law Offices of McMahon, Welch & Learned, Reston, Virginia,

for plaintiff.

J. Bryan Warnock, Trial Attorney, Commercial Litigation Branch, Civil Division,

United States Department of Justice, Washington, D.C., for defendant. With him were

Bryant G. Snee, Acting Director, Commercial Litigation Branch, and Stuart F. Delery,

Assistant Attorney General. Kyle Chadwick, Trial Attorney, Contract and Fiscal Law

Division, United States Army Legal Services Agency, of counsel.

OPINION

HORN, J.

The protestor, FCN, Inc. (FCN), filed a post-award bid protest in this court

challenging the Air National Guard’s award of a contract for a “Mass Notification

System/Net-Centric Alerting System” (Mass Notification System) to Reliable

Government Solutions, Inc. (RGS)2 pursuant to Solicitation W9133L-13-R-0015 (the

1

This opinion was issued under seal on March 14, 2014. The parties were asked to

propose redactions prior to public release of the opinion. This opinion is issued with

some of the redactions that the parties proposed and some additional redactions,

although not proposed by the parties, are added in the interest of consistency. Words

which are redacted, are reflected with the following notation: “[redacted].”

2

RGS did not intervene in the above captioned protest. The court notes that although

the parties refer to RGS as “Reliable Government Solutions, Inc.,” which is the entity

Solicitation). Before filing suit in this court, FCN filed a protest with the Government

Accountability Office (the GAO), which was denied. In this court, the protestor states:

“The FCN proposal received the highest ranking for all non-price factors outlined in the

RFP [Request for Proposal].” Therefore, the protestor alleges that the Air National

Guard contracting officer awarded the contract to RGS in violation of the Federal

Acquisitions Regulations (FAR) by: (1) “accepting a proposal that relied on RGS's offer

to utilize Government Furnished Equipment (GFE),” (2) “accepting RGS's offer to submit

a ‘no cost’ licensing fee and ‘no-cost’ telephony communications previously provided to

the U.S. Air Force under a previous contract,” (3) “failing to perform a proper price

realism analysis on the proposal of RGS and its subcontractor AtHoc,” and (4) “allowing

the RGS proposal to violate the stated proposal instructions by including pricing

information in its technical proposal.” To the extent the current Solicitation violates the

applicable procurement regulations, the protestor asks the court to enjoin

implementation of contract W9133L-13-P-0034, awarded to RGS under the Solicitation,

and order the government to re-evaluate the existing proposals.3 The protestor also

seeks any other relief the court deems appropriate, including, but not limited to,

attorney’s fees and the costs of maintaining the protest. The parties fully briefed cross-

motions for judgment on the administrative record and oral argument was held.

FINDINGS OF FACT

Pre-Solicitation History

On September 22, 2012, the Air National Guard issued solicitation W9133L-12-

R-0073 (the subsequently cancelled solicitation), under the work statement “Desktop

Alert (DTA) Build-out.” (emphasis in original). The subsequently cancelled solicitation’s

due date was listed as September 26, 2012. The parties stipulated that the

subsequently cancelled solicitation was for the procurement of “hardware and software

to expand the ANG’s [Air National Guard’s] Desktop Alert (DTA) environment.” The

parties have stipulated that “Desktop Alert is a Mass Notification System/Net-Centric

Alerting System (MNS/NCAS) created and sold by Desktop Alert, Inc.” On September

28, 2012, Ly Tran, Vice President of AtHoc, Inc. (AtHoc), a competitor of Desktop Alert,

sent an e-mail to contracting specialist Willie L. Holmes objecting to the subsequently

that was awarded the contract, the agency and the GAO, at times, refer to RGS as

“RGS Federal Inc.”

3

FCN filed a motion for preliminary injunction to stay implementation of the contract

awarded to RGS, contract W9133L-13-P-0034. In an unopposed motion for extension

of time to respond to the protestor’s filing, defendant stated, however, that: “The

contract in this case has already been awarded, but the procuring agency has assured

counsel that it will continue to stay performance until the Court issues its opinion.”

Furthermore, in its motion for judgment on the administrative record, the protestor

indicated that by agreement of the parties, the court consolidated FCN's request for

preliminary injunction with its request for permanent injunction and declaratory relief.

2

cancelled solicitation’s requirement to use Desktop Alert, and alleging that it was a

waste of taxpayer funds and encouraged unfair competition. Mr. Tran stated in his e-

mail: “We vehemently protest the Solicitation W9133L-12-R-0073 for the fielding and

sustainment of Desktop Alerts across the Air National Guard.” Mr. Tran claimed in the

e-mail that “the Government needs to open up this sonication [sic] to new competition

for new vendors such as AtHoc.” He listed some of the purported advantages of using

AtHoc’s software, including that “AtHoc is already deployed across 120+ US Air Force

bases,” and that the “US Air Force already purchased licenses for ALL USAF [United

States Air Force] INCLUDING ANG (!).” (capitalization and punctuation in original). Mr.

Tran also asserted in his e-mail that:

Furthermore the USAF negotiated an UNLIMITED USAGE for its alerting

capability including no cost for any phone call or text message or email or

desktop alert sent. Last USAF [sic] already purchased a pool of lines to be

available for ALL USAF (including ANG) of over [redacted] lines. By not

providing AtHoc the ability to complete [sic] for this solicitation, ANG will

not benefit from all that the USAF ALREADY PAID FOR!

(capitalization in original).

On October 8, 2012, Clayton S. Marsh, counsel to AtHoc, submitted a

supplement to the AtHoc objections to the subsequently cancelled solicitation (W9133L-

12-R-0073). Mr. Marsh offered a number of additional arguments as to why the

subsequently cancelled solicitation was flawed. Mr. Marsh stated that the synopsis of

the announcement was incorrect, claiming that “[t]he FBO [Federal Business

Opportunities] announcement described this procurement as ‘DESKTOP ALERT

SUSTAINMENT AND SUPPORT’ . . . . In truth, the Solicitation is for a massive build-

out of a new hardware and software implementation of Desktop Alert.” (capitalization in

original). Mr. Marsh also stated that the “FBO announcement allowed only one day to

respond. It was posted September 27, at 10:06 a.m., and required offers by noon on

September 28.”4 Mr. Marsh continued that “[t]here are no ‘[f]actors and significant

subfactors that will be used to evaluate the proposal and their relative importance’ as

minimally required by FAR [Federal Acquisition Regulation] 15.203(a)(4).” Mr. Marsh

also stated that “the specific materials needed to fully respond are indicated

(repeatedly) to be in the ‘attached LOM’ [list of materials] – which is not attached.’”

Additionally, Mr. Marsh claimed that there was a potential conflict of interest due to

unequal access to information, and that the National Guard Bureau had already

purchased a “DTA [Desktop Alert] software alert system, covering ‘all personnel in the

Guard at the Air and Army Guard HQs . . . .’” (emphasis in original).5 Mr. Marsh

4

Although Mr. Marsh claimed the subsequently canceled solicitation provided only a

one day turnaround, the first page of the subsequently cancelled solicitation states that

it was issued September 22, 2012 and that proposals were due by September 26, 2012.

5

Also in the record is a chart in which AtHoc compared the subsequently canceled

solicitation to a prior July 21, 2009 Air National Guard solicitation, W9133L-09-F-0139,

3

further commented on the availability of AtHoc’s system throughout the United States

Air Force and stated, “the existing Air Force purchase and installation of AtHoc’s system

for desktop, telephony, email, and text alerting includes [redacted] Telephone Alerting

lines available to Air National Guard. Through more than 20 different contracts, the Air

Force has purchased licenses from AtHoc totaling 700,000 users.” In the Marsh e-mail

were copies of e-mails and sections of Air Force - AtHoc contracts in support of AtHoc’s

position.

On October 11, 2012, Anthony Mara of the National Guard Bureau sent an e-mail

asking Air Force Colonel Rigel Hinckley for comments regarding AtHoc’s allegations.

Colonel Hinckley responded, as follows:

The truth has been stretched to the point where it can no longer be

discerned from wild promises or innuendos. We currently do not have a

license agreement that allows existing AtHoc licenses to be used

wherever we want. DTA 4.x and 5.x are both currently going through

certification and will not be turned off.

The unfair competition should be used against AtHoc for their attempt to

acquire the Enterprise contract without competing for it. The EIS

[Enterprise Information System] PMO [Program Management Office]

continues to work through the Enterprise contract award.

Nonetheless, on November 7, 2012, the Air National Guard sent a letter to AtHoc

stating that the Air National Guard will “either list ‘Brand Name or Equal’ requirements,

with salient features or will remove the vendor specific information and/or still add

salient features for use in determining ‘Best Value Technically/Price Acceptable’ trade-

off criteria.” According to the parties’ joint stipulation, on the same day, November 7,

2012, the Air National Guard “took corrective action by cancelling Solicitation No.

W9133L-12-R-0073.”6

also for an “Integrated Electronic Alert Notification Software Solution (EANS) Access

NCB. . . .”

6

Although not implicating the Air National Guard’s subsequently cancelled solicitation or

the current Solicitation at issue, in 2013 the Defense Contract Management Agency

(DCMA) issued a similar solicitation for emergency mass notification software, products

and services. See Desktop Alert, Inc., B-408196, 2013 WL 3803965 (Comp. Gen. July

22, 2013). In 2009, in response to a Department of Defense Instruction, which required

defense agencies to “maintain a mass warning and notification capability to warn

immediately all personnel if there is a dangerous incident or condition in the workplace,”

DCMA awarded RGS a contract to provide “a product known as the AtHoc Mass

Notification System . . . this contract included requirements for: software; licenses; core

system; software assurance; upgrades and technical support; 50 dedicated phone lines

for transmitting alerts; system installation and set-up; and a back-up system.” Id. at *1.

The RGS contract with DCMA ended on April 12, 2013, and in March of 2013, DCMA

issued a solicitation which was limited to AtHoc products and services, and restricted

4

On February 21, 2013, the Air National Guard issued solicitation, W9133L-13-R-

0015, the Solicitation at issue in the above captioned protest. As stipulated by the

parties, the Solicitation’s “Program Goal” (emphasis in original) was for a Mass

Notification System/Net-Centric Alerting System “that would allow the ANG to rapidly

and reliably inform personnel about anti-terrorism/force protection conditions (FPCON)

(including chemical, biological, radiological, and nuclear threats), hazardous weather

conditions, and other critical events.” The Solicitation listed as: “Program Objectives:”

A. The NCAS [Net-Centric Alerting System] shall be capable of sending

alert messages to end-users (recipients) via multiple delivery methods,

including:

a. Audio-visual network alerts to desktops and laptops via desktop

pop-up

b. Text alerts to mobile phones and pagers

c. Text alerts to electronic mail (e-mail) clients

d. Audio alerts to phones

the competition to authorized AtHoc resellers. Id. The solicitation sought AtHoc

software, upgrades, security patches, software assurance, technical support,

communication services, telephony and training. RGS was the only offeror to submit an

offer to DCMA. Id.

Desktop Alert filed a pre-award protest with the GAO, alleging DCMA failed to

consider mass notification systems offered by other vendors and that “the solicitation's

limitation of sources to AtHoc brand name items is unduly restrictive of competition, and

that the solicitation fails to describe the agency's minimum requirements.” Id. at *2.

The GAO found

that DCMA failed to justify the use of the restrictive brand name

requirements for this procurement. Specifically, we conclude that the

agency's justification is deficient because DCMA failed to adequately

define the supplies or services required to meet its needs, or any essential

feature of the supplies or services that is unique to the AtHoc brand name.

We also conclude that the justification is deficient because the agency

failed to document adequately its market research of other vendors' similar

products.

Id. at *4. Therefore, the GAO concluded “that the solicitation was overly restrictive,” and

sustained the protest. Id.

Despite arguing to the Air National Guard that the subsequently cancelled

solicitation’s requirement to use Desktop Alert encouraged unfair competition and was a

waste of taxpayer funds, AtHoc intervened in the Desktop Alert protest at the GAO in

support of DCMA’s solicitation restricting the competition only to authorized resellers of

AtHoc products and services.

5

e. Audio alerts to existing indoor/outdoor PA [Public Address]/giant

voice systems

f. Network alerts to XMPP[Extensible Messaging and Presence

Protocol]-based Chat rooms or any other IP[Internet Protocol]-

connected devices via standard XML [Extensible Markup

Language] and CAP [Common Alerting Protocol] protocols

B. The NCAS shall be capable of sending alert messages to target

recipients according to:

a. Hierarchical organizational structure (as would be imported from

an LDAP [Lightweight Directory Access Protocol] or Active

Directory)

b. Organizational roles

c. Specific distribution lists (e.g., hazardous materials (HAZMAT)

response teams)

d. Dynamic groups created through on-the-fly queries of the user

directory

e. Geographical locations (e.g., entire bases, zones within bases)

f. IP address

C. The NCAS must be capable of interoperability with other notification

systems and organizations hosting those systems, for example, but not

limited to NOAA [National Oceanic and Atmospheric Administration],

FEMA [Federal Emergency Management Agency] and Army National

Guard through Common Access Protocol (CAP)

D. The NCAS shall be able to centrally track, in real-time, all alerting

activities for each individual recipient, including sending, receiving, and

responding to alerts, and be able to generate reports based on tracked

information

E. The Air National Guard Enterprise Network (ANGEN) is comprised of

VMware virtual server infrastructure; therefore any NCAS solution must

leverage virtualization.

a. Exclusion: 2 ANG Locations require NCAS be installed on

existing physical servers

(emphasis in original).

According to the parties’ joint stipulation, the Solicitation “contained firm-fixed-

price line items (CLINs) for labor, materials, travel and other direct costs. It included a

base performance period of 12 months with two 12-month options for sustainment

support.” (internal citations omitted). Randall Wilson was the Air National Guard

contracting officer and source selection official responsible for the Solicitation. Mr.

Wilson stated under oath on June 21, 2013, during the FCN’s protest to the GAO of the

Solicitation at issue before this court: “Our agency purposely expressed our

6

requirements as a ‘Statement of Objectives,’ in order to clearly describe the capability

that the Government was seeking while providing flexibility to the offerors to provide the

Government with their unique solutions to our requirement.” The Solicitation also listed

as “Considerations:”

A. Acceptable proposals must include the ability to rapidly and reliably

provide the NCAS program objectives to all users within the ANGEN

[Air National Guard Enterprise Network] to include main operating

bases and geographically separated units.

a. Exclusion: Host bases with tenant ANG organizations are

responsible for providing NCAS to those ANG units within the

host base area of responsibility

B. Leveraging existing resources/capabilities to achieve program

objectives could be included in the offeror’s proposal

C. All aspects of the proposed solution (hardware/software) must:

a. Comply with applicable DISA [Defense Information Systems

Agency] STIGS [Security Technical Information Guides]

b. Have approval to connect to DOD [Department of Defense]

networks

c. Must meet DOD/AF certification and accreditation criteria

(all emphasis in original). Under the Solicitation’s “DELIVERY INFORMATION” section,

a chart titled “SERVICING UNITS,” (emphasis and capitalization in original), lists the

projected population to receive information from the Mass Notification System by Air

National Guard Wing and by geographically separated unit. The Air National Guard, in

a response to questions from interested bidders, stated that [redacted] users would

require e-mail notifications, [redacted] users would require text message access, and

[redacted] workstations would need to receive desktop alerts. In an April 2, 2013

questionnaire sent by the Air National Guard to the offerors in the competitive range,

discussed below, offerors were instructed that all proposals should cover the total

population of the Air National Guard, which was estimated to be [redacted] personnel at

that time. Although the stated goal in the Solicitation at issue before this court was for

rapid notification of Air National Guard personnel, neither the Solicitation’s “Program

Objectives,” nor “Considerations,” set a time limit by which a specified number of

service members would have to be alerted or a rate of service members to be alerted

over time.7 (emphasis in original).

7

This represented a change from the subsequently cancelled solicitation, W9133L-12-

R-0073, which required a Mass Notification System that could “ensure all members of

the ANG can be contacted within 10 minutes of an event.”

7

The Solicitation currently under review stated:

The award will be made based on the best overall (i.e., best value)

proposal that are [sic] determined to be the most beneficial to the

Government, with appropriate consideration given to the four (4)

evaluation factors. Award will be made to the offeror whose proposal is

most advantageous to the Government based upon an integrated

assessment of the evaluation factors and sub-factors described below.

The Government intends to determine best value by conducting a trade-off

analysis of Price and Non-Price factors with respect to the relative order of

importance described in paragraph M.3.

The Solicitation listed the evaluation factors as: (I) “MISSION CAPABILITY,” (II) “PAST

PERFORMANCE,” (III) “SMALL BUSINESS PARTICIPATION,” and (IV) “PRICE.”

(capitalization in original). The relative order of importance of the four evaluation factors

was described as:

a) The Mission Capability Factor is More Important than the Past

Performance Factor.

b) The Mission Capability Factor is Significantly More Important than the

Small Business Participation Factor.

c) The Past Performance Factor is More Important than the Small

Business Participation Factor.

d) The Past Performance Factor and Small Business Participation Factor

are each More Important than the Price Factor.

e) All non-Price evaluation factors, when combined, are More Important

than the Price Factor.

According to the Solicitation’s “EVALUATION APPROACH,” the proposals were to be

evaluated to determine if they “adequately and completely considered, defined, and

satisfied the requirements specified in the RFP.” (emphasis and capitalization in

original). The Solicitation further stated:

The proposal will be evaluated to determine the extent to which the

proposed approach is workable and the end results achievable. The

proposal will be evaluated to determine the extent to which successful

performance is contingent upon proven devices and techniques. The

proposal will be evaluated to determine the extent to which the offeror is

expected to be able to successfully complete the proposed tasks and

technical requirements within the required schedule.

8

When discussing the price factor, the Solicitation stated:

The Total Contract Life Price will be evaluated for completeness,

accuracy, reasonableness and realism, using the techniques in FAR

15.404-1(b)(2). A determination will be made as to whether the Offerors

have completed all aspects of the price proposal properly and whether the

amounts listed in the price proposal are calculated accurately. No

adjectival ratings will be used to evaluate Price.

1) The RFP requires firm-fixed-prices [sic] contract line items. A price

reasonableness approach will be utilized by the Government to

determine that the proposed prices offered are fair and reasonable and

that a “buy-in” or unbalanced pricing between CLINs or Option Periods

is not occurring. In evaluating price reasonableness, other than cost

and pricing data, may be requested and utilized if the Contracting

Officer cannot determine reasonableness through initially submitted

pricing information. Indications of potential underbidding or unbalanced

pricing will be reflected in the cost/pricing report and may impact the

ratings for non-price factors as such indications may be determined to

indicate a lack of understanding of the requirement.

2) The Government will examine price proposals for artificially low unit

prices. Offers found to be unreasonably high, unrealistically low (an

indication of “buy–in”), or unbalanced, may be considered

unacceptable and may be rejected on that basis.

3) Evaluation of Options. The Government may determine that an offer is

unacceptable if the option prices are significantly unbalanced.

According to the Solicitation, “reasonableness, other than cost and pricing data,” could

be considered in evaluating both the price and non-price factors.

The Solicitation instructed offerors to arrange their proposals into five volumes.

Each of the first four volumes was to be dedicated to discussing one of the four

evaluation factors, mission capability, past performance, small business participation,

and price, respectively, and the fifth was to contain completed solicitation forms,

surveys, certifications, and representations. The Solicitation made clear, in bold font,

that: “No pricing information is to be provided in the Mission Capability Volume.”

(emphasis in original). Offerors, however, were instructed to discuss other items in the

mission capability proposal, as follows:

Offerors shall describe recent similar experience at the corporate and

service delivery level in demonstrating value relative to MNS/NCAS and in

working with customer organizations to understand and meet their needs.

The proposal will describe comparable experiences in providing the types

of services applicable to MNS/NCAS to include the contract number, site,

9

period of performance and size of effort. The contracts identified shall

demonstrate the organization’s performance or responsibility for

performance of services similar to those described in the SOO [Statement

of Objectives]. Demonstration of experience in the ability to control cost

and schedule, and to identify problems or potential problems in a timely

manner in the performance of the contract/task. At a minimum, the

proposal will identify the technical approach, overall capability of the

proposed team, risk assessment of the representative tasks, ANG Support

tasks proposed for the technical solution, compliance with DoD IA

[Department of Defense Information Analysis] standards, overall business

approach, relevant management experience (including Mass Notification

System/Net-Centric Alerting System) and identify the extent to which the

management experience relates to the current requirement. Offerors will

provide clear, definitive and verifiable examples in which it has voluntarily

adjusted or proposed and implemented novel solution arrangements in

order to better meet effort/requirements and create efficiencies in the

previous three (3) years.

The Solicitation left open the option for the Air National Guard to negotiate with the

offerors, stating that “[i]f the Government enters into discussions, it will be with those

Offerors considered to be within the Competitive Range.”

In a May 1, 2012 memorandum, an “Independent Government Cost Estimate”

was provided for a “NetCentric Alert System,” with the base year cost for contract

performance estimated at [redacted].8 The base year cost was composed of the

following: one “Net Centric Alert Client Package,” for [redacted]; “Enterprise CAP Server

Software Licenses,” for [redacted]; “Annual Software Assurance & Technical Support,”

for [redacted]; and two “CAP Server[s],” for [redacted]. The government also estimated

the cost of “Annual Software Assurance & Technical Support” for the 2014 option year

to be [redacted]. The government did not estimate a cost of “Annual Software

Assurance & Technical Support” for the 2015 option year.

8

It does not appear from the record before the court that another Independent

Government Cost Estimate was issued after the Air National Guard cancelled the

previous solicitation on November 7, 2012, or before the Air National Guard issued

Solicitation currently under review on February 21, 2013. There is, however, an

undated document in the record, signed by Mr. Holmes and Mr. Wilson, titled “PRICE

REASONABLENESS DETERMINATION.” (emphasis and capitalization in original).

The one-page determination lists the total RGS, [redacted], and FCN proposed prices

for the Solicitation, for the base year cost of contract performance, plus option years, as

well as a price for an “IGCE [independent government cost estimate].” (emphasis and

capitalization in original). According to the undated document, the independent

government cost estimate was listed as [redacted], to cover both the base year and

both option years. This figure is different, however, from the May 1, 2012 independent

cost estimate, discussed above, of [redacted] for the base year and [redacted] for only

one option year.

10

The FCN Proposal

FCN’s mission capability proposal, volume one of the protestor’s proposal,

centered on the use of the Desktop Alert software version 5.x, provided by

subcontractor Desktop Alert.9 According to FCN’s mission capability proposal,

Desktop Alert Software version 5.x can centrally track, in real-time, all

alerting activities for individual recipients, including alerts sent, received,

and responded to, and generate reports based on this tracked information.

The Desktop Alert Software version 5.x, with our proposed implementation

plan, meets all ANG MNS NCAS objectives.

FCN’s mission capability proposal continued, “[e]ach Desktop Alert Software version 5.x

instance meets or exceeds the Air National Guard’s (ANG) Mass Notification Systems

(MNS) Net-Centric Alerting System (NCAS) requirements.” FCN proposed to upgrade

the current Air National Guard Desktop Alert software to version 5.x, and train

appropriate personnel on use of the software package. FCN noted: “The [redacted] Air

National Guard Wings currently use [redacted] servers for their existing Desktop Alert

(DTA) Mass Notification System (MNS). . . . [redacted] of the Air National Guard

personnel are currently supported by this existing installed and operational Desktop

Alert Mass Notification System.”

Regarding hardware, FCN’s mission capability proposal stated that FCN would

provide “[redacted] servers,” “located in [redacted] different secure, [redacted] facilities,”

“backed up by [redacted] dedicated lines capable of delivering a daily volume of

[redacted] calls.” FCN’s mission capability proposal did not specify how or from where

this telephony capability was to be provided.10 In its mission capability proposal FCN

also stated that the same [redacted] capabilities mentioned were “assumptions . . .

regarding the Air National Guard’s [redacted] system.” FCN’s price proposal included a

charge of [redacted] per-contract-year to cover “[redacted] dedicated lines capable of

delivering a daily volume of [redacted] calls.”

FCN, in its mission capability proposal, indicated potential cost savings, stating

that use of Desktop Alert “leverages the investment made to-date by the ANG,” and

“[m]aximize[s] ANG resource investments to date by leveraging the in place Desktop

Alert NCAS, infrastructure, interfaces, and training.” FCN further indicated in its mission

capability proposal that its centrally hosted, high-scalability approach, “represents

substantial savings over the traditional deployment model,” and would “support at a

9

The parties have stipulated that FCN is an authorized reseller of Desktop Alert

software.

10

At a hearing before the court, however, FCN stated that its telephony capability

utilized a “[redacted] system,” and, therefore, did not need to rely on [redacted] lines,

indicating that this was “[o]ne reason that their [redacted] system costs much less than

RGS’s.”

11

lower cost than the traditional model,” “without incurring additional deployment or

operation configuration costs.” FCN also stated that this approach would “incur no

additional configuration costs.”

In FCN’s price proposal, volume four of its proposal, FCN again highlighted the

Air National Guard’s prior use of Desktop Alert, stating that the “Desktop Alert mass

notification software has been in daily use by the [redacted] Air National Guard Wings

for several years.” Below is a summary of FCN’s base year pricing structure, as

reflected in its price proposal:

Item QTY Catalog # Description Unit Price Extended

# Price[11]

1 [redacted] [redacted] Desktop Alert Software version [redacted] [redacted]

5.x Annual Software

Assurance and Technical

Support Enterprise 25K User

2 [redacted] [redacted] Desktop Alert - Phone/SMS [redacted] [redacted]

Alerts - [redacted] Combined

[redacted] and or [redacted]

Voice Message/SMS Delivery

([redacted] exchanges, [redacted] per

call, Call Minutes valid for [redacted]

12

from contract date)[ ]

3 [redacted] [redacted] Upgrade to Desktop Alert [redacted] [redacted]

Software version 5.x Server

Software Enterprise License

Maximum 25000 Users

4 [redacted] [redacted] A plan detailing the process of [redacted] [redacted]

coordinating the distribution of [13]

patches, upgrades and hot

fixes to the server and client

systems.

5 [redacted] [redacted] A Training Plan to provide [redacted] [redacted]

training to the ANG Users and

Administrators.

11

Extended Price was equivalent to Unit Price times quantity.

12

FCN estimated in its price proposal that the Air National Guard would require capacity

for “[redacted] Alerts.” FCN stated in its price proposal that “[i]n previous solicitations

the ANG estimated the annual call volume to be a maximum of [redacted] calls,” and

that the addition of [redacted] could raise this number.

13

The price given for the two training plans differed throughout FCN’s price proposal

between [redacted] and [redacted]. The latter value was used in both the final price

summary and detailed breakdown charts.

12

6 [redacted] [redacted] Desktop Alert Software version [redacted] $ [sic]

5.x Onsite Engineering Support [redacted]

(1 Day)

7 [redacted] [redacted] Desktop Alert Software version [redacted] [redacted]

5.x Onsite Training [redacted]

8 [redacted] [redacted] Desktop Alert Software version [redacted] [redacted]

5.x [redacted] Engineering

Support (1 Day)

SUBTOTAL [redacted]

Discount [redacted]

BASE YEAR FIRM FIXED PRICE AMOUNT [redacted]

9 Reimbursable Travel Estimate [redacted] [redacted]

(capitalization and emphasis in original). As stipulated to by the parties, “FCN did not

include a charge in its price volume for the approximately 100,000 Desktop Alert

licenses the ANG had already purchased through contract W9133L-09-F-0139,” a

different, prior contract.14 Instead, as reflected in Item 0001 in the above pricing chart,

FCN intended to charge for: (a) “Upgrad[ing] the currently installed [redacted] Wings to

Desktop Alert v5.x,” (b) “Annual software support to include patches and updates,” (c)

“Remote phone, email, webinar support services,” and (d) “Initial administrator training.”

Along with the [redacted] new Desktop Alert enterprise licenses provided (Item 0003),

the FCN proposal was capable of supporting [redacted] users. Finally, a [redacted]

percent blanket discount was applied to all prices, not including travel costs, to arrive at

a base proposal price of [redacted]. The price was listed as a “FIRM FIXED PRICE

AMOUNT.” (emphasis and capitalization in original). The two option years were priced

identically for [redacted], as follows:

Item # QTY Catalog # Description Unit Price Extended

Price

[redacted] [redacted] [redacted] Desktop Alert Software [redacted] [redacted]

version 5.x Annual

Software Assurance and

Technical Support

Enterprise [redacted] User

[redacted] [redacted] [redacted] Desktop Alert - [redacted] [redacted]

Phone/SMS Alerts -

[redacted] Combined

Calls and or [redacted]

14

FCN’s price proposal estimated the Air National Guard “Installed Base,” or those

users for whom prior versions of Desktop Alert already had been installed, to be

[redacted] personnel.

13

Voice Message/SMS

Delivery

(US based exchanges,

Maximum 1 minute per call, Call

Minutes valid for 18 months

from contract date)

[redacted] [redacted] [redacted] Desktop Alert Software [redacted] [redacted]

version 5.x 4 hour online

training webinar

SUBTOTAL [redacted]

Discount [redacted]

OPTION YEAR 1 FIRM FIXED PRICE AMOUNT [redacted]

(emphasis in original). After a [redacted] discount was applied,15 the option year price

for [redacted] was proposed as [redacted]. The price was listed as a “FIRM FIXED

PRICE AMOUNT.” (emphasis and capitalization in original).16

The RGS Proposal

RGS explained in its mission capability proposal that it “has partnered with

Company A[17] to deliver the solution for ANG that answers and/or exceeds 100% of the

requirements of the RFP.” RGS described AtHoc’s prior work with the United States Air

Force, claiming that “virtually all AF personnel (less ANG) depend on Company A

technology for emergency alerts and accountability.” RGS claimed that “Company A’s

deployment across the USAF already covers [redacted] military, civilian and contractor

personnel stationed at over [redacted] USAF facilities worldwide.” RGS also stated in

its mission capability proposal that [redacted] different United States Air Force

MAJCOMs [Major Commands] adopted AtHoc technology for their Mass Notification

Systems, and RGS listed the commands in its proposal. RGS further stated in its

mission capability proposal that AtHoc would provide its Mass Notification System

software product, IWSAlerts.18

15

No reason was given by FCN for why a [redacted] discount was applied to the base

performance costs and a [redacted] discount was applied to the option years.

16

The past performance proposals and small business participation proposals, volumes

two and three of the overall proposals, were not included in the record before the court

for any of the offerors, and were not put into issue in the current protest before the

court.

17

In its proposal, RGS did not mention its subcontractor AtHoc by name, and instead

referred to AtHoc as “Company A.”

18

As stipulated to by the parties, RGS is an authorized reseller of AtHoc IWSAlerts. As

further stipulated to by the parties, FCN is not an authorized reseller of IWSAlerts, nor is

RGS an authorized reseller of Desktop Alert.

14

RGS emphasized in its mission capability proposal that, by working with RGS

and AtHoc, the Air National Guard could leverage a number of synergies through

AtHoc’s prior work with the United States Air Force. In particular, RGS stated that the

Air National Guard could “[l]everage existing Company A licenses owned by USAF -

The USAF already purchased sufficient Company A licenses to cover [redacted]

personnel, including [redacted]. . . . This translates to no cost for ANG for these

licenses, given that the licenses have already been paid for by USAF.” (emphasis and

capitalization in original). According to RGS, the Air National Guard additionally could:

Leverage existing USAF Telephony Alerting capability - The USAF

established in 2011 the AF Enterprise Telephone Alerting capability, which

reduces annual cost by [redacted] and increases operational capability

across the entire AF, all using Company A technology. The capability

allocates over [redacted] lines to USAF units for the purpose of alerting,

enabling every AF unit to make over [redacted] emergency calls per

minute . . . . This proposal will leverage this pool to provide ANG access

to this massive AF Enterprise capability at a fraction of the cost it would

take ANG to develop it on its own.

(emphasis in original). RGS explained that this capability meant that a “[redacted].”

Additionally in its mission capability proposal, RGS stated that “[t]he AF Enterprise TAS

[Telephony Alerting System] capability was successfully ‘surge tested’ in Oct 12 when

four MAJCOMs simultaneously initiated an after duty hours personnel recall check;

Company A functioned as designed and passed with flying colors, successfully reaching

over [redacted] users per hour by phone.” RGS also indicated:

Once ANG joins all other MAJCOMs in using Company A, ALL ANG units

will have access to the existing AF Enterprise Telephone Alerting

capability; over [redacted] reserved alerting telephone lines activated

simultaneously, with firm fixed price for unlimited telephone and text

message alerts.

According to RGS, the telephone capability was provided through a hosted service, “a

commmunication [sic] capability from multi-redundant and secure commercial data

centers.” The RGS mission capability proposal stated that “[t]he [redacted]

communication services [redacted].” RGS did not mention in its mission capability

proposal that [redacted] extra telephone lines would be added to the [redacted]

telephone lines allegedly available from the United States Air Force capability, to bring

the total resource to [redacted] lines. This fact is reflected in RGS’ price proposal,

discussed more fully below.

In its mission capability proposal, RGS further claimed that the Air National

Guard could leverage United States Air Force, [redacted], “pre-negotiated FFP [Firm

Fixed Price] rates for telephony and SMS [Short Message Services] calls,” as well

as “existing Company A Computer Based Training built for USAF,” pre-created

15

web-based training programs, and pre-planned scenarios. (emphasis in original). RGS

also stated that, because of AtHoc’s prior installations with the “US Air Force, US Navy,

US Coast Guard, US Army, US Marine Corps, and numerous federal agencies,” the Air

National Guard, using AtHoc software, “could notify not only all ANG units affected, but

cascade across to other services and organizations in the area.” RGS further claimed

in its mission capability proposal that AtHoc could allocate accounts and change who

had access to the service virtually, as follows:

Unlike other product, [sic] Company A’s software is [redacted]. This

means that there is [redacted].

(capitalization in original). As stipulated to by the parties, “[t]he RGS Mission Capability

volume did not state how many IWSAlerts licenses the Air Force currently held, merely

that the Air Force had purchased enough to cover all Air Force and ANG personnel.”

Furthermore, according to the parties, “[t]he RGS proposal did not specify how many

licenses the Air Force was using, and the proposal did not provide proof that the Air

Force committed to transfer the licenses to the ANG, or allow the ANG to use the

licenses, permanently, temporarily or under any other conditions.”

The RGS mission capability proposal also discussed cost savings. In the

executive summary, RGS stated that their solution “provides innovative and cost-

efficient solutions to the outlined needs.” RGS also claimed to be

acutely aware of the budget pressures the DoD currently faces and is

proactive about identifying multiple ways to reduce costs and increase

efficiencies within the NCAS/EMNS [Emergency Mass Notification

System] programs. As such this proposal will leverage existing USAF

resources/capabilities to achieve program objectives in a highly cost

efficient manner, as requested by the RFP in Section C.4.B.

Additionally, RGS stated that it would “[redacted],” negotiated previously with the Air

Force when RGS installed the Air Force’s Mass Notification System. RGS claimed that

the software licenses would be at “no cost for ANG,” and that the Air National Guard

could take advantage of the United States Air Force telephone capacity at a “fraction” of

the cost of building one themselves. RGS also claimed that it could offer “web-based

training sessions for all ANG personnel [redacted] at no additional cost.” RGS

concluded the executive summary of its mission capability proposal by stating that its

offer “results in significant efficiencies and cost savings while it maintains and improves

on the powerful EMNS capability the USAF already owns.” RGS consistently claimed in

its mission capability proposal that its processes were “low total-cost-of-ownership,”

“cost-efficient,” cost-effective, or similar, that the use of the [redacted] telephone lines

from the Air Force Enterprise Telephone Alerting Capability would be extended to the

Air National Guard “at no additional cost,” and that its proposal allowed for [redacted]

telephone text message alerts at a Firm Fixed Price. At no point in RGS’ mission

capability proposal was a dollar figure mentioned for the overall proposal or for any of

the no-cost components.

16

RGS’ pricing structure for the base year and option years, as reflected in its price

proposal was, as follows:

[chart redacted]

In its price proposal, RGS discounted [redacted] of its product license costs, and

the costs related to access to the [redacted] telephone lines. RGS proposed an annual

fee of [redacted], discounted [redacted] from the list price of [redacted], to add another

[redacted] telephone lines to the overall telephone line bank. As a result, although the

proposed list price for materials was [redacted], it was discounted [redacted],19 for a

final price of [redacted], a discount of [redacted]. As a result, the base year cost for

contract performance for RGS’ proposal came to [redacted]. In the notes below the

pricing chart, in its proposal, RGS tried to explain its [redacted] discount of the software

product licenses, as well as the [redacted] telephone lines to be shared with the United

States Air Force. RGS stated:

The USAF procured sufficient perpetual “Company A” Enterprise Server

and COR [Contracting Officer’s Representative] User Client Access

Licenses (CAL) Product Licenses to support all personnel. “Company A”

agreed to the following terms from DITCO/BOA [Defense Information

Technology Contracting Organization/Basic Order Agreement] Contract

[redacted], 9 Aug 11:

“AF shall be entitled to operate the software on any platform the software

Vendor supports and transfer the software or maintenance between

platforms. There shall be no additional charge for transferring software

from site-to-site or machine-to-machine where AF maintains AF Service

responsibilities as long as the scope of license is materially similar. There

shall be no additional cost transferring maintenance from site-to-site or

machine-to-machine where AF maintains AF Service responsibilities as

long as the maintenance requirements and scope of service are materially

similar (e.g., number of data centers, sites, operators or end-users

supported).”

Because existing USAF IWSAlerts licenses are available as GFE, they will

be reallocated and distributed for ANG use. This significantly reduces the

cost of implementing an ANG Enterprise solution because the software

costs would typically be by far the most expensive portion of this contract-

here they are simply GFE. This proposal pricing includes the necessary

licenses as GFE. As a frame of reference, both PACAF and AMC enjoyed

the same benefit as ANG does in this proposal, with their recent

deployment of “Company A.”

19

RGS’ price proposal put the discount value for materials in the proposal at [redacted].

17

...

Instead of having to lease additional dedicated alerting communications

lines for ANG unit use, ANG can leverage the operational USAF

Enterprise Telephone Alerting capability, with Firm Fixed Price Telephony

and SMS calls, significantly reducing annual Communications Services.

This proposal pricing utilizes this capability.

(emphasis in original). RGS also explained that it could offer a low-cost training solution

because “[e]xisting USAF Computer Based Training and bi-weekly live online training

sessions will be offered to all ANG operators, simply by registering.” 20

Evaluation of the Proposals

The Air National Guard Source Selection Evaluation Board met to review

proposals on March 25–29, 2013. According to the Source Selection Evaluation

Board’s Technical Evaluation Summary, seven offerors responded to the Solicitation:

RGS, [redacted], FCN, [redacted], [redacted], [redacted], and [redacted]. When

conducting the technical evaluation, the Source Selection Evaluation Board stated in its

Technical Evaluation Summary:

The Cost/Pricing nor Small Business Commitment evaluations were not

within the scope of this team’s tasks except to determine the

reasonableness of the cost in relation to the technical merits of the

proposal. Otherwise, Cost/Pricing will be evaluated by the contracting

officer when determining the best value to the Government.

Later in the Technical Evaluation Summary, however, the Source Selection Evaluation

Board stated that “[o]ur assessments were based strictly on mission capability,

performance history and cost.” The Source Selection Evaluation Board rated the

offerors on two of the four evaluation factors, Mission Capability and Past Performance,

which are summarized below:

20

[Redacted], which also submitted a proposal pursuant to the Solicitation, and was

ranked second to RGS, stated in its mission capability proposal that it similarly

proposed to partner with AtHoc, and discussed AtHoc’s prior success with the Air Force.

Although the parties did not provide [redacted’s] price proposal in the record before the

court, an examination of the mission capability proposal indicates that [redacted] also

appears to have proposed sharing AtHoc’s prior licenses with the United States Air

Force with the Air National Guard, at no cost. It is not clear from the [redacted] mission

capability proposal whether the telephony capability it offered is the same as what was

offered by RGS, although such may be the case. The Source Selection Evaluation

Board commented that “[t]he [redacted] and RGS offers were practically the same due

to their choice in sub-contractor.” [Redacted] also discussed cost savings within its

mission capability proposal, stating, for example, that it “achieves 100% compliance

with the SOO [Statement of Objectives] yet with low total-cost-of-ownership.”

18

Offeror Mission Capability Past Performance

Rating21 Rating22

RGS Outstanding Substantial Confidence

[redacted] Outstanding Substantial Confidence

FCN Outstanding Substantial Confidence

[redacted] Unacceptable Limited Confidence

[redacted] Unacceptable Limited Confidence

[redacted] Unacceptable Limited Confidence

[redacted] Unacceptable Limited Confidence23

The Technical Evaluation Summary stated that FCN’s proposal “provides detailed

information of planned execution as well as the use of assets presently in place.”

The Technical Evaluation Summary also commented on RGS’ “multiple client

installation methods and the cost savings for utilizing existing GFE,” as well as that the

RGS proposal provided “an enterprise solution reducing the ANG total cost of

ownership.” The Technical Evaluation Summary also listed, as a strength of the RGS

proposal, that “[t]he vendor’s past experience demonstrates their understanding of the

ANGEN [Air National Guard Enterprise Network] and shows they are capable of

performing on an effort as to the scope and magnitude of the solicited requirement.”

[Redacted’s] proposal received the same positive comments as the RGS proposal. The

executive summary at the end of the Technical Evaluation Summary stated the

following:

The 3 offerors that met the objectives were FCN (AQR0015-02), RGS

Federal Incorporated (AQR0015-04), and [redacted] (AQR0015-13).

Though the 3 vendors were all rated Outstanding, there were subtle

differences that separated them from one another. The [redacted] and

RGS offers were practically the same due to their choice in sub-contractor

21

According to the Technical Evaluation Summary, “the Mission Capable [sic] Factor

evaluation provides an assessment of recent similar experience at the corporate and

service delivery level in demonstrating value relative to Mass Notification System

(MNS)/NCAS and in working with customer organizations to understand and meet their

needs.”

22

According to the Technical Evaluation Summary, “[t]he Past Performance evaluation

assesses the degree of confidence the Government has in an Offeror’s ability to supply

products and services that meet users’ needs, including cost and schedule, based on a

demonstrated record of performance.”

23

Although no confidence was marked in the Technical Evaluation Summary for the

[redacted] proposal, the Technical Evaluation Summary stated in the text that the

Source Selection Evaluation Board had “limited” confidence in the [redacted] proposal.

19

[sic] (AT-HOC) was [sic] supplying the end solution. . . . FCN was equally

impressive, and offerered [sic] a very relevant Past Performance history.

The SSEB [Source Selection Evaluation Board] finds the aforementioned

proposal to be equal and the government would be well served if [sic]

regardless of which Offeror is [sic] wins the award.

The Source Selection Evaluation Board recommended the top three offerors, in the

following order: RGS (“Best Value”), [redacted] (“Acceptable/Capable”), and FCN

(“Acceptable/Capable”).

The parties stipulated that “[d]uring the SSEB’s discussions, SSEB members

expressed concerns about potential software licensing issues.” Therefore, on April 2,

2013, the Source Selection Evaluation Board submitted a written questionnaire to the

three offerors in the competitive range, FCN, RGS, and [redacted]. The April 2, 2013

questionnaire instructed the offerors to provide responses “within two (2) hours of

receipt of this email.” The April 2, 2013 questionnaire posed the following three

requests:

Request the Vendor confirm that (1) the number of licenses provided in

their proposal covers the total ANG population (currently estimated at

108,436) at all times, (2) If costs are figured with the idea that licensing is

covered by GFE; will the vendor provide in writing and signed by the

appropriate government official proof of such claim, and (3) will the vendor

assume ALL RISKS with licensing issues related to this effort; meaning

the ANG will not be charged/billed in any way for additional licensing

throughout the life (POP [Period of Performance]) of this contract; to

include Base plus any Option Years beyond the cost/price proposal

submitted in response to this solicitation.

(capitalization in original).

All three offerors in the competitive range responded to the April 2, 2013

questionnaire. FCN responded to the first question, stating in relevant part, “[o]ur

response to this W9133L-13-R-0015 proposal provides a total Desktop Alert Software

v5.x perpetual enterprise software license to cover a maximum of [redacted] ANG end

users.” FCN responded to the second question by stating, in part, that FCN’s proposal

“includes the Desktop Alert Software v5.x perpetual licenses sufficient to cover the total

ANG population (currently estimated at 108,436) at all times,” and indicated that the

“VMWare vSphere Server/Client 4.1 software, Windows Server Licenses, and SQL

Database Licenses are provided by ANG and considered GFE.” FCN responded to the

third question by stating, in part, that FCN “will assume all risk regarding licensing

Desktop Alert Software v5.x throughout the life (POP) of this W9133L-13-R-0015

contract; including Base plus any Option Years beyond the cost/price proposal

submitted in response to this W9133L-13-R-0015 solicitation.”

20

RGS responded to the first question by stating:

After consulting with our partner AtHoc, we confirm that the number of

licenses in our proposal covers the total ANG population (currently

estimated at 108,436 but may grow or fluctuate moderately) at

all times. . . . AtHoc, as the developer of IWSAlerts software has legal

authority to grant licenses for any AtHoc customer, including USAF.

RGS responded to the second question by stating:

We did reconfirm with Mr[.] Jim Rau, AF MSN [Air Force Mass Notification

System] PMO [Project Management Office] again this morning that, Yes

we will provide in writing and signed/approved by PMO that sufficient

USAF owned licenses exist, and they will be reallocated to support ANG

at no additional charge. Because of the very tight 2 hour suspense, Mr[.]

Rau will confirm by separate email.

The parties have stipulated that the Source Selection Evaluation Board did not

receive the e-mail from Mr. Rau of the Air Force Mass Notification System Project

Management Office within the two hours from receipt of the April 2, 2013 questionnaire

as was required for responses. It was not until June 5, 2013, more than two months

after the deadline to respond to the April 2, 2013 questionnaire, and almost two months

after the award was made, that Mr. Rau wrote an e-mail to Mr. Holmes, titled “AtHoc

Product Licensing.” Mr. Rau indicated that he was from the United States Air Force

Program Executive Office and stated that when the United States Air Force was

developing its own mass notification system

AtHoc revealed to us that the Air Force has purchase [sic] sufficient

licenses thru numerous procurements to cover the total Air Force Need.

Accordingly, the AFMC’s [Air Force Materiel Command’s] renewal

incorporated an [sic] change in the licensing agreement to allow the use of

the AFMC licenses anywhere within the Air Force thus making available

sufficient licenses for [redacted].

Mr. Rau also stated that, with regards to a different RFI related to the United States Air

Force mass notification system, “AtHoc’s response to our RFI again stated that the AF

owns sufficient licenses to cover the [redacted].” Mr. Rau also admitted, however, that

“this office has no contract with AtHoc or any of their resellers.”

RGS responded to the third question in the April 2, 2013 questionnaire by

stating:

RGS will assume ALL RISK with licensing issues related to this contract

effort, and the ANG will NOT be charged/billed in any way for additional

licensing throughout the life (POP) of this contract, including Base plus

21

any Option Years beyond the cost/price proposal submitted in response to

this solicitation. The only costs anticipated for ANG will be the annual

sustainment costs as proposed in our offering.

(capitalization in original).

RGS also attached a copy of a 2011 contract between Defense Information

Services Agency – Defense Information Technology Contracting Organization, and an

AtHoc reseller, [redacted] contract [redacted]. It contained as part of “ADDITIONAL

TERMS & CONDITIONS” (emphasis and capitalization in original), the following:

1. AF [Air Force] shall be entitled to operate the software on any platform

the software Vendor supports and transfer the software or maintenance

between platforms. There shall be no additional charge for transferring

software from site-to-site or machine-to-machine where AF maintains AF

Service responsibilities as long as the scope of license is materially

similar. There shall be no additional cost transferring maintenance from

site-to-site or machine-to-machine where AF maintains AF Service

responsibilities as long as the maintenance requirements and scope of

service are materially similar (e.g., number of data centers, sites,

operators or end-users supported).

2. Should there be a restructuring of AF or its mission during the life of the

contract, the contractor agrees that AF's software licenses, capacity

levels, usage rights, entitlements and contracts shall transfer to the

successor DoD organization(s) to which AF may transfer its

responsibilities for computing services for the AF.

RGS further stated in its response that, “[t]his same contract enabled [redacted],

[redacted], [redacted], and [redacted] units to likewise use reallocated AtHoc licenses

for similar contract efforts.”

The parties to this litigation also stipulated:

The contract RGS provided is not enterprise-wide across all the Air Force,

but is restricted to one command. The contract does not state the number

of licenses provided, does not indicate that the Air Force would be

receiving extra or surplus licenses that could later be transferred, and

does not indicate that the Air Force would be willing to give up any or all

the licenses provided under that contract.

(internal citation omitted).24 Additionally, the parties stipulated that the contract, which

24

[Redacted’s] response to the questionnaire contained the exact same statements as

the response submitted by RGS, except using [redacted’s] name in place of RGS, and

[redacted] attached the same sample contract to its response.

22

was cited in RGS’ response to the April 2, 2013 questionnaire, the 2011 contract

between Defense Information Services Agency – Defense Information Technology

Contracting Organization, and an AtHoc reseller, [redacted], contract [redacted], did not

contain RGS or AtHoc as a party; the contract, instead, was between “DISA-DITCO

[Defense Information Services Agency – Defense Information Technology Contracting

Organization], on behalf of the Air Force, and [redacted], an AtHoc reseller.” Moreover,

the 2011 [redacted] contract does not provide access to the same [redacted] lines RGS

offered the Air National Guard in the Solicitation at issue, but includes as equipment,

“[redacted],” with a quantity of [redacted] lines.

On behalf of RGS, Andy Anderson, Vice President for Business Development,

Defense & International for AtHoc, forwarded to a Willie Holmes, who was not part of

the Source Selection Evaluation Board, but was the contract specialist and the point of

contact for the submission of offers to the agency, an e-mail from John Bartoli, “a

civilian employee of the Air Force Materiel Command.” The parties stipulated that “RGS

had asked Mr. Bartoli to confirm that the Air Force could make available licenses for

IWSAlerts to the ANG under the terms of Contract [redacted] that the

Defense Information Services Agency - Defense Information Technology Contracting

Organization (DISA-DITCO) awarded to [redacted].” The e-mail from Mr. Bartoli to Mr.

Holmes was time-stamped April 2, 2013, at 9:23 p.m., and stated in full:25

I can verify this is the AFMCcontract [sic] for AtHoc sustainment; that it

does include the referenced verbiage for no cost transfer of licenses; that

we did exercise this right; and that the transfers were made available for

reuse by the AF Program Management Office.

I need to also state that AFMC is no longer paying sustainment for

transferred licenses, and that this cost liability still exists if the AF wants to

continue using the licenses.

On the same day, April 2, 2013, the Source Selection Evaluation Board stated

that it had reached a consensus that “[a]ll Offerors response [sic] confirmed their

25

It is unclear if the Source Selection Board reviewed Mr. Bartoli’s e-mail before coming

to its selection, or if the Bartoli e-mail reached Mr. Holmes within two hours of the

submission of the April 2, 2013 questionnaire. During the FCN protest at the GAO, a

June 28, 2013 e-mail from the National Guard Bureau, sent in response to a FCN

document request during the GAO proceedings, stated: “There was no ‘correspondence

between the AF and ANG concerning confirmation of the availability of licenses,

conducted during the evaluation of proposals under this procurement.’” The Air

National Guard, however, later tried to recant that statement, claiming in a later

statement to the GAO that the prior statement resulted from a miscommunication. In a

second statement, Mr. Wilson declared, under penalty of perjury, that he “read the string

containing Mr. Bartoli’s e-mail prior to making my source selection decision . . . . In my

view, then and now, the e-mail string supports RGS’s express affirmation that they

would provide licenses as GFE in line with their proposal.”

23

original claim, stating in writing that there’s ‘NO RISK’ to the ANG in terms of licensing

which was the concern of the SSEB, and the reason for the reconvening of the SSEB.”

(capitalization in original). Therefore, the Source Selection Evaluation Board made no

changes to its evaluation of the offerors.

The final award decision was made by Air National Guard contracting officer Mr.

Wilson, who was also the source selection official. His decision was reflected in the

April 17, 2013 “SOURCE SELECTION DECISION DOCUMENT.” (capitalization and

emphasis in original). The source selection decision document indicated that Mr.

Wilson had reviewed the proposals, the Technical Evaluation Summary, and had made

a final decision regarding which offeror should be awarded the contract.

Regarding the first two factors, mission capability and past performance, Mr.

Wilson stated that he had conducted his own “in-depth” review of the proposals, but no

record of his independent technical investigation has been offered to the court. Instead,

the Technical Evaluation Summary was adopted fully into the source selection decision

document without any changes or objections. Mr. Wilson also stated in the source

selection decision document, “I concur with the ratings provided by the SSEB in their

report to this office dated 12 April 2013.”

With respect to the third evaluation factor, “Small Business Participation,” Mr.

Wilson evaluated all offerors, but [redacted] as “outstanding.” Regarding the fourth

evaluation factor, price, Mr. Wilson found that “[redacted] had incomplete pricing,

[redacted] and the remaining five were found to be reasonable . . . .”26 Mr. Wilson

stated, “I found that five of the six price proposals that included options to be realistic.

Realism was evaluated in terms of the price proposed was [sic] found appropriate to the

technical solutions offered.” Mr. Wilson indicated the following price structure for FCN,

RGS, and [redacted], as summarized below:

Offeror Base Year Cost Option Year 1 Option Year 2 TOTAL

RGS [redacted] [redacted] [redacted] $1,316,357.58

[redacted] [redacted] [redacted] [redacted] [redacted]

FCN [redacted] [redacted] [redacted] [redacted]

In his source selection decision document Mr. Wilson stated that, under the price factor

analysis, the three offerors, FCN, RGS, and [redacted], were found to have “complete,

accurate, reasonable and realistic” prices. Mr. Wilson stated that “[t]he reasonableness

of the offers was evaluated by reviewing the proposed prices, against the potential for

26

Mr. Wilson, noted, however, on the same page of his source selection decision

document that “[f]ive of the proposals were found to be complete. I note that one

proposal from [redacted] did not include prices for the option years, which was not

responsive to the requirements of the solicitation. Another had incomplete pricing,

[redacted] due to the lack of pricing for a service provider to track and text data

(required by the SOO).”

24

buy-in and any unbalances.” The undated price reasonableness determination,

concluded, without further explanation, that the RGS price proposal “is considered fair

and reasonable.”

In making his final decision, Mr. Wilson discussed whether a “Tradeoff Analysis,”

was warranted between FCN, RGS, and [redacted]. He concluded:

Since the Following [sic] three vendors, RGS Federal, Inc. [sic] [redacted],

and FCN received Outstanding Mission Capability ratings along with

Substantial Past Performance and Outstanding Small Business

Commitment, a trade off was not needed as such RGS Federal, Inc.

received the award because their cost was the lowest. Again, I

understand that adjectival ratings are merely guides to intelligent decision

making. In this case, however, these three acceptable proposals were

truly equal in my view in terms of their non-price factor ratings.

Mr. Wilson ended the source selection decision document by stating: “Since RGS

Federal, Inc. had the lower overall price for all three years, award was made to RGS

Federal, Inc.” The contract, W9133L-13-P-0034, was issued by “NGB-AQ-AF JOINT

BASE ANDREWS,” to RGS on April 22, 2013, and signed by RGS on April 23, 2013.

(capitalization in original). The Notice of Award to RGS indicated that the total award

amount was $1,316,357.58, representing the price for the base year and two option

years.

Post Selection History

FCN requested a debriefing following the award to RGS. The National Guard

Bureau responded by sending a debriefing letter to FCN, dated May 6, 2013, and

signed by Mr. Wilson. The letter stated that “[t]he government found no significant

weaknesses or deficiencies as that term is used in the FAR,” and that “[y]our proposal

was ranked third of the seven. RGS, obviously, was ranked first,” and [redacted]

second. In providing a summary for the rationale for the award, Mr. Wilson stated:

As stated in the solicitation, the Government sought to award this contract

deemed to provide the best value to the Government. As reflected in the

adjectival ratings, the Government found that your company submitted an

outstanding proposal for this contract. The Government evaluators and I

also found your past performance to merit the highest rating in this

competition. The awardee’s proposal was found to be equal to yours in

terms of technical and past performance rating. As such, the main

discriminator became the significantly lower price offered by the [sic] RGS.

I recognize that price was the least important factor in this competition,

however, in light of the relative equivalence of your proposal and the

awardee’s proposal, the significantly lower price submitted by RGS tipped

the scales clearly in their favor.

25

(emphasis in original).

After receiving a written debriefing, FCN filed a protest with the GAO on May 13,

2013, claiming that the Air National Guard had conducted an improper price evaluation

of the RGS proposal. Specifically, FCN claimed that the “ANG failed to evaluate the

RGS/AtHoc proposal adequately,” that the RGS price proposal was unrealistic, and,

therefore, that RGS should have been awarded a lower technical score. FCN alleged

that the RGS “proposed price of $1,316,357.58 should have been found to be well

below a realistic cost for this project and indicative of ‘buying-in’ to this contract.”

Additionally, FCN claimed that the United States Air Force communicated to the Air

National Guard previously, regarding the “AtHoc/RGS claims of ‘free licenses’ that, in

fact, these ‘seats’ do not exist and even if they did exist, there is no legal way to move

these ‘seats’ to the this [sic] procurement.” At the GAO, FCN asked for an automatic

stay of performance “pursuant to FAR § 33.104(c).” RGS moved to dismiss the GAO

protest under FAR § 21.5(f) (2013), claiming that the “NGB [National Guard Bureau] did

not have to consider price realism at all” in a fixed price contract, and that “the RFP

gives the agency the express discretion to rely on the fixed price, or not.” In addition,

RGS asked for the stay of performance to be lifted, but, on June 17, 2013, in an e-mail

to the parties, the GAO declined to dismiss the protest.

On June 24, 2013, the Air National Guard submitted its agency report to the

GAO. In its comments to the agency report, FCN raised three new protest grounds.

FCN claimed that, “[t]he AtHoc software produce [sic] is not on the Air Force

approved product list,” and that, without this, RGS was ineligible for the Solicitation at

issue. (emphasis in original). FCN also raised a claim against [redacted], stating that

“[redacted] was not eligible for Award.” (emphasis in original). In support, FCN

stated that the same issues regarding the RGS proposal would render the [redacted]

proposal ineligible as well, since [redacted’s] proposal relied on the same AtHoc

software product. FCN further asserted that “RGS Violated Proposal Requirements

by Including Pricing Information In its Mission Capability Proposal,” by claiming

the licenses would be “no cost” and cost-saving, and that these statements should have

resulted in RGS being penalized during the award process or removed from contention.

(emphasis in original).

In a July 19, 2013 supplemental agency report, the Air National Guard argued:

“AtHoc’s IWSAlerts is on the DIACAP [Department of Defense Information Assurance

Certification]-level Approved Product List, which applies to all DoD components and

supersedes the Air Force list.” Regarding [redacted], in its supplemental report the Air

National Guard indicated that FCN’s claim was moot:

The Guard has not proposed to award the contract to the second-rated

offeror, nor has it challenged FCN’s standing, as the third-ranked offeror,

to protest the award to RGS. The reason is that the second-ranked offeror

proposed the same software solution as did RGS. Thus, if the GAO

sustained FCN’s protest or supplemental protest, the Guard would not

make an award to the second-ranked offeror.

26

The Air National Guard also maintained that the RGS comments about cost and

pricing in the mission capability proposal are “de minimis at worst. The statements that

FCN cites do not, in fact, contain ‘substantive pricing information,’ such as unit prices or

rates, but merely describe RGS’s overall pricing strategy.” On July 25, 2013, both FCN

and RGS commented on the Air National Guard’s supplemental agency report. In

FCN’s comments, it dropped the first two of the new protest grounds it had raised, the

claim that AtHoc’s software was not on approved lists, and the claim against [redacted].

FCN, however, mentioned that “it is significant to note that the Agency does not

challenge FCN’s standing as an interested party. They [sic] Agency recognizes that

because the RGS and [redacted] both proposed the same AtHoc software utilizing the

same or a similar GFE licensing strategy, if the FCS [sic] protest were sustained,

[redacted] would no longer be in line for award.”

Also on July 25, 2013, the contracting officer and source selection official, Mr.

Wilson, submitted a “CONTRACTING OFFICER’S STATEMENT IN RESPONSE TO

PROTESTER’S COMMENTS AND NEW PROTEST GROUNDS,” (capitalization and

emphasis in original), in which he stated:

I recognize that the transferability issue was not 100% verified prior to my

award decision; however, I believe that our agency’s examination of this

issue was reasonable. This decision was aided by RGS’s clarification

response and the e-mail response that I reviewed from Mr. Bartoli – the

Chief Technology Officer from the Air Force Materiel Command on or

about April 2, 2013.[27] RGS has contractually promised these licenses to

the ANG regardless of whether or not they are able to transfer from the Air

Force. In the event that these licenses do not transfer, RGS would be

required to provide them to the ANG or else they would face a cure notice

and potential termination for default.

On August 19, 2013, the GAO denied FCN’s protest. The GAO stated that

FCN’s protest was “limited to the allegation that ANG failed to reasonably consider the

cost realism of RGS’ proposal as required by the terms of the RFP,” as well as the

allegation that “RGS ignored the RFP’s instructions and improperly included cost

information in its mission capability proposal.” The GAO noted in its decision that,

“where the award of a fixed-price contract is contemplated, a proposal’s price realism is

not ordinarily considered.” The GAO also stated that an agency may provide for a price

realism analysis, “for such purposes as measuring an offeror’s understanding of the

solicitation requirements, or to avoid the risk of poor performance.” The GAO further

noted that “[t]he nature and extent of an agency’s price realism analysis are matters

within the sound exercise of the agency’s discretion.” The GAO found that the agency

“specifically considered” the price realism issue, and that RGS’ response to the Source

27

As noted above, there is some doubt, and an apparent reversal of positions, as to

when the Bartoli e-mail was received at the Air National Guard Contract Office and

whether the evaluators and source selection officials reviewed it prior to contract award.

27

Selection Evaluation Board’s April 2, 2013 questionnaire was sufficient:

As noted above, the agency required offerors to confirm that they

maintained sufficient licenses, provide proof of available licenses if

proposing licenses as GFE, and assume all risk against the need for

additional licenses for the life of the contract. RGS addressed all of these

issues in its response.

The GAO further stated that: “On review of this record, we have no basis to

conclude that the agency acted unreasonably in its evaluation of the realism of RGS’

low price . . . .” The GAO also briefly addressed FCN’s second allegation in a footnote,

stating that, “[t]he record shows that the cost information in RGS’ mission capability

proposal was limited to a description of RGS’ approach of utilizing existing Air Force

software licenses at no cost to the agency, consistent with the RFP direction to discuss

‘technical approach’ and ‘business approach,’ in the mission capability proposal.”

Additionally, the GAO commented that the RGS mission capability proposal was

consistent with the RFP’s provisions regarding “‘[l]everaging existing

resources/capabilities to achieve program objectives.’” (modification in original).

Subsequently, FCN filed the above captioned bid protest in this court, alleging

four protest grounds. First, FCN claims that the Air National Guard failed to follow FAR

Part 45 regarding the proposal and acceptance of government property or government-

furnished property, alleging that “[d]uring the evaluation period of this RFP, the NGB Air

Guard made no effort to eliminate in any way the competitive advantage that RGS and

AtHoc held in proposing to use Government property,” and that the Air National Guard

failed to notify other offerors about potential use of the government-furnished property.

Second, FCN claims that the Air National Guard contracting officer failed to conduct a

reasonable price realism analysis, and argues that, “although the RFP promised a price

realism consideration, the contemporaneous documents show that no such analysis

occurred.” Third, FCN claims that RGS, through its statements referring to price in the

mission capability proposal, violated the Solicitation’s requirements and that the

contracting officer failed to acknowledge or penalize RGS for this alleged violation.

Fourth, FCN claims that RGS’ knowledge of transferrable AtHoc licenses under a

United States Air Force contract, which only those parties knew about, created “unequal

access to information,” and, therefore, a conflict of interest that the contracting officer

had a duty to mitigate, but failed to do.28

In its complaint in this court, FCN asks the court to (1) declare that the Air

National Guard evaluation of the proposals under the Solicitation unreasonable,

arbitrary, and an abuse of discretion, (2) permanently enjoin the Air National Guard from

continuing the contract with RGS, and (3) grant other such relief as the court deems

appropriate. In its motion for judgment on the administrative record, FCN also requests

the court issue an order requiring the Air National Guard to “perform a re-evaluation of

the existing proposals in accordance with the stated criteria and the applicable

28

FCN subsequently withdrew the fourth protest ground concerning conflict of interest.

28

procurement regulations or, to the extent that its needs have not been properly

explained by the existing RFP, order that the Agency amend the RFP to meet the

Government’s new requirements, and seek new final proposal revisions from the

offerors considered to be in the competitive range.” With the agreement of the parties,

this court consolidated FCN's request for preliminary injunction with its request for

permanent injunction and declaratory relief, and the defendant agreed to stay

performance until the court issued its decision.

DISCUSSION

Standard of Review

Pursuant to Rule 52.1(c) of the Rules of the United States Court of Federal

Claims (RCFC) (2013), which governs motions for judgment on the administrative

record, the court’s inquiry is directed to “whether, given all the disputed and undisputed

facts, a party has met its burden of proof based on the evidence in the record.” Eco

Tour Adventures, Inc. v. United States, 114 Fed. Cl. 6, 21 (2013) (citing Bannum, Inc. v.

United States, 404 F.3d 1346, 1356-57 (Fed. Cir. 2005)); see also DMS All-Star Joint

Venture v. United States, 90 Fed. Cl. 653, 661 (2010).

The Administrative Dispute Resolution Act of 1996 (ADRA), Pub. L. No. 104-320,

§§ 12(a), 12(b), 110 Stat. 3870, 3874 (1996) (codified at 28 U.S.C. § 1491(b)(1)-(4)

(Supp. V 2011)), amended the Tucker Act to establish a statutory basis for bid protests

in the United States Court of Federal Claims. See Impresa Construzioni Geom.

Domenico Garufi v. United States, 238 F.3d 1324, 1330-32 (Fed. Cir. 2001). The

statute provides that protests of agency procurement decisions are to be reviewed

under Administrative Procedure Act (APA) standards, making applicable the standards

outlined in Scanwell Laboratories, Inc. v. Shaffer, 424 F.2d 859 (D.C. Cir. 1970), and

the line of cases following that decision. See, e.g., Res. Conservation Grp., LLC v.

United States, 597 F.3d 1238, 1242 (Fed. Cir. 2010) (“Following passage of the APA in

1946, the District of Columbia Circuit in Scanwell Labs., Inc. v. Shaffer, 424 F.2d 859

(D.C. Cir. 1970), held that challenges to awards of government contracts were

reviewable in federal district courts pursuant to the judicial review provisions of the

APA.”); Galen Med. Assocs., Inc. v. United States, 369 F.3d 1324, 1329 (Fed. Cir.)

(citing to Scanwell Laboratories, Inc. v. Shaffer for its reasoning that “suits challenging

the award process are in the public interest and disappointed bidders are the parties

with an incentive to enforce the law”), reh’g denied (Fed. Cir. 2004); Banknote Corp. of

Am., Inc. v. United States, 365 F.3d 1345, 1351 (Fed. Cir. 2004) (“Under the APA

standard as applied in the Scanwell line of cases, and now in ADRA cases, ‘a bid award

may be set aside if either (1) the procurement official’s decision lacked a rational basis;

or (2) the procurement procedure involved a violation of regulation or procedure.’”

(quoting Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d at

1332)); Info. Tech. & Applications Corp. v. United States, 316 F.3d 1312, 1319 (Fed.

Cir.), reh’g and reh’g en banc denied (Fed. Cir. 2003). The United States Court of

Appeals for the Federal Circuit has stated that the Court of Federal Claims’ jurisdiction

over “any alleged violation of statute or regulation in connection with a procurement or a

29

proposed procurement,” 28 U.S.C. § 1491(b)(1), “provides a broad grant of jurisdiction

because ‘[p]rocurement includes all stages of the process of acquiring property or

services, beginning with the process for determining a need for property or services and

ending with contract completion and closeout.’” Sys. Application & Techs., Inc. v.

United States, 691 F.3d 1374, 1381 (Fed. Cir. 2012) (emphasis in original) (quoting

Res. Conservation Grp., LLC v. United States, 597 F.3d at 1244 (quoting 41 U.S.C. §

403(2))); see also Distrib. Solutions, Inc. v. United States, 539 F.3d 1340, 1345 (Fed.

Cir.) (“[T]he phrase, ‘in connection with a procurement or proposed procurement,’ by

definition involves a connection with any stage of the federal contracting acquisition

process, including ‘the process for determining a need for property or services.’”), reh’g

denied (Fed. Cir. 2008); RAMCOR Servs. Grp., Inc. v. United States, 185 F.3d 1286,

1289 (Fed. Cir. 1999) (“The operative phrase ‘in connection with’ is very sweeping in

scope.”).

Agency procurement actions should be set aside when they are “arbitrary,

capricious, an abuse of discretion, or otherwise not in accordance with law,” or “without

observance of procedure required by law.” 5 U.S.C. § 706(2)(A), (2)(D) (2006); 29

29

The language of 5 U.S.C. § 706 provides:

To the extent necessary to decision and when presented, the reviewing

court shall decide all relevant questions of law, interpret constitutional and

statutory provisions, and determine the meaning or applicability of the

terms of an agency action. The reviewing court shall—

(1) compel agency action unlawfully withheld or unreasonably delayed;

and

(2) hold unlawful and set aside agency action, findings, and

conclusions found to be—

(A) arbitrary, capricious, an abuse of discretion, or otherwise not in

accordance with law;

(B) contrary to constitutional right, power, privilege, or immunity;

(C) in excess of statutory jurisdiction, authority, or limitations, or

short of statutory right;

(D) without observance of procedure required by law;

(E) unsupported by substantial evidence in a case subject to

sections 556 and 557 of this title or otherwise reviewed on the

record of an agency hearing provided by statute; or

30

see also Orion Tech., Inc. v. United States, 704 F.3d 1344, 1347 (Fed. Cir. 2013);

COMINT Sys. Corp. v. United States, 700 F.3d 1377, 1381 (Fed. Cir. 2012); Savantage

Fin. Servs. Inc., v. United States, 595 F.3d 1282, 1285-86 (Fed. Cir. 2010); Weeks

Marine, Inc. v. United States, 575 F.3d 1352, 1358 (Fed. Cir. 2009); Axiom Res. Mgmt.,

Inc. v. United States, 564 F.3d 1374, 1381 (Fed. Cir. 2009) (noting arbitrary and

capricious standard set forth in 5 U.S.C. § 706(2)(A), and reaffirming the analysis of

Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d at 1332); Blue

& Gold Fleet, L.P. v. United States, 492 F.3d 1308 1312 (Fed. Cir. 2007) (“[T]he inquiry

is whether the [government’s] procurement decision was ‘arbitrary, capricious, an abuse

of discretion, or otherwise not in accordance with law.’” (quoting 5 U.S.C. § 706(2)(A)

(2000))); Bannum, Inc. v. United States, 404 F.3d at 1351; Contracting, Consulting,

Eng’g LLC v. United States, 104 Fed. Cl. 334, 340 (2012). “In a bid protest case, the

agency’s award must be upheld unless it is ‘arbitrary, capricious, an abuse of discretion,

or otherwise not in accordance with law.’” Turner Constr. Co. v. United States, 645 F.3d

1377, 1383 (Fed. Cir.) (quoting PAI Corp. v. United States, 614 F.3d 1347, 1351 (Fed.

Cir. 2010)), reh’g and reh’g en banc denied (Fed. Cir. 2011); see also McVey Co. v.

United States, 111 Fed. Cl. 387, 402 (2013) (“The first step is to demonstrate error, that

is, to show that the agency acted in an arbitrary and capricious manner, without a

rational basis or contrary to law.”); PlanetSpace, Inc. v. United States, 92 Fed. Cl. 520,

531–32 (2010) (“Stated another way, a plaintiff must show that the agency’s decision

either lacked a rational basis or was contrary to law.” (citing Weeks Marine, Inc. v.

United States, 575 F.3d at 1358)).

In discussing the appropriate standard of review for bid protest cases, the United

States Court of Appeals for the Federal Circuit specifically has addressed subsections

(2)(A) and (2)(D) of 5 U.S.C. § 706, see Impresa Construzioni Geom. Domenico Garufi

v. United States, 238 F.3d at 1332 n.5, but the Federal Circuit has focused its attention

primarily on subsection (2)(A). See NVT Techs., Inc. v. United States, 370 F.3d 1153,

1159 (Fed. Cir. 2004) (“Bid protest actions are subject to the standard of review

established under section 706 of Title 5 of the Administrative Procedure Act (‘APA’), 28

U.S.C. § 1491(b)(4) (2000), by which an agency’s decision is to be set aside only if it is

‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,’ 5

U.S.C. § 706(2)(A) (2000).”) (citations omitted); Banknote Corp. of Am., Inc. v. United

States, 365 F.3d at 1350 (“Among the various APA standards of review in section 706,

the proper standard to be applied in bid protest cases is provided by 5 U.S.C.

§ 706(2)(A): a reviewing court shall set aside the agency action if it is ‘arbitrary,

capricious, an abuse of discretion, or otherwise not in accordance with law.’” (quoting 5

(F) unwarranted by the facts to the extent that the facts are subject

to trial de novo by the reviewing court.

In making the foregoing determinations, the court shall review the whole

record or those parts of it cited by a party, and due account shall be taken

of the rule of prejudicial error.

5 U.S.C. § 706.

31

U.S.C. § 706(2)(A) and citing Advanced Data Concepts, Inc. v. United States, 216 F.3d

1054, 1057-58 (Fed. Cir.), reh’g denied (Fed. Cir. 2000))); Info. Tech. & Applications

Corp. v. United States, 316 F.3d at 1319 (“Consequently, our inquiry is whether the Air

Force’s procurement decision was ‘arbitrary, capricious, an abuse of discretion, or

otherwise not in accordance with law.’ 5 U.S.C. § 706(2)(A) (2000).”).

The United States Supreme Court has identified sample grounds which can

constitute arbitrary or capricious agency action:

[W]e will not vacate an agency’s decision unless it “has relied on factors

which Congress has not intended it to consider, entirely failed to consider

an important aspect of the problem, offered an explanation for its decision

that runs counter to the evidence before the agency, or is so implausible

that it could not be ascribed to a difference in view or the product of

agency expertise.”

Nat’l Ass’n of Home Builders v. Defenders of Wildlife, 551 U.S. 644, 658 (2007) (quoting

Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983));

see also F.C.C. v. Fox Television Stations, Inc., 556 U.S. 502, 552 (2009); Ala. Aircraft

Indus., Inc.-Birmingham v. United States, 586 F.3d 1372, 1375 (Fed. Cir. 2009), reh’g

and reh’g en banc denied (Fed. Cir. 2010); In re Sang Su Lee, 277 F.3d 1338, 1342

(Fed. Cir. 2002) (“The agency must present a full and reasoned explanation of its

decision. . . . The reviewing court is thus enabled to perform a meaningful

review . . . .”), aff’d on subsequent appeal, 262 F. App’x 275 (Fed. Cir. 2008); Textron,

Inc. v. United States, 74 Fed. Cl. 277, 285-86 (2006), appeal dismissed sub nom.

Textron, Inc. v. Ocean Technical Servs., Inc., 222 F. App’x 996 (Fed. Cir.), and

dismissed per stipulation sub nom. Textron, Inc. v. Ocean Technical Servs., Inc., 223 F.

App’x 974 (Fed. Cir. 2007). The United States Supreme Court also has cautioned,

however, that “courts are not free to impose upon agencies specific procedural

requirements that have no basis in the APA.” Pension Benefit Guar. Corp. v. LTV

Corp., 496 U.S. 633, 654 (1990).

A disappointed bidder has the burden of demonstrating the arbitrary and

capricious nature of the agency decision by a preponderance of the evidence. See

Grumman Data Sys. Corp. v. Dalton, 88 F.3d 990, 995–96 (Fed. Cir. 1996); Davis Boat

Works, Inc. v. United States, 111 Fed. Cl. 342, 349 (2013); Contracting, Consulting,

Eng’g LLC v. United States, 104 Fed. Cl. at 340. The Federal Circuit has made clear

that “[t]his court will not overturn a contracting officer’s determination unless it is

arbitrary, capricious, or otherwise contrary to law. To demonstrate that such a

determination is arbitrary or capricious, a protester must identify ‘hard facts;’ a mere

inference or suspicion . . . is not enough.” PAI Corp. v. United States, 614 F.3d at 1352

(citing John C. Grimberg Co. v. United States, 185 F.3d 1297, 1300 (Fed. Cir. 1999);

C.A.C.I., Inc.-Fed. v. United States, 719 F.2d 1567, 1581 (Fed. Cir. 1983); Sierra

Nevada Corp. v. United States, 107 Fed. Cl. 735, 759 (2012); Filtration Dev. Co., LLC v.

United States, 60 Fed. Cl. 371, 380 (2004)).

32

Furthermore, to prevail in a bid protest case, the protestor not only must show

that the government’s actions were arbitrary, capricious, or otherwise not in accordance

with the law, but the protestor also must show that it was prejudiced by the

government’s actions. See 5 U.S.C. § 706 (“[D]ue account shall be taken of the rule of

prejudicial error.”); see also Glenn Def. Marine (ASIA), PTE Ltd. v. United States, 720

F.3d 901, 907 (Fed. Cir.) (“In a bid protest case, the inquiry is whether the agency's

action was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance

with law and, if so, whether the error is prejudicial.”), reh’g en banc denied (Fed. Cir.

2013); Linc Gov’t Servs., LLC v. United States, 96 Fed. Cl. 672, 694-96 (2010).

Recognizing the two-step analysis of bid protest cases, the United States Court of

Appeals for the Federal Circuit has stated that:

A bid protest proceeds in two steps. First . . . the trial court determines

whether the government acted without rational basis or contrary to law

when evaluating the bids and awarding the contract. Second . . . if the

trial court finds that the government’s conduct fails the APA review under

5 U.S.C. § 706(2)(A), then it proceeds to determine, as a factual matter, if

the bid protester was prejudiced by that conduct.

Bannum, Inc. v. United States, 404 F.3d at 1351. In describing the prejudice

requirement, the Federal Circuit also has held that:

To prevail in a bid protest, a protester must show a significant, prejudicial

error in the procurement process. See Statistica, Inc. v. Christopher, 102

F.3d 1577, 1581 (Fed. Cir. 1996); Data Gen. Corp. v. Johnson, 78 F.3d

1556, 1562 (Fed. Cir. 1996). “To establish prejudice, a protester is not

required to show that but for the alleged error, the protester would have

been awarded the contract.” Data General, 78 F.3d at 1562 (citation

omitted). Rather, the protester must show “that there was a substantial

chance it would have received the contract award but for that error.”

Statistica, 102 F.3d at 1582; see CACI, Inc.-Fed. v. United States, 719

F.2d 1567, 1574-75 (Fed. Cir. 1983) (to establish competitive prejudice,

protester must demonstrate that but for the alleged error, “‘there was a

substantial chance that [it] would receive an award--that it was within the

zone of active consideration.’”) (citation omitted).

Alfa Laval Separation, Inc. v. United States, 175 F.3d 1365, 1367 (Fed. Cir.), reh’g

denied (Fed. Cir. 1999); see also Glenn Def. Marine (ASIA), PTE Ltd. v. United States,

720 F.3d at 912; Allied Tech. Grp., Inc. v. United States, 649 F.3d 1320, 1326 (Fed.

Cir.), reh’g en banc denied (Fed. Cir. 2011); Info. Tech. & Applications Corp. v. United

States, 316 F.3d at 1319; Impresa Construzioni Geom. Domenico Garufi v. United

States, 238 F.3d at 1332-33; OMV Med., Inc. v. United States, 219 F.3d 1337, 1342

(Fed. Cir. 2000); Advanced Data Concepts, Inc. v. United States, 216 F.3d at 1057;

Stratos Mobile Networks USA, LLC v. United States, 213 F.3d 1375, 1380 (Fed. Cir.

2000).

33

In Data General Corp. v. Johnson, the United States Court of Appeals for the

Federal Circuit wrote:

We think that the appropriate standard is that, to establish prejudice, a

protester must show that, had it not been for the alleged error in the

procurement process, there was a reasonable likelihood that the protester

would have been awarded the contract . . . . The standard reflects a

reasonable balance between the importance of (1) averting unwarranted

interruptions of and interferences with the procurement process and (2)

ensuring that protesters who have been adversely affected by allegedly

significant error in the procurement process have a forum available to vent

their grievances. This is a refinement and clarification of the “substantial

chance” language of CACI, Inc.-Fed. [v. United States], 719 F.2d at 1574.

Data Gen. Corp. v. Johnson, 78 F.3d 1556, 1562 (Fed. Cir.), reh’g denied, en banc

suggestion declined (Fed. Cir. 1996); see also Glenn Def. Marine (ASIA), PTE Ltd. v.

United States, 720 F.3d at 912; Bannum, Inc. v. United States, 404 F.3d at 1353, 1358

(“The trial court was required to determine whether these errors in the procurement

process significantly prejudiced Bannum . . . . To establish ‘significant prejudice’

Bannum must show that there was a ‘substantial chance’ it would have received the

contract award but for the [government’s] errors” in the bid process. (citing Info. Tech. &

Applications Corp. v. United States, 316 F.3d at 1319; Alfa Laval Separation, Inc. v.

United States, 175 F.3d at 1367; Statistica, Inc. v. Christopher, 102 F.3d at 1581; Data

Gen. Corp. v. Johnson, 78 F.3d at 1562); see also Advanced Data Concepts, Inc. v.

United States, 216 F.3d at 1057 (using a “reasonable likelihood” rule); Stratos Mobile

Networks USA, LLC v. United States, 213 F.3d at 1380 (using a “substantial chance”

test); Archura LLC v. United States, 112 Fed. Cl. 487, 496 (2013) (using a “substantial

chance” test); Info. Scis. Corp. v. United States, 73 Fed. Cl. 70, 96 (2006) (using a

“substantial chance” test), recons. in part, 75 Fed. Cl. 406 (2007).

Under an arbitrary or capricious standard, the reviewing court should not

substitute its judgment for that of the agency, but should review the basis for the agency

decision to determine if it was legally permissible, reasonable, and supported by the

facts. See Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. at 43

(“The scope of review under the arbitrary and capricious standard is narrow and a court

is not to substitute its judgment for that of the agency.”); see also Turner Const. Co.,

Inc. v. United States, 645 F.3d 1377, 1383 (Fed. Cir.), reh’g en banc denied (Fed. Cir.

2011); R & W Flammann GmbH v. United States, 339 F.3d 1320, 1322 (Fed. Cir. 2003)

(citing Ray v. Lehman, 55 F.3d 606, 608 (Fed. Cir.), cert. denied, 516 U.S. 916 (1995)).

“‘“If the court finds a reasonable basis for the agency’s action, the court should stay its

hand even though it might, as an original proposition, have reached a different

conclusion as to the proper administration and application of the procurement

regulations.”’” Weeks Marine, Inc. v. United States, 575 F.3d at 1371 (quoting

Honeywell, Inc. v. United States, 870 F.2d 644, 648 (Fed. Cir. 1989) (quoting M.

Steinthal & Co. v. Seamans, 455 F.2d 1289, 1301 (D.C. Cir. 1971))); see also HP Enter.

Servs., LLC v. United States, 104 Fed. Cl. 230, 238 (2012); Vanguard Recovery

34

Assistance v. United States, 101 Fed. Cl. 765, 780 (2011); Seaborn Health Care, Inc. v.

United States, 55 Fed. Cl. 520, 523 (2003).

As stated by the United States Supreme Court:

Section 706(2)(A) requires a finding that the actual choice made was not

“arbitrary, capricious, an abuse of discretion, or otherwise not in

accordance with law.” To make this finding the court must consider

whether the decision was based on a consideration of the relevant factors

and whether there has been a clear error of judgment. Although this

inquiry into the facts is to be searching and careful, the ultimate standard

of review is a narrow one. The court is not empowered to substitute its

judgment for that of the agency.

Citizens to Pres. Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971), abrogated on

other grounds by Califano v. Sanders, 430 U.S. 99 (1977); see also U.S. Postal Serv. v.

Gregory, 534 U.S. 1, 6-7 (2001); Bowman Transp., Inc. v. Arkansas-Best Freight Sys.,

Inc., 419 U.S. 281, 285 (1974), reh’g denied, 420 U.S. 956 (1975); Co-Steel Raritan,

Inc. v. Int’l Trade Com'n, 357 F.3d 1294, 1309 (Fed. Cir. 2004) (In discussing the

“arbitrary, capricious, and abuse of discretion otherwise not in accordance with the law”

standard, the Federal Circuit stated that “the ultimate standard of review is a narrow

one. The court is not empowered to substitute its judgment for that of the agency.”); In

re Sang Su Lee, 277 F.3d at 1342; Advanced Data Concepts, Inc. v. United States, 216

F.3d at 1058 (“The arbitrary and capricious standard applicable here is highly

deferential. This standard requires a reviewing court to sustain an agency action

evincing rational reasoning and consideration of relevant factors.” (citing Bowman

Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. at 285)); Lockheed Missiles

& Space Co. v. Bentsen, 4 F.3d 955, 959 (Fed. Cir. 1993); Gulf Grp. Inc. v. United

States, 61 Fed. Cl. 338, 351 (2004) (“Although this inquiry into the facts is to be

searching and careful, the ultimate standard of review is a narrow one. The court is not

empowered to substitute its judgment for that of the agency.”); ManTech Telecomms. &

Info. Sys. Corp. v. United States, 49 Fed. Cl. 57, 63 (2001), aff’d, 30 F. App’x 995 (Fed.

Cir. 2002); Ellsworth Assocs., Inc. v. United States, 45 Fed. Cl. 388, 392 (1999) (“Courts

must give great deference to agency procurement decisions and will not lightly overturn

them.” (citing Fla. Power & Light Co. v. Lorion, 470 U.S. 729, 743-44 (1985))), appeal

dismissed, 6 F. App’x 867 (Fed. Cir 2001).

According to the United States Court of Appeals for the Federal Circuit:

Effective contracting demands broad discretion. Burroughs Corp. v.

United States, 617 F.2d 590, 598 (Ct. Cl. 1980); Sperry Flight Sys. Div. v.

United States, 548 F.2d 915, 921, 212 Ct. Cl. 329 (1977); see NKF Eng’g,

Inc. v. United States, 805 F.2d 372, 377 (Fed. Cir. 1986); Tidewater

Management Servs., Inc. v. United States, 573 F.2d 65, 73, 216 Ct. Cl. 69

(1978); RADVA Corp. v. United States, 17 Cl. Ct. 812, 819 (1989), aff’d,

914 F.2d 271 (Fed. Cir. 1990). Accordingly, agencies “are entrusted with

35

a good deal of discretion in determining which bid is the most

advantageous to the Government.” Tidewater Management Servs., 573

F.2d at 73, 216 Ct. Cl. 69.

Lockheed Missiles & Space Co. v. Bentsen, 4 F.3d at 958-59; see also Grumman Data

Sys. Corp. v. Dalton, 88 F.3d at 995; Grumman Data Sys. Corp. v. Widnall, 15 F.3d

1044, 1046 (Fed. Cir. 1994); Cybertech Grp., Inc. v. United States, 48 Fed. Cl. 638, 646

(2001) (“The court recognizes that the agency possesses wide discretion in the

application of procurement regulations.”); JWK Int’l Corp. v. United States, 49 Fed. Cl.

371, 388 (2001), aff’d, 279 F.3d 985 (Fed. Cir), reh’g denied (Fed. Cir. 2002).

Similarly, the Federal Circuit further has indicated that:

Contracting officers “are entitled to exercise discretion upon a broad range

of issues confronting them in the procurement process.” Impresa

Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324,

1332 (Fed. Cir. 2001) (internal quotation marks omitted). Accordingly,

procurement decisions are subject to a “highly deferential rational basis

review.” CHE Consulting, Inc. v. United States, 552 F.3d 1351, 1354 (Fed.

Cir. 2008) (internal quotation marks omitted). Applying this highly

deferential standard, the court must sustain an agency action unless the

action does not “evince[ ] rational reasoning and consideration of relevant

factors.” Advanced Data Concepts, Inc. v. United States, 216 F.3d 1054,

1058 (Fed. Cir. 2000) (alterations added).

PAI Corp. v. United States, 614 F.3d at 1351; see also Weeks Marine, Inc. v. United

States, 575 F.3d at 1368-69 (“We have stated that procurement decisions ‘invoke[ ]

“highly deferential” rational basis review.’ Under that standard, we sustain an agency

action ‘evincing rational reasoning and consideration of relevant factors.’” (quoting CHE

Consulting, Inc. v. United States, 552 F.3d at 1354 (quoting Advanced Data Concepts,

Inc. v. United States, 216 F.3d at 1058))).

The wide discretion afforded contracting officers extends to a broad range of

procurement functions, including the determination of what constitutes an advantage

over other proposals. See L-3 Commc’ns EOTech, Inc. v. United States, 83 Fed. Cl.

643, 650 (2008) (“The deference afforded to an agency’s decision must be even greater

when a trial court is asked to review a technical evaluation.”), appeal dismissed, 356 F.

App’x 390 (Fed. Cir. 2009); Textron, Inc. v. United States, 74 Fed. Cl. at 286 (in which

the court considered technical ranking decisions as “‘minutiae of the procurement

process’” not to be second guessed by a court (quoting E.W. Bliss Co. v. United States,

77 F.3d 445, 449 (Fed. Cir. 1996))). This is because “[t]he evaluation of proposals for

their technical excellence or quality is a process that often requires the special expertise

of procurement officials, and thus reviewing courts give the greatest deference possible

to these determinations.” Beta Analytics Int’l, Inc. v. United States, 67 Fed. Cl. 384, 395

(2005) (citing E.W. Bliss Co. v. United States, 77 F.3d at 449); see also Unisys Corp. v.

United States, 89 Fed. Cl. 126, 142 (2009) (holding that an agency’s “exercise of such

36

technical judgment and expertise . . . . is entitled to the greatest possible deference

under E.W. Bliss”); CRAssociates, Inc. v. United States, 102 Fed. Cl. 698, 717 (2011).

The question is not whether the court would reach the same conclusions as the agency

regarding the comparison of proposals, but, rather, whether the conclusions reached by

the agency lacked a reasonable basis and, therefore, were arbitrary or capricious, in

which case, courts have a role to review and instruct. See WorldTravelService v.

United States, 49 Fed. Cl. 431, 441 (2001) (“Therefore, this court’s main task is to

ensure that the [agency] examined the relevant data and articulated a ‘rational

connection between the facts found and the choice made.’” (quoting Motor Vehicle

Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. at 43 (internal citations

omitted))).

The amount of discretion afforded the contracting officer is greater in some

circumstances as compared to others. For example, in a negotiated procurement,

contracting officers are generally afforded greater decision making discretion, in

comparison to their role in sealed bid procurements. See Galen Med. Assocs., Inc. v.

United States, 369 F.3d at 1330 (“Because the bid protest at issue here involved a

‘negotiated procurement,’ the protestor’s burden of proving that the award was arbitrary,

capricious, an abuse of discretion, or otherwise not in accordance with law is greater

than in other types of bid protests.” (citations omitted)); Am. Tel. & Tel. Co. v. United

States, 307 F.3d 1374, 1379 (Fed. Cir. 2002) (“Moreover, in a negotiated procurement,

as in this case, this court has held that the regulations entrust the contracting officer

with especially great discretion, extending even to his application of procurement

regulations.”), reh’g en banc denied (Fed. Cir.), cert. denied, 540 U.S. 937 (2003).

The Federal Circuit has explained that procurement officials have an even

greater degree of discretion when it comes to best-value determinations, as compared

to deciding on price alone. See Galen Med. Assocs., Inc. v. United States, 369 F.3d at

1330 (noting that because “the contract was to be awarded based on ‘best value,’ the

contracting officer had even greater discretion than if the contract were to have been

awarded on the basis of cost alone”); see also CHE Consulting, Inc. v. United States,

552 F.3d 1351, 1354 (Fed. Cir. 2008) (citing E.W. Bliss Co. v. United States, 77 F.3d at

449); Banknote Corp. of Am. Inc. v. United States, 365 F.3d at 1355 (“It is well-

established that contracting officers have a great deal of discretion in making contract

award decisions, particularly when, as here, the contract is to be awarded to the bidder

or bidders that will provide the agency with the best value.” (citing TRW, Inc. v. Unisys

Corp., 98 F.3d 1325, 1327-28 (Fed. Cir. 1996))); Am. Tel. & Tel. Co. v. United States,

307 F.3d 1374, 1379 (Fed. Cir. 2002); E.W. Bliss Co. v. United States, 77 F.3d at 449

(“Procurement officials have substantial discretion to determine which proposal

represents the best value for the government.”); Akal Sec., Inc. v. United States, 103

Fed. Cl. 310, 329 (2011) (“The United States Court of Appeals for the Federal Circuit

has recognized that ‘[p]rocurement officials have substantial discretion to determine

which proposal represents the best value for the government.’” (quoting E.W. Bliss Co.

v. United States, 77 F.3d at 449)); Blackwater Lodge & Training Ctr., Inc. v. United

States, 86 Fed. Cl. 488, 514 (2009).

37

When the contracting officer’s discretion grows, so does the burden on the

protestor. As noted in D & S Consultants, Inc. v. United States:

The protestor’s burden becomes more difficult the greater the degree of

discretion vested in the contracting officer. DynCorp Int’l v. United States,

76 Fed. Cl. 528, 537 (2007). Negotiated procurements afford the

contracting officer a “breadth of discretion;” “best-value” awards afford the

contracting officer additional discretion. Id. Therefore, in a negotiated,

best-value procurement, the “protestor’s burden is especially heavy.” Id.

D & S Consultants, Inc. v. United States, 101 Fed. Cl. 23, 33 (2011), aff’d, 484 F. App’x

558 (Fed. Cir. 2012); see also Galen Med. Assocs., Inc. v. United States, 369 F.3d at

1330 (noting that contracting officers have great discretion in negotiated procurements

but even greater discretion in best-value determinations than in procurements based on

cost alone); PHT Supply Corp. v. United States, 71 Fed. Cl. 1, 11 (2006) (“It is critical to

note that ‘a protestor’s burden is particularly great in negotiated procurements because

the contracting officer is entrusted with a relatively high degree of discretion, and

greater still, where, as here, the procurement is a “best-value” procurement.’” (citations

omitted)). “It is well-established that contracting officers have a great deal of discretion

in making contract award decisions, particularly when, as here, the contract is to be

awarded to the bidder or bidders that will provide the agency with the best value.”

Banknote Corp. of Am. Inc. v. United States, 365 F.3d at 1355 (citing TRW, Inc. v.

Unisys Corp., 98 F.3d at 1327-28; E.W. Bliss Co. v. United States, 77 F.3d at 449; and

Lockheed Missiles & Space Co. v. Bentsen, 4 F.3d at 958-59); see also Am. Tel. & Tel.

Co. v. United States, 307 F.3d at 1379; Lockheed Missiles & Space Co. v. United

States, 4 F.3d at 958; Brooks Range Contract Servs., Inc. v. United States, 101 Fed. Cl.

699, 707 (2011) (“[A] plaintiff’s burden ‘is elevated where the solicitation contemplates

award on a “best value” basis.’” (internal citations omitted)); Matt Martin Real Estate

Mgmt. LLC v. United States, 96 Fed. Cl. 106, 113 (2010); Serco v. United States, 81

Fed. Cl. 463, 496 (2008) (“To be sure, as noted at the outset, plaintiffs have a significant

burden of showing error in that regard because a court must accord considerable

deference to an agency’s best-value decision in trading off price with other factors.”).

Despite the forgoing deference typically afforded a contracting officer in a bid

protest review, this court will overturn an agency’s decision as arbitrary and capricious if

it “‘entirely failed to consider an important aspect of the problem.’” SKF USA Inc. v.

United States, 630 F.3d 1365, 1374 (Fed. Cir. 2011) (quoting Motor Vehicle Mfgs. Ass'n

v. State Farm Mutual Auto. Ins. Co., 463 U.S. at 43); Supreme Foodservice GmbH v.

United States, 109 Fed. Cl. 369, 382 (2013) (applying the standard in a bid protest

dispute); Linc Gov’t Servs., LLC v. United States, 108 Fed. Cl. 473, 489 (2012) (same).

The protestor, FCN, argues that the decision by the Air National Guard to award

a contract pursuant to Solicitation W9133L-13-R-0015 to RGS was “arbitrary,

capricious, an abuse of discretion, or otherwise not in accordance with law.” As noted

above, the protestor now brings three protest grounds to the court for consideration, a

challenge to (1) how the Air National Guard treated the proposed use of government-

38

furnished property by RGS, (2) how the Air National Guard conducted its price realism

analysis, and (3) RGS’ inclusion of pricing information in its mission capability

proposal.30

Government-Furnished Property

The protestor alleges that “accepting a proposal that relied on RGS’s offer to

utilize Government Furnished Equipment (GFE) software licenses and a telephony-

based communications system allegedly in the possession of another Government

Agency violated the FAR requirements for the offer, acceptance, and use of GFE in

federal government contracts pursuant to FAR Part 45.” The protestor maintains that

“[i]t is clear from the Administrative Record that the Agency Evaluators thought that

RGS was offering GFE.” The protestor argues that when an offeror proposes using

GFE, the FAR requires that “‘Agencies shall . . . [e]liminate to the maximum practical

extent any competitive advantage a prospective contractor may have by using

Government property.’” (quoting FAR § 45.103(a)(2) (2013)) (emphasis and

modification in original). According to the protestor, however, the Air National Guard

ignored FAR Part 45 and “made no effort to eliminate in any way the competitive pricing

advantage that RGS and AtHoc held in proposing to use Government property.”

Furthermore, the protestor claims that the Solicitation failed to “include sufficient

information that would demonstrate that RGS’s proposed GFE would be available for

use under this contract,” and that the Air National Guard failed to consider the other

requirements that accompany the use of government-furnished property, which RGS

allegedly failed to meet in its proposal. FCN claims, in the alternative, that because

pursuant to FAR § 45.000(b)(4), “[s]oftware and intellectual property” are exempt from

FAR Part 45, “it seems equally valid to say that FAR 45.000 acts as a bar to offering

software and intellectual property as GFE.” See FAR § 45.000 (“Scope of part”).

Defendant does not dispute that FAR Part 45 applies to government-furnished

property,31 or that the Air National Guard believed that certain parts of the RGS

30

As stated above, the protestor withdrew a fourth protest ground alleging a conflict of

interest.

31

The parties mostly use the term “government-furnished equipment” or “GFE,” but also

refer to FAR Part 45, which contain the federal acquisition regulations regarding

“[g]overnment property” and “[g]overnment-furnished property.” FAR Part 45 does not

refer to “government-furnished equipment,” and draws distinctions between different

types of government property. For example, government-owned equipment falls within

the definition of government property, however, government-furnished equipment falls

within the definition of government-furnished property. See FAR § 45.101 (2013);

72 Fed. Reg. 27366 (May 15, 2007) (In a recent update to the FAR, the government,

responding to why the “Property” was chosen to replace “Plant equipment” in FAR

section 45.000, stated that the term “Property” “is more appropriately used because it is

more inclusive and more definitive.”); see also Teledyne Lewisburg v. United States,

699 F.2d 1336, 1344, 1354 (Fed. Cir. 1983) (interchanging between the terms); Harris

Patriot Healthcare Solutions, LLC v. United States, 95 Fed. Cl. 585, 594 (2010).

39

proposal included government-furnished property. As discussed below, however,

defendant is not consistent in its arguments regarding government-furnished property or

the agency’s understanding of RGS’ proposal. Defendant argues, however, that the Air

National Guard’s failure to consider FAR Part 45 is immaterial since, “the ANG did not

decide that RGS’s proposal was the best value because it used government property.

The ANG awarded the contract to RGS because RGS offered the lowest price and

committed to provide sufficient software licenses . . . .” Defendant further argues that,

to whatever extent RGS utilized government-furnished property, FCN did the same

because FCN did not include the cost of [redacted] Desktop Alert licenses in its

proposal. At the same time, defendant also, inconsistently, argues that, “neither the

telephone alerting system nor the IWSAlerts software licenses in RGS’s proposal are in

fact Government-furnished property. Instead, both are components of AtHoc’s

IWSAlerts system.”

Defendant has been unable, after multiple requests from the court, to provide

sufficient information to explain the ownership and transferability to the Air National

Guard of the Air Force licenses and telephony capability, which RGS intended to

“leverage” as part of its winning proposal. At the hearing before this court, in response

to the court’s straightforward question - what is the licensing situation? - counsel for the

defendant, after conferring with agency representatives at counsel table, stated that “the

Guard is in the process of working through those issues right now with the Air Force,”

and that the government is “checking on the transferability of the licenses . . . .”

Defendant also has been unable to offer a reason as to why it could not find any of the

United States Air Force - AtHoc license agreements, and could only indicate that the

process for searching for them is complicated, and that the licenses are “spread out

among the -- all the Air Force,” with multiple contracts involved. Moreover, the

contracting officer declared during the protest at the GAO: “I recognize that the

transferability issue was not 100% verified prior to my award decision, however, I

believe that our agency's examination of this issue was reasonable.” To date, no

supplemental documents to address these issues have been submitted to the court.

The record before the court only contains the text of one, apparently unrelated

AtHoc software license provision from an unrelated Air Force contract, the 2011

Defense Information Services Agency – Defense Information Technology Contracting

Organization contract with [redacted], contract [redacted]. The [redacted] contract was

included in AtHoc’s objections to the September 22, 2012 subsequently cancelled

solicitation, W9133L-12-R-0073, in the RGS price proposal, and in the RGS response to

the Source Selection Evaluation Board’s April 2, 2013 questionnaire. The [redacted]

contract contained the following licensing provisions:

1. AF [Air Force] shall be entitled to operate the software on any platform

the software Vendor supports and transfer the software or maintenance

between platforms. There shall be no additional charge for transferring

software from site-to-site or machine-to-machine where AF maintains AF

Service responsibilities as long as the scope of license is materially

similar. There shall be no additional cost transferring maintenance from

40

site-to-site or machine-to-machine where AF maintains AF Service

responsibilities as long as the maintenance requirements and scope of

service are materially similar (e.g., number of data centers, sites,

operators or end-users supported).

2. Should there be a restructuring of AF or its mission during the life of the

contract, the contractor agrees that AF's software licenses, capacity

levels, usage rights, entitlements and contracts shall transfer to the

successor DoD organization(s) to which AF may transfer its

responsibilities for computing services for the AF.

Although these provisions may indicate that the Air Force is “entitled” to some

transferability of the licenses at no charge, there are a number of limiting conditions,

such as “as long as the scope of license is materially similar,” and “[s]hould there be a

restructuring of AF or its mission during the life of the contract.” (emphasis added). The

April 2, 2013 e-mail from Mr. Bartoli, a civilian employee from the Air Force Materiel

Command to Mr. Anderson, the Vice President for Business Development, Defense &

International for AtHoc, indicated that the [redacted] contract “does include the

referenced verbiage for no cost transfer of licenses; that we did exercise this right; and

that the transfers were made available for reuse by the AF Program Management

Office.” The court notes that it is not clear from the record whether the Bartoli e-mail

was read by the Source Selection Evaluation Board before the award decision was

made, or that the transferability included to the Air National Guard. The June 5, 2013 e-

mail from Mr. Rau to Mr. Holmes, which tries to suggest that the licensing provisions

quoted above are typical in current United States Air Force contracts, was written after

the April 17, 2013 decision to award the contract to RGS. Mr. Rau stated in his e-mail,

“the AFMC’s [Air Force Materiel Command’s] renewal incorporated an [sic] change in

the licensing agreement to allow the use of the AFMC licenses anywhere within the Air

Force . . . .” Mr. Rau’s statement, however, appears to have come from information

provided by AtHoc, as he indicated, “[i]t was then that AtHoc revealed to us that the Air

Force has purchased sufficient licenses thru numerous procurements to cover the total

Air Force need.” Moreover, none of the information in the record contains conclusive

statements which confirm the transferability or numerical sufficiency of the licenses for

use in the contract awarded pursuant to the Solicitation currently under review by this

court. In fact, the parties have jointly stipulated that:

The contract RGS provided is not enterprise-wide across all the Air Force,

but is restricted to one command. The contract does not state the number

of licenses provided, does not indicate that the Air Force would be

receiving extra or surplus licenses that could later be transferred, and

does not indicate that the Air Force would be willing to give up any or all

the licenses provided under that contract.

(internal citations omitted). Additionally, the parties have stipulated that “[t]he RGS

proposal did not specify how many licenses the Air Force was using, and the proposal

did not provide proof that the Air Force committed to transfer the licenses to the ANG, or

41

allow the ANG to use the licenses, permanently, temporarily or under any other

conditions.” (internal citations omitted).

Regarding the telephony system, no contracts, contract provisions, or other

definitive information are in the record to help the court understand RGS’ or AtHoc’s

contractual relationship with the Air Force or what government property would

potentially be available to the Air National Guard for utilization with the RGS proposal.

For example, the proposal submitted by RGS indicates, at times, that the physical

telephony hardware is owned by AtHoc or third party “commercial data centers,” but

also indicates in other places that the United States Air Force owns the lines, has

“reserved lines,” or leases the lines. In its mission capability proposal, RGS stated:

“Once ANG joins all other MAJCOMs in using Company A [AtHoc], ALL ANG units will

have access to the existing AF Enterprise Telephone Alerting capability; over [redacted]

telephone lines activated simultaneously, with firm fixed price for unlimited telephone

and text message alerts.”

In its price proposal, RGS refers to the [redacted] telephone lines that make up

the current telephony capability as being “[o]wned” by the United States Air Force. The

RGS price proposal also indicated: “Instead of having to lease additional dedicated

alerting communications lines for ANG unit use, ANG can leverage the operational

USAF Enterprise Telephone Alerting capability.” The [redacted] contract, discussed

above, includes as equipment under the contract, “Telephony Comm Service” for

[redacted] “[r]eserved” lines. From all the statements made by RGS and the

government, it is still unclear what is owned, leased or to be provided. It is possible that

the Air Force, for example, could have a lease on the [redacted] telephone lines, in

which case the United States Air Force might possess government property, but the

issue of transferability would remain. See FAR § 45.101 (“Government property means

all property owned or leased by the Government.”). It is also possible the Air Force

could have access to the necessary capability through a services contract, which

defendant at one point alleges in its brief. Defendant claims that, “[a]s described in

RGS’s proposal, the Air Force ‘Enterprise Alerting Capability’ is a contracted telephone

alerting service that AtHoc provides to the Air Force through multiple ‘commercial data

centers.’” It appears, therefore, from the record before the court that there is a lack of

definition as to what RGS offered in its proposal, let alone a clear indication of what, if

any, government furnished-property the government had to offer as part of a contract

awarded pursuant Solicitation W9133L-13-R-0015. As noted above, during the GAO

protest, the contracting officer, as the source selection official, indicated: “I recognize

that the transferability issue was not 100% verified prior to my award decision.”

Moreover, months later, at a hearing in this court, with agency personnel and agency

counsel present, defendant’s Department of Justice counsel stated that “the Guard is in

the process of working through those issues right now with the Air Force,” and that the

government is “checking on the transferability of the licenses.”

It also appears from the record before the court that the Air National Guard

contracting officer, as the source selection official, proceeded to award the contract to

RGS, without investigating or forming an understanding of whether or not the Air

42

National Guard could use of Air Force government property, for performance of the

contract to be awarded under Solicitation W9133L-13-R-0015. Although, as noted

above, contracting officers are given significant discretion in negotiated best-value

procurements, see Galen Med. Assocs., Inc. v. United States, 369 F.3d at 1330;

Banknote Corp. of Am. Inc. v. United States, 365 F.3d at 1355, the Air National Guard’s

decision still must be founded on a “rational basis,” and a “‘coherent and reasonable

explanation of its exercise of discretion.’” Impresa Construzioni Geom. Domenico

Garufi v. United States, 238 F.3d at 1332 (quoting Latecoere Int'l, Inc. v. United States

Dep't of Navy, 19 F.3d 1342, 1356 (11th Cir. 1994)). Agency discretion “does not

relieve the agency of its obligation to develop an evidentiary basis for its findings.” In re

Sang Su Lee, 277 F.3d at 1344; see also Patriot Taxiway Indus., Inc. v. United States,

98 Fed. Cl. 575, 583 (2011); Ceres Envtl. Servs., Inc. v. United States, 97 Fed. Cl. 277,

302 (2011). Defendant’s admission at a hearing before this court that the government,

more than six months after contract award, still was unable to locate the software

licenses under consideration, together with the absence in the record of any additional

information as to a contractual relationship between Air Force and AtHoc regarding the

telephony capability and its transferability, demonstrates that the agency did not have a

reasoned, rational basis for its finding of the transferability and availability of licenses,

thus relieving the court of the normal deference due to agency decision-making. See

Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d at 1332.

Although having incomplete information, the Source Selection Evaluation Board

and the contracting officer, acting as the source selection official, both blindly accepted

that the software licenses and telephony services were government-owned property and

available. The Source Selection Evaluation Board commented in its Technical

Evaluation Summary on RGS’ “cost savings for utilizing existing GFE,” without

clarifying, or having a clear understanding, whether the “existing GFE” meant the

licenses, the telephony capability, or both, and whether or not the items were

government property, and, if so, could be could transferred. The Source Selection

Evaluation Board did ask the offerors in its April 2, 2013 questionnaire “[i]f costs are

figured with the idea that licensing is covered by GFE; will the vendor provide in writing

and signed by the appropriate government official proof of such claim.” In Mr. Wilson’s

June 12, 2013 after-the-fact declaration during the GAO protest, regarding the e-mail

from Mr. Bartoli, he stated: “In my view, then and now, the email string supports RGS’s

express affirmation that they would provide licenses as GFE in line with their proposal.”

Neither the Source Selection Evaluation Board, nor the contracting officer, as the

source selection official, however, indicated concern with RGS’ description of the

software licenses or the [redacted] telephone lines in its price proposal as “[a]lready

[o]wned by the USAF” when RGS was awarded the contract, implying that they were

government-owned and, by implication, would be furnished by the government.32 The

Air National Guard officials did not fully investigate or address the status of the potential

32

Because the software licenses and telephony capability were described as “owned”

by the Air Force, not the Air National Guard, this could have created possible,

additional, unexplored layers of ownership or control of the alleged government-

furnished property.

43

government-furnished property, including ownership and transferability issues, or the

possible requirements or implications of FAR Part 45.

Having concluded RGS’ offered utilized government-furnished property as part of

its proposal, the agency officials, however, chose not to consider or apply FAR Part 45.

The FAR defines “government property” as follows:

all property owned or leased by the Government. Government property

includes both Government-furnished property and contractor-acquired

property. Government property includes material, equipment, special

tooling, special test equipment, and real property. Government property

does not include intellectual property and software.

FAR § 45.101 (2013); see also FAR § 52.245-1 (2013) (repeating the same provision).

The same regulation also provides that, “[p]roperty means all tangible property, both

real and personal.” FAR § 45.101.

“Government-furnished property” is defined under the FAR to include:

property in the possession of, or directly acquired by, the Government and

subsequently furnished to the contractor for performance of a contract.

Government-furnished property includes, but is not limited to, spares and

property furnished for repair, maintenance, overhaul, or modification.

Government-furnished property also includes contractor-acquired property

if the contractor-acquired property is a deliverable under a cost contract

when accepted by the Government for continued use under the contract.

FAR § 45.101 (emphasis added); see also FAR § 52.245-1 (repeating the same

provision).

FAR Part 45, if implicated, places a number of requirements on the government

to allow for the use of government-furnished property by an offeror. FAR Part 45,

however, was not meant to limit the use of government property by contractors, but

rather to regulate it, if government property is to be utilized and FAR Part 45 is

triggered. See FAR § 45.000(a) (“This part prescribes policies and procedures for

providing Government property to contractors; contractors' management and use of

Government property; and reporting, redistributing, and disposing of contractor

inventory.”). FAR § 45.102 notes that “[c]ontractors are ordinarily required to furnish all

property necessary to perform Government contracts.” FAR § 45.102 (2013).

FAR § 45.102, however, provides the evaluation requirements for contracting officers

must follow when government-furnished property is part of a solicitation, as follows:

(b) Contracting officers shall provide property to contractors only when it is

clearly demonstrated—

(1) To be in the Government's best interest;

44

(2) That the overall benefit to the acquisition significantly outweighs

the increased cost of administration, including ultimate property

disposal;

(3) That providing the property does not substantially increase the

Government's assumption of risk; and

(4) That Government requirements cannot otherwise be met.

Id.; see also Space Gateway Support [SGS], LLC, ASBCA No. 55608, 2013 WL 518974

(Jan. 29, 2013) (“FAR Part 45 set forth numerous rules for the handling of government

furnished property, such as procedures for identifying and maintaining such property,

arid [sic] had to be consulted by contractors such as SGS receiving government

property. See, e.g., FAR 45.000.”).

Under FAR § 45.103(a), “[a]gencies shall . . . (2) [e]liminate to the maximum

practical extent any competitive advantage a prospective contractor may have by using

Government property;33 . . . (5) [c]harge appropriate rentals when the property is

authorized for use on other than a rent-free basis.” FAR § 45.103(a)(2), (5) (2013).

FAR § 45.202 repeats the requirement for offsetting any competitive advantage from

possession or use of government property, during the evaluation of proposals, as

follows:

(a) The contracting officer shall consider any potentially unfair competitive

advantage that may result from an offeror or contractor possessing

Government property. This shall be done by adjusting the offers by

applying, for evaluation purposes only, a rental equivalent evaluation

factor as specified in FAR 52.245–9.

(b) The contracting officer shall ensure the offeror's property management

plans, methods, practices, or procedures for accounting for property are

consistent with the requirements of the solicitation.

FAR § 45.202 (2013).

FAR § 45.107 mandates the inclusion of a contract provision provided in

FAR § 52.245-1 into “[f]ixed-price solicitations and contracts when the Government will

provide Government property.” See FAR § 45.107(a)(1)(ii) (2013). FAR § 45.201 also

adds the following minimum inclusion requirements upon the agency when government-

furnished property is anticipated in the Solicitation:

33

FAR § 45.103(a)(4) includes a requirement for “contractors to use Government

property already in their possession to the maximum extent practical in performing

Government contracts.” FAR § 45.103(a)(4).

45

(a) The contracting officer shall insert a listing of the Government property

to be offered in all solicitations where Government-furnished property is

anticipated (see [FAR] 45.102). The listing shall include at a minimum--

(1) The name, part number and description, manufacturer,

model number, and National Stock Number (if needed for

additional item identification tracking and management, and

disposition);

(2) Quantity/unit of measure;

(3) Unit acquisition cost;

(4) Unique-item identifier or equivalent (if available and

necessary for individual item tracking and management);

and

(5) A statement as to whether the property is to be furnished

in an “as-is” condition and instructions for physical

inspection.

(b) When Government property is offered for use in a competitive

acquisition, solicitations should specify that the contractor is responsible

for all costs related to making the property available for use, such as

payment of all transportation, installation or rehabilitation costs.

(c) The solicitation shall describe the evaluation procedures to be

followed, including rental charges or equivalents and other costs or

savings to be evaluated, and shall require all offerors to submit the

following information with their offers--

(1) A list or description of all Government property that the

offeror or its subcontractors propose to use on a rent-free

basis. The list shall identify the accountable contract under

which the property is held and the authorization for its use

(from the contracting officer having cognizance of the

property);

(2) The dates during which the property will be available for

use (including the first, last, and all intervening months) and,

for any property that will be used concurrently in performing

two or more contracts, the amounts of the respective uses in

sufficient detail to support prorating the rent;

(3) The amount of rent that would otherwise be charged in

accordance with FAR 52.245–9, Use and Charges; and

46

(4) A description of the offeror's property management

system, plan, and any customary commercial practices,

voluntary consensus standards, or industry-leading practices

and standards to be used by the offeror in managing

Government property.

(d) Any additional instructions to the contractor regarding property

management, accountability, and use, not addressed in FAR clause

52.245–1, Government Property, should be specifically addressed in the

statement of work on the contract providing property or in a special

provision.

FAR § 45.201 (2013). None of the FAR Part 45 provisions were included as clauses by

reference or otherwise in the Solicitation or in the contract awarded to RGS, nor does

the Solicitation or the contract award to RGS contain any reference to FAR Part 45, or

to government-furnished property. Additionally, FAR 52.245-1 is not included in the

Solicitation or the contract award to RGS.

RGS specifically identified in its price proposal:

Because existing USAF IWSAlerts licenses are available as GFE, they will

be reallocated and distributed for ANG use. This significantly reduces the

cost of implementing an ANG Enterprise solution because the software

costs would typically be by far the most expensive portion of this contract-

here they are simply GFE. This proposal pricing includes the necessary

licenses as GFE. As a frame of reference, both PACAF [Pacific Air

Forces] and AMC [Air Mobility Command] enjoyed the same.

Given that RGS proposed to utilize government-furnished property, and because RGS

indicated that the use of government-furnished property would eliminate what would

likely be the most expensive component of the contract, the requirements of FAR Part

45 should have been considered by the offerors to the Solicitation, the Source Selection

Evaluation Board, and the contracting officer, as the source selection official. Perhaps

because the Air National Guard could not establish at the time of contract award the

extent, if any, of the government property involved, the agency chose not to do a FAR

Part 45 analysis or include the necessary FAR clauses. There is no evidence in the

record that the Air National Guard met the requirements of FAR Part 45, much less

considered them in evaluating the proposals. The Air National Guard, therefore, did not

even try to eliminate any “competitive advantage” that might have resulted, pursuant to

the requirements of FAR §§ 45.103(a)(2) and 45.202(a). There was no evidence a

rental charge was added or other price adjustment made. See FAR §§ 45.103(a)(5),

45.201(c). The contracting officer should have taken notice of the policies expressed in

FAR § 45.102(b), and evaluated if RGS’s alleged provision of government-furnished

property increased based on established information, “the Government's assumption of

risk” or “cost of administration.” FAR § 45.102(b). The contracting officer also should

47

have made an effort to “ensure the offeror's property management plans, methods,

practices, or procedures for accounting for property are consistent with the

requirements of the solicitation.” FAR § 45.202.

Given how little information the Air National Guard obtained on the alleged

government property the RGS proposal offered for use during contract performance, or

even how little information the agency had, even months after the award, as well as

after the above captioned protest was filed in this court, it does not seem possible that

the Air National Guard could have complied with the FAR Part 45 requirements or made

a rational decision that was not arbitrary and capricious. Nonetheless, the agency

blindly accepted that government-furnished property was part of the RGS proposal.

Defendant contends that FAR Part 45 is immaterial to the selection of RGS

because “the ANG did not decide that RGS’s proposal was the best value because it

used government property.” This is not a persuasive argument. As noted above, the

rationale for the award decision, as stated by the contracting officer in the debriefing

letter to FCN:

As stated in the solicitation, the Government sought to award this contract

to the offeror deemed to provide the best value to the Government. As

reflected in the adjectival ratings, the Government found that your

company submitted an outstanding proposal for this contract. The

Government evaluators and I also found your past performance to merit

the highest rating in this competition. The awardee's proposal was found

to be equal to yours in terms of the technical and past performance rating.

As such, the main discriminator became the significantly lower price

offered by the RGS. I recognize that price was the least important factor in

this competition, however, in light of the relative equivalence of your

proposal and the awardee's proposal, the significantly lower price

submitted by RGS tipped the scales clearly in their favor.

(emphasis in original). Considering that price was the determining factor for the best

value award to RGS, and RGS’ price was heavily impacted by the proposal to use of

government-furnished property, the use, or non-use, of government-furnished property

was relevant to the selection decision.

Moreover, it is remarkable that the agency’s evaluation of the proposals was

completed before the Air National Guard had an understanding of whether government

property was involved, and if so, the extent of such property and its availability. Prior to

the award decision, the agency was at least aware of the potential issues as it found it

necessary to issue the April 2, 2013 questionnaire to the offerors in the competitive

range after receiving all the proposals. Although apparently still without the necessary

information as to the status of government-furnished property to be used during

performance of the contract, the Source Selection Evaluation Board stated that “[a]ll

Offerors response [sic] confirmed their original claim, stating in writing that there’s ‘NO

RISK’ to the ANG in terms of licensing.” (capitalization in original). After receiving the

48

responses, the Source Selection Evaluation Board noted the “cost savings for utilizing

existing GFE” in its Technical Evaluation Summary, indicating that the Source Selection

Evaluation Board appreciated RGS’ general approach to use government-furnished

property, without having the opportunity to consider the burdens or risks that might

come with the use of government-furnished property. See FAR §§ 45.103(a)(2),

45.201(d), 45.202(b). The assessment, and necessary minimization, of a competitive

advantage as a result of the use of government-furnished property could have impacted

how the Source Selection Evaluation Board evaluated RGS, [redacted], and FCN

equally on non-price factors. The contracting officer, as the source selection official,

noted that “these three acceptable proposals were truly equal in my view in terms of

their non-price factor ratings.” Moreover, an analysis of the risk to project completion

also could have been impacted as neither the agency nor RGS could confirm if

government property would be available or available in sufficient quantities for contract

performance.

Although the defendant had previously agreed that government-furnished

property was part of the RGS and [redacted] proposals, in some of the defendant’s

arguments to this court, defendant now contends that the government’s failure to

consider or comply with FAR Part 45 is excusable since “neither the telephone alerting

system nor the IWSAlerts software licenses in RGS’s proposal are in fact Government-

furnished property. Instead, both are components of AtHoc’s IWSAlerts system.” The

defendant makes this argument despite the Source Selection Evaluation Board’s

statement that the RGS proposal implements “cost savings for utilizing existing GFE.”

Defendant now tries to maintain that any reference in the RGS proposal or otherwise to

government-furnished property is incorrect, and that the court should ignore those

statements. Defendant indicates that “though RGS’s proposal declared IWSAlerts

licenses to be ‘GFE,’ the proposal did not definitively establish that the Air Force could,

or would, allow the ANG to use them.” Defendant states that “RGS is not a party to the

contract it asserts grants the Air Force the right to transfer IWSAlerts to the ANG, so its

interpretation of the contract carries little weight.” (internal citations omitted). Defendant

also alleges that the Air National Guard’s decision to label the licenses as government-

furnished property is irrelevant, because “[t]he ANG awarded the contract to RGS

because RGS offered the lowest price and committed to provide sufficient software

licenses regardless of whether the Air Force could or would transfer IWSAlerts

licenses.” Furthermore, defendant states that “[s]oftware is expressly excluded from the

scope of FAR Part 45 and the definition of Government property.” Regarding the AtHoc

telephony capability, defendant maintains that the telephony alerting system is a hosted

service, with the physical hardware located in data centers owned by AtHoc in Denver,

San Diego, and Chicago, which tie into “major carrier backbones,” and that the United

States Air Force merely contracts for its use. Therefore, according to defendant, the

telephony capability is not owned by the government, but “the Air Force pays a firm-

fixed price to AtHoc for TAS [Telephone Alerting System] services as part of IWSAlerts.”

The protestor responds that the AtHoc licenses and telephony system proposed

by RGS are indeed government-furnished property. At the hearing, the protestor, when

discussing the AtHoc licenses and telephony system, stated both items were treated “as

49

what the [RGS] cost proposal itself identifies as government-furnished property. So,

there was no question that they were proposing the government-furnished [property].”

Regarding the licenses, protestor argues that, “[e]ven though it's in the form of a license,

it's still . . . owned property, and this property has value.” The protestor notes that the

RGS proposal stated, “[i]nstead of having to lease additional dedicated alerting

communications lines for ANG unit use, ANG can leverage the operational USAF

Enterprise Telephone Alerting capability.” In addition, the protestor responds to the

defendant that “[t]he Government [sic] new position is totally inconsistent with the

evaluators’ and the SSA’s [source selection authority’s] position,” and this should be

enough to set aside the award. Finally, FCN added at a hearing that the government’s

change in view “alone just totally undermines the evaluation.”

Defendant’s more recent assertions before this court that no government

property was relied upon as part of the RGS proposal, even if they were to turn out to

be correct, are not dispositive of whether the evaluations and selection decision by the

agency were arbitrary or capricious. The determination of whether or not government-

furnished property is part of the RGS proposal is a fact-specific question based on the

record before the court. The record establishes that at the time of the evaluation and

RGS’ selection, the agency had insufficient information to make such determinations.

If government-furnished property is involved, the agency did not review the proposals in

accordance with FAR Part 45. The court cannot rely on the defendant’s after-the-fact

arguments, offered by counsel for the defendant, especially when the explanations differ

greatly from the information in the record of what information was considered at the time

of award. No complete explanation regarding the use of government-furnished property

has been offered to the court. Whether or not RGS’ telephony capability involves

government property also remains unclear. The defendant has not offered information

to permit an understanding of the specifics of the availability, extent, and ownership of

the telephony capability RGS offered and the contracts RGS or AtHoc have or had with

the Air Force.

In sum, defendant counsel’s unsupported reversal on behalf of his client from the

agency’s previously stated position as to whether government-furnished property was

offered and available for RGS’ proposal is not sufficient to counter the agency’s action

or inaction during the evaluations. Moreover, based on the record before the court,

RGS’ proposed use of government-furnished property appears to have been considered

a positive element of RGS’ proposal during the Source Selection Evaluation Board’s

review, and to the selection decision to award to RGS. Even if the licenses and

telephony services offered by RGS turn out not to be government-furnished property,

the agency “offered an explanation for its decision that runs counter to the evidence

before the agency.” See Ala. Aircraft Indus., Inc.-Birmingham v. United States, 586

F.3d at 1375; see also Motor Vehicle Mfgs. Ass'n v. State Farm Mutual Auto. Ins. Co.,

463 U.S. at 43 (“[T]he agency must examine the relevant data and articulate a

satisfactory explanation for its action including a ‘rational connection between the facts

found and the choice made.’” (quoting Burlington Truck Lines v. United States, 371 U.S.

156, 168 (1962)); GHS Health Maint. Organization, Inc. v. United States, 536 F.3d

1293, 1303 (Fed. Cir. 2008); Supreme Foodservice GmbH v. United States, 109 Fed.

50

Cl. at 384. If, however, items offered under RGS’ and [redacted’s] proposal turn out to

be government-furnished property, and therefore, subject to the rules included in FAR

Part 45, then the Air National Guard “entirely failed to consider an important aspect of

the problem.” SKF USA Inc. v. United States, 630 F.3d at 1374. Regardless, the

agency made its selection based on insufficient and incomplete information, in an

uninformed fashion, without having conducted sufficient inquiry to make a rational

decision which was not arbitrary or capricious.

The Price Realism Analysis

The protestor also argues that Mr. Wilson, the contracting officer and source

selection official, “made a casual and unsupported finding ‘that five of the six price

proposals that included options [are] realistic.’” (modification in original). The protestor

further alleges that the Air National Guard failed to conduct a proper price realism

analysis, including “to determine that RGS’s pricing strategy to utilize software licenses

and a telephony system allegedly sold to the U.S. Air Force was inadequate to

guarantee that RGS could perform the requirements of the contract.” FCN maintains

that RGS proposed its Mass Notification System software licenses for free claiming that

“the ‘USAF already purchased sufficient Company A [AtHoc] licenses to cover

[redacted] personnel, including [redacted].’” (modification and capitalization in original).

According to the protestor, however, the record before the court indicates that the Air

Force could not necessarily transfer the licenses to the Air National Guard, creating a

risk of non-performance. The protestor also maintains that, in order to offer a low-cost

telephony option, RGS proposed to have the Air National Guard share use of the Air

Force’s Enterprise Telephone Alerting capability, including access to [redacted]

telephone lines. According to the protestor, however, RGS offered “no explanation as

to how the Air Force would share these lines or whether the shared use would interfere”

with, or interrupt, other Air Force operations.

The protestor admits that with a fixed-price contract, such as the one awarded

pursuant to the Solicitation at issue, “an agency may, but is not required to consider

whether the offered price is realistic.”34 The protestor argues, however, that when a

solicitation calls for a price realism analysis, the “Agency is required to follow the

evaluation terms as stated in the RFP.” According to the protestor, however, in this

case, the Air National Guard should have, but did not, conduct a price realism analysis

that should have included determining if “the SSA had a duty to understand and

34

“‘Where the award of a fixed-rate contract is contemplated, the realism of offerors'

proposed labor rates is not ordinarily considered since a fixed-rate contract . . . places

the r

This text is long and has been trimmed here. Open the source document for the complete record.