Dm Petroleum Operations Company v. United States

In the United States Court of Federal Claims

No. 14-80C

(Originally Filed: March 20, 2014)1

(Reissued: March 27, 2014)

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

DM PETROLEUM OPERATIONS

COMPANY,

Plaintiff,

v.

Bid Protest; Best Value

THE UNITED STATES, Tradeoff; Strategic

Petroleum Reserve;

Defendant, Agency Discretion;

Reasonableness.

and

FLUOR FEDERAL PETROLEUM

OPERATIONS, LLC,

Intervenor.

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

Robert J. Symon, Washington, D.C., and Daniel P. Golden and Aron C.

Beezley, Washington, D.C., of counsel, for plaintiff.

William P. Rayel, Civil Division, Department of Justice, Washington,

D.C., with whom were Stuart F. Delery, Assistant Attorney General, Bryant

G. Snee, Acting Director, and Deborah A. Bynum, Assistant Director, for

defendant.

Thomas L. McGovern III, Washington, D.C., and Michael D. McGill

and C. Peter Dungan, Washington, D.C., of counsel, for intervenor.

1

This opinion was originally issued under seal, and publication was deferred

pending the parties’ review for redaction of protected materials. The parties

agreed that no redactions were required.

OPINION

This is a post-award bid protest of the Department of Energy’s selection

of Fluor Federal Petroleum Operations, LLC (“Fluor”) as the management and

operating contractor for the Strategic Petroleum Reserve. The parties briefed

the case on cross-motions for judgment on the administrative record, and oral

argument was held on March 7, 2014. Because the agency’s decision was not

arbitrary or capricious, we deny plaintiff’s motion for judgment on the

administrative record and grant defendant’s and intervenor’s cross-motions for

judgment.

BACKGROUND

The Department of Energy (“DOE”) maintains the nation’s Strategic

Petroleum Reserve (“SPR”). Plaintiff, DM Petroleum Management

Operations Company (“DM”) has been the primary management and

operations (“M&O”) contractor for the SPR since 1993, having successfully

completed two back-to-back 10 year contracts with DOE. In February 2012,

contemplating the end of the current SPR M&O contract, DOE issued

solicitation No. DE-SOL-0003490, which invited proposals for a five year

contract with a DOE option for five additional years. The solicitation

announced a cost-plus award fee performance-based contract to be awarded to

the proposal evaluated to be “the best value and most advantageous to the

Government.” Administrative Record (“AR”) 686, 911. The contract was

competed as a negotiated procurement pursuant to Federal Acquisition

Regulation part 15. The solicitation informed offerors that discussions would

likely not be held.

Proposals were first evaluated by the Source Evaluation Board (“SEB”)

and then a final offeror selected by the Source Selection Official (“SSO”)

using the best value analysis described in the solicitation. In doing so, the SSO

was to consider “the Technical Evaluation Criteria . . . significantly more

important than evaluated price.” AR 912. Offerors were informed, however,

that the more similarly they were evaluated for technical merit, “the more

likely the evaluated price may be the determining factor in selection for

award.” Id.

The solicitation listed six technical factors to be adjectivally rated by

the SEB: (1) Management Approach, (2) Key Personnel, (3) Organizational

Structure, (4) Past Performance, (5) Relevant Experience, and (6) Transition

Approach. Management Approach was the most important factor and second

2

was Key Personnel. Organizational Structure and Past Performance were of

“equal importance and when combined [were] equal in importance to

Management Approach.” Id. Relevant Experience and Transitional Approach

were equally important and least among all of the factors but were combined

to be equal to Key Personnel. The technical evaluation was “significantly

more important than the cost evaluation criteria.” AR 911.

With respect to the most important technical factor, Management

Approach, the agency informed offerors that DOE would evaluate their

“approach to managing and operating activities at the [SPR].” AR 913. It went

on to notify bidders that,

DOE will evaluate the depth, quality, effectiveness, and

completeness of the Offeror’s proposed approach to performing

the work described in the PWS [Performance Work Statement],

including implementing a contractor assurance system that

identifies and corrects deficiencies; developing budgets and

establishing cost controls; achieving safe and environmentally

responsible performance of work; assuring the operational

readiness of the storage sites/facilities; managing a large

workforce; ensuring the integrity, including optimal storage

capacity, of the crude oil storage caverns; and identifying

specific actions to reduce contract costs.

Id. The “commitment and availability of corporate resources to support

efficient and effective contract performance” was also considered. Id.

For the Organizational Structure factor, DOE was concerned with

offerors’ “rationale for the proposed organizational structure for its providing

an effective and efficient structure for the successful accomplishment of the

work to be performed . . . .” AR 914. For Past Performance, the solicitation

indicated that the agency would evaluate the offeror, “its teaming partners, as

well as major subcontractors’ past performance . . . on the basis of information

furnished by the references identified in Section L and any other available

sources.” Id. The solicitation further provided that, for major subcontractors,

DOE “will evaluate . . . past performance commensurate with the portion of

the work being performed under the solicitation/PWS.” Id. Offerors or their

subcontractors without relevant past performance history were to be rated as

neutral.

The Source Selection Plan listed five possible adjectival ratings for the

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technical factors: Outstanding, Good, Satisfactory, Marginal, and

Unsatisfactory. Relevant to this case are the definitions of the top three

ratings.

Outstanding: The proposal demonstrates a very high

probability of successful contract performance. In general, the

response would be described as excellent or superior.

The proposal also demonstrates a comprehensive understanding

of the contract requirements; and a highly effective approach to

perform the work that will likely exceed the contract

requirements. Such a response may be evidenced by a proposal

that exhibits several significant strengths; several or many

strengths; few, if any, weaknesses, no significant weaknesses;

and no deficiencies.

Good: The proposal demonstrates a high probability of

successful contract performance. In general, the response would

be described as conscientious, competent, and complete.

The proposal also demonstrates a proficient understanding of the

contract requirements, and an effective approach to perform the

work that may exceed the contract requirements.

Such a response may be evidenced by a proposal that exhibits

few, if any, significant strengths; many strengths, few

weaknesses; few, if any, significant weaknesses; and no

deficiencies.

Satisfactory: The proposal demonstrates a moderate probability

of successful contract performance. In general, the response

would be described as suitable or sufficient.

The proposal also demonstrates an adequate understanding of

the contract requirements, and an acceptable approach to

perform the work that will achieve the contract requirements.

Such a response may be evidenced by a proposal that exhibits

few, if any, significant strengths; several strengths; several or

many weaknesses; offsetting strengths and weaknesses; few, if

any, significant weaknesses; and no deficiencies.

4

AR 958-59.

Five offerors submitted proposals and were evaluated by DOE. The

SEB members produced individual ratings for each offeror and then met and

agreed upon a consensus rating for each offeror in March 2013. Only the

offers of DM and Fluor are relevant to this protest. Their ratings were as

follows:

Factor DM Flour

Management Approach Satisfactory Good

Key Personnel Outstanding Outstanding

Organizational Structure Good Good

Past Performance Good Good

Relevant Experience Outstanding Good

Transition Approach Outstanding Satisfactory

Evaluated Price $95,660,755 $98,056,245

AR 5489 (technical), 5503 (price).2 The SSO reviewed the SEB’s consensus

report, found it to be “rigorous, thorough, and consistent with the evaluation

criteria stated in the solicitation.” AR 5742 (Source Selection Decision).

After reviewing the SEB report and the proposals, the SSO selected Fluor for

contract award based mainly upon Fluor’s advantage in the Management

Approach factor. See AR 5774-77.

Because DM’s proposal was evaluated to cost less than Fluor’s, the

SSO conducted a best value trade off between the two proposals. Although

DM’s price was approximately $2.5 million lower and DM was superior in the

two lowest importance factors, Relevant Experience and Transition Approach,

the SSO believed that Fluor’s advantage in the Management Approach factor

2

The evaluated price was calculated as the “most probable cost for proposed

key personnel and transition activities plus the proposed total available award

fee for the base and option periods.” AR 911.

5

justified paying the “slight evaluated price premium,” which he found to be

“not disproportionate to the benefits associated with Fluor’s evaluated

superiority.” AR 774. His analysis centered on three areas of Fluor’s

proposal that he found to present advantages in the area of Management

Approach.

The first was Fluor’s “One/Fluor/One SPR – One Team/One

Mission/One Vision” concept that permeates its proposal. This was described

as the integration of “the Fluor SPR contract with the entire Fluor corporate

structure to ensure that the SPR will benefit from the Fluor collective

experience.” Id. The SSO believed this would make available to the SPR the

best practices and effective management tools gleaned from Fluor’s experience

as a whole. The SSO found that this approach “presents a significant strength

to [Fluor’s] management approach because of its focus on operational

readiness and the safe, efficient, and effective performance of the PWS

elements.” Id.

The second discriminator cited by the SSO was Fluor’s emphasis on

planning, not just for the short-term, but also for the mid and long-term

operation of the SPR. The SSO cited Fluor’s planning approach several times

throughout his best value analysis. “Fluor has proposed a comprehensive and

effective planning process that features plans for 1-year, 5-year, and 20-year

planning horizons.” AR 5775. He found that this would “not only enhance

on-going performance of the PWS, but will ensure a strategic approach to

planning and budget formation.” Id. In contrast, the SSO believed DM’s

proposal, although strong in its approach to “proven systems, policies, and

procedures currently in use under the SPR M&O contract,” to be unclear on

“on the longer term advantages being offered by its approach.” Id. The SSO

found “a lack of detail . . . as to what exactly the M&O contract will do, when

and how it will be done, expected outcomes, and practical issues or problems

to overcome.” Id.

Closely related to its comprehensive planning approach, the SSO

specifically cited Fluor’s plan to address the long-term issue of cavern integrity

at the SPR as the third reason that Fluor offered a better value to the agency.

As the SSO stated in his Source Selection Decision, Fluor proposed to

establish a “Subsurface Advisory Group consisting of geotechnical and

petroleum engineering experts with Gulf Coast experience that will analyze

existing SPR cavern and salt dome conditions and propose solutions to issues

and concerns.” Id. In concert with establishing a Subsurface Advisory Group,

Fluor proposed creating a forum with neighboring salt cavern owners, which,

6

in the SSO’s view, would enable “the SPR to take better advantage of and use

lessons learned to enhance the effectiveness and efficiency of cavern

operations.” Id.

The advantages offered by Fluor were summed up by the SSO in this

way:

The specific advantages of Fluor’s management approach

proposal that makes it superior to that of DM’s and worth the

slight price differential of $2,398,490 are that the planning

process and its recognition of and proposed approaches to how

to address the future issues of the [SPR]. The [SPR] is a

national asset and the strategic path forward is important to the

Government. The [SPR] is currently configured to meet

vulnerabilities that the United States faced in the 1970’s and

1980’s. It is critical that the M&O Contractor have a sound

planning process for the near term, mid-term and long term

strategic process. Fluor as reflected in its first strength has a

comprehensive and effective planning process for 1 year, 5-year,

10-year, and 20-year planning horizons. Its approach addresses

planning for the near term, mid-term, and 20-year planning

horizons. Its approach . . . recognizes the importance of

integrating near term detailed plans with longer term program

considerations.

AR 5776. The SSO further cited Fluor’s proposed Subsurface Advisory Group

and owners forum to be examples of this planning approach.

The SSO awarded the contract to Fluor and notified DM of the award

on September 18, 2013. The agency briefed DM as requested on September

27, 2013. DM filed a protest at the Government Accountability Office

(“GAO”) on September 30, 2013. At GAO, DM primarily challenged the

evaluation of its and Fluor’s proposals as unreasonable and not in accordance

with the solicitation. DM filed a supplemental protest on November 8, 2013,

alleging disparate treatment. GAO denied those protests on January 15, 2014.3

AR 1870-82 (GAO decision).

3

GAO also denied the protest of a second disappointed bidder on January 24,

2014. See Gulf Coast Petroleum Reserve Operations, LLC, B-409004.2, et al.,

2014 CPD ¶ 41, 2014 WL 355993 (Comp. Gen. Jan. 24, 2014).

7

Plaintiff filed suit here on January 28, 2014. A temporary restraining

order and preliminary injunction were deemed unnecessary pursuant to the

agreement of the parties. Plaintiff asks the court to declare DOE’s evaluation

and award to be improper and to enjoin the award to Fluor. The thrust of

DM’s argument is that DOE’s evaluation of both its and Fluor’s proposals was

unreasonable and contrary to the stated criteria in the solicitation. DM alleges

that each of the items cited by the SSO as making Fluor’s proposal superior

was either unreasonable or not unique to Fluor. DM also argues that it was

deserving of a higher rating for the Management Approach and Organizational

Structure factors. DM also attacks as unreasonable the evaluation of one of

Fluor’s subcontractors in the Past Performance factor. We reject each of these

challenges.

DISCUSSION

We have jurisdiction over an action by an “interested party objecting

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

contract or to a proposed award or the award of a contract or any alleged

violation of statute or regulation in connection with a procurement or a

proposed procurement.” 28 U.S.C. § 1491(b)(1) (2012). There is no question

that DM is an “interested party” because it was an “actual . . . bidder[] or

offeror[] whose direct economic interest would be affected by the award of the

contract.” Am. Fed’n of Gov’t Emps. v. United States, 258 F.3d 1294, 1302

(Fed. Cir. 2001).

We review agency action in the bid protest context under the deferential

standards of administrative review borrowed from the Administrative

Procedures Act. See 28 U.S.C. § 1491(b)(4). DOE’s actions can only be

enjoined if we find them to have been “arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with the law.” 5 U.S.C. § 706(2)(A)

(2012). In the course of our review, we must not substitute our judgment for

that of the agency’s. See Redland Genstar, Inc. v. United States, 39 Fed. Cl.

231 (1997). All that is required of an agency is that it has a reasonable basis

for its decision. See Honeywell, Inc. v. United States, 870 F.2d 644, 648 (Fed.

Cir. 1989).

Plaintiff’s briefing presents a number of critiques of DOE’s selection

of Fluor. While we are sympathetic with DM’s consternation at not being

selected after many years of apparently successful performance of the

incumbent contract, all of the challenges, including the ones we select for

treatment below, can be characterized merely as calling into question the

8

agency’s legitimate exercise of its own judgment. As is frequently the case in

close calls in procurement selections, the fact that the court, or even a different

group of agency selection authorities, may have come to another conclusion,

is irrelevant.

Plaintiff chose to narrow oral argument to a few of its more pressing

issues. Accordingly, we will follow plaintiff’s order of presentation there,

which focused on the evaluation of the Management Approach, Organizational

Structure, and Past Performance factors.

I. Management Approach

Plaintiff argues that the three items from Fluor’s proposal under the

Management Approach factor that the SSO used to discriminate between

DM’s and Fluor’s proposal were not sufficiently distinct or were not deserving

of the praise given them by the agency. DM also argues that, based on the

definition of a the adjectival ratings in the solicitation, it should have received

a “good” rather than a “satisfactory” for its Management Approach factor. If

Fluor’s proposal was not as strong under this factor or DM’s should have been

rated stronger, then perhaps DOE’s best value decision would be arbitrary

given DM’s other advantages on the lower-weighted technical factors and its

slight price advantage. Defendant’s and intervenor’s response to these

arguments is that plaintiff is in essence disagreeing with the agency’s ratings

without identifing any action of the agency that is arbitrary, capricious, or in

violation of law or regulation. We agree. None of the challenges which

follow demonstrate a violation of law or any irrationality.

A. Fluor’s One Fluor/ One SPR Approach

DOE found Fluor’s One Fluor/ One SPR concept to be a significant

strength under the Management Approach factor. It also cited this concept as

one of the reasons that Fluor’s proposal represented the best value to the

government. Plaintiff finds fault in this analysis because, in its view, the One

Fluor/ One SPR concept “offered nothing unique” and “merely complied with

the requirements of the Solicitation.” P.’s Memo in Supp. of Mot. for J. on AR

14. Plaintiff points out the solicitation’s requirement that “[t]he work

performed by the offeror shall be conducted by a legal entity separate from its

parent organization(s) that will be totally responsible for all contract

activities.” AR 859. Plaintiff believes Fluor’s One Fluor/ One SRP to be

nothing more than a slick repackaging of this basic contract requirement.

9

Plaintiff also criticizes the SSO’s praise for the One Fluor/ One SPR

concept under the Management Approach factor because plaintiff believes that

feature of Fluor’s proposal was not properly considered under that factor.

Plaintiff directs our attention to the stated focus of the Management Approach

factor: “the Offeror’s proposed approach to performing work described in the

PWS.” AR 913. Plaintiff argues that the One Fluor/ One SPR concept is not

aimed at the specifics of the M&O contract work but instead is best addressed

to the Organizational Structure factor, which was concerned with “effective

and efficient structure for the successful accomplishment of the work to be

performed under the contract.” AR 914. Fluor received credit for the One

Fluor/ One SPR concept in the agency’s consideration of both the Management

Approach and Organizational Structure factors. Citing GlassLock, Inc., B-

299931, et al., 2007 CPD ¶ 216, 2007 SL 4200104 (Comp. Gen. Oct. 10,

2007), plaintiff argues that such “double counting” by the agency is prohibited.

We observe initially that plaintiff is wrong in suggesting that DOE

could not consider the One Fluor/ One SPR concept under two different

technical factors. See Office Depot, Inc. v. United States, 95 Fed. Cl. 517, 533

n.18 (2010). Agencies are well within their discretion to consider relevant

information under more than one evaluation factor. DOE found that the One

Fluor/ One SPR concept was the “foundation for [Fluor’s] management

approach.” AR 5532. This concept, in essence, runs throughout Fluor’s

proposal. Specific to the Management Approach factor, DOE found that

Fluor’s approach would enable Fluor to employ best practices and efficiencies

in the management of the SPR that it had possessed through its broader

corporate structure. See id. The SSO specifically found that this demonstrated

a focus on “operational readiness and the safe, effective, and efficient

performance of the PWS elements.” Id. Those considerations are specifically

related to the work to be performed under the contract. The fact that DM

would not have attributed a strength in this regard is of no note. It was not

arbitrary or capricious for DOE to have assigned a significant strength for

Fluor’s organizing principle under the Management Approach factor.

Likewise, we cannot accept plaintiff’s invitation to quibble with the SSO in

deciding that this was one of the reasons to pay a premium for Fluor.

B. Fluor’s Strength for Planning

The SSO cited Fluor’s strength under the Management Approach factor

for “comprehensive and effective planning process for the near term and long

term for the SPR” as a “further discriminator.” AR 5775. The SSO explained

that it “is important that the M&O contractor recognize and plan for both the

10

near-term and long-term for the SPR as its mission evolves, and that near-term

detailed plans are integrated with longer term program consideration, as

reflected in the SEB’s evaluation of Fluor’s proposal.” Id. The SEB and SSO

assigned a weakness, on the other hand, to DM for its “failure to recognize and

address the longer term, including lack of detail in the concepts presented and

lack of clarity as to what exactly the M&O Contractor will do, when and how

it will be done, expected outcomes and practical issues or problems to

overcome.” AR 5743 n.1; see also AR 5775.

Plaintiff argues that such statements make clear that the SSO did not

follow the stated evaluation criteria. Plaintiff states that the solicitation did not

require long-term planning for the Management Approach factor and did not

promise to evaluate long-term approaches. Thus, in plaintiff’s view, it should

not have been assigned a weakness for lack of long-term planning.4 Without

that weakness, according to plaintiff, the agency’s decision to make an award

based, at least in part, on this discriminator was arbitrary and capricious.

Plaintiff also points the court to several places in its proposal where it

believes it proposed long-term actions as part of DM’s SPR 2020 Program,

which took a view out to the year 2020. See AR 1007, 1019, 1024, 1031-32,

1048-49 (excerpts from DM’s proposal). Plaintiff argues that “specific

objectives and target dates for that program . . . are set forth on a detailed

timeline included in [DM’s] proposal.” Pl.’s Memo in Supp. 22 (citing AR

989 (timeline for SPR 2020 Program)). Thus, in plaintiff’s view, DOE’s

award of a strength to Fluor and weakness to DM was unequal treatment and

unreasonable.

Once again, we cannot substitute our judgment for that of the agency.

The SEB and the SSO found a strength in Fluor’s proposal as it relates to

planning for the near, middle, and long-term horizons. As plaintiff admits, it

cannot find fault with giving a strength to Fluor for its proposal in this respect.

Although it believes it should also have been awarded a similar strength, its

real qualm is with DOE’s assignment of a weakness for a lack of clarity in

4

At oral argument, plaintiff clarified that it was not per se improper for the

agency to have awarded a strength to Fluor for its long-term planning because

offerors are always at liberty to propose enhancements to the agency. It is,

however, improper for an agency to cite a proposal as weak in an area for

which the solicitation did not seek information. That is what plaintiff believes

happened here.

11

long-term advantages offered by DM.

Plaintiff is wrong when it suggests that the solicitation was not

concerned with long-term planning for the SPR. In the PWS, under

Operations, the solicitation called for the contractor to “[p]erform

management, planning, oversight, documentation, training, operational

functions, energy management and crude oil activities associated with the

operation of the SPR sites/facilities.” AR 692. In fact, for maintenance, the

PWS specifically asked the contractor to develop long-term plans. AR 694.

The PWS next includes a list of activities that contractors were to manage and

“plan.” AR 692. The requirement to plan for future activities is also listed for

a variety of additional contractor duties in the PWS. See, e.g., AR 692

(Drawdown Readiness), 693 (Petroleum Acquisition and Transportation), 694

(Major Maintenance: “Develop long-term plans and, as assigned, perform

major maintenance projects . . .”), 697 (Project Management).5

In the introduction to the PWS, the solicitation requires the offeror to

“develop and implement innovative approaches and adopt practices that foster

continuous improvement in accomplishing the mission of the SPR.” AR 689.

DOE further stated that the contract should reflect “application of

performance-based contracting approaches and techniques which emphasize

results/outcomes and minimize ‘how to’ performance descriptions.” Id. From

the start, offerors were on notice that the agency sought more than a recital of

the PWS and how much performance would cost. DOE was seeking

innovation and continuous improvement in operation of the SPR.

The SEB found that most of the improvements proposed by DM were

5

Several other major items in the PWS call for the contractor to develop and

manage systems and programs for the SPR: Environmental Management

System, including a Site Sustainability Plan, AR 695; Security Program, AR

695-96; Quality Assurance Program, AR 696; Financial Management program,

AR 967; DOE-approved procurement system, AR 698. The list goes on to

include development of projects for personal property management, human

resources, safety and health, and emergency management. AR 698-700. For

Information Systems and Knowledge Management, the contractor was

required to “orient all planning and implementation towards deploying

forward-looking technologies which maximize overall operating efficiencies

and best business practices from enterprise resource planning and knowledge

management perspectives.” AR 697.

12

related to information technology or extending the life of existing facilities.

DOE found, however, that DM’s proposal had a “lack of detail in the concepts

presented.” AR 5531. The SSO repeated this criticism in his decision and

cited what he viewed to be the weakness of DM’s SPR 2020 program. See AR

5775.

DOE found that Fluor’s proposed activities and improvements to the

SPR would mean that “near-term detailed plans are appropriately integrated

with longer-term program considerations,” which DOE considered to “ensure

a strategic approach to planning and budget formulation.” AR 5775. Plaintiff

attempts to shift the focus to the long-term planning cited by the agency as a

strength for Fluor and weakness for DM. It would be a mistake to view it that

narrowly, however. The majority of projects proposed by both offerors deal

with the 10 year contract life. Per the agency, Fluor’s proposal included better

detail for its proposal in the near, mid, and long-term phases, including beyond

the 10 year window. Certainly DM was not taken by surprise by the agency’s

evaluation of longer-term planning. As it details in its briefing, DM offered

a variety of activities and plans for the SPR, including goals extending past the

10 year contract window. The agency simply valued the detail included in

Fluor’s proposal over that in DM’s proposal. That was not arbitrary or

capricious.

C. Fluor’s Operation and Maintenance/ Cavern Integrity

The third discriminator on which the SSO relied was Fluor’s “multiple

approaches to improve operations and maintenance, including geotechnical

issues associated with SPR cavern integrity.” AR 5744. The SSO found

Fluor’s proposal to establish a Subsurface Advisory Group and operator’s

forum to be specific additional advantages, which, in concert with Fluor’s

strength in planning, offered an “effective forward looking approach for

cavern or geotechnical issues being faced by the [SPR].” AR 5776.

DM argues that this amounted to disparate treatment because both

offerors were awarded strengths under the Management Approach factor for

effective operations and maintenance aspects of their proposals. See AR 5527

(DM), 5533-34 (Fluor) (SEB Report). Thus, “in view of their comparably

rated operations and maintenance proposals, it was arbitrary and capricious for

the SSO to conclude that Fluor’s operations and maintenance proposal was a

discriminator.” Pl.’s Memo in Supp. 22. Plaintiff goes on to argue that there

is nothing in the record to support the evaluation of Fluor’s proposal as

superior to DM’s with respect to its approach to cavern integrity. It argues that

13

the formation of an advisory group and operators’ forum are designed to

“mitigate the ‘learning curve’ that Fluor would experience in the event it was

awarded the contract.” Id. at 23. Plaintiff then asks the court to consider its

proposal with respect to cavern integrity, including its own employment of a

noted expert in the field, Mark Erskine. When compared in that light, plaintiff

argues that it was arbitrary and capricious for the agency to have awarded to

Fluor on the basis of a strength that, at best, was present in both proposals.

Fluor’s allegations with regard to this discriminator once again

represent a disagreement with the agency’s judgment. The agency found very

attractive Fluor’s proposal to develop a Subsurface Advisory Group and a

forum of salt cavern owners to trade operation and maintenance information.

Although DM’s proposal also contained information and plans to ensure

cavern integrity and the agency credited DM’s proposal with a strength for

effective operations and maintenance, the agency could, within its discretion,

prefer one offeror’s plan in this regard over that of another.6 It was not

irrational for DOE to have pointed to this aspect of Fluor’s proposal as a

reason that Fluor’s proposal represented the best value to the government.

D. DM’s “Satisfactory” Rating for the Management Approach Factor

Plaintiff also asks the court to consider its rating of “satisfactory” for

the Management Approach factor to be insufficient because the narrative

rationale for the rating also was consistent with a “good” rating, which is what

Fluor received for that factor. Plaintiff argues that it met each of the

solicitation’s three requirements for a “good” rating: that the proposal

demonstrates a high probability of successful contract performance; that it

demonstrates a proficient understanding of the contract requirements; and that

“[s]uch a response may be evidenced by a proposal that exhibits few, if any,

significant strengths; many strengths; few weaknesses; few, if any significant

weaknesses; and no deficiencies.” AR 958 (Source Selection Plan’s definition

of a “good” rating).

6

Plaintiff also proposed to hire Mr. Erskine, already an employee of DM. We

do not place central importance on Fluor’s proposal to hire Mr. Erskine,

however. The advisory group and owners’ forum were not dependent upon

that hire, and plaintiff proposed other individuals in the event that Mr. Erskine

was unavailable. This is thus not a reason to reject the agency’s preference for

Fluor’s proposal.

14

Plaintiff points out that its proposal received one significant strength,

five strengths, three weaknesses, no significant weakness, and no deficiencies,

see AR 5526-31, consistent with the third prong of the “good” definition. In

addition, plaintiff points the court to the SEB Report’s finding regarding DM’s

Management Approach rating, specifically its description of DM’s significant

strength under that factor: “The DM proposal demonstrates significant

effectiveness, and completeness in its approach to performing the PWS work

elements under the solicitation that reflects a comprehensive description and

understanding of the proven systems, policies and procedures currently in use

under the SPR M&O contract.” AR 5526. The report goes on to list three

examples that the SEB believed would “appreciably increase the probability

of successful contract performance.” AR 5527.

Although these facts might be consistent with a rating of “good,” they

do not compel it. They are also consistent with “satisfactory.” The rating

scheme allows for the exercise by the agency of its judgment in drawing

admittedly fine distinctions. The line between “a high probability of contract

performance” and “a moderate probability of successful contract

performance,” for example, is likely a narrow one. See AR 958 (comparison

of the definition of “Good” and “Satisfactory”). It is not, however, one that

the court may draw in the first instance. See Sci. Applications Int’l Corp. v.

United States, 108 Fed. Cl. 235, 281 (2012) (“The Agency’s discretion in these

technical subjective evaluations and adjectival ratings is not like balancing

weights on a scale.”). Plaintiff has not presented a reason why it was irrational

for it to have been rated “satisfactory” for the Management Approach factor.

Even were plaintiff to have its rating for Management Approach

elevated to “good,” it has not alleged a basis on which we could conclude that

the agency acted arbitrarily in finding that Fluor offered the best value to the

government. While plaintiff was a successful incumbent contractor with a

good record of performance and the lowest priced proposal, those facts are

insufficient to supplant the agency’s judgment. The agency found the price

difference to be small, and it found three specific aspects of Fluor’s proposal

to be more advantageous to the government.

II. Organizational Structure

Plaintiff attacks the rating of its proposal as “good” for the

Organizational Structure as irrational because the SEB cited several items in

DM’s proposal as advantageous, which should have boosted it from receiving

three strengths and no significant strengths to at least one significant strength.

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Had DM received a significant strength under the Organizational Structure

factor, it believes its adjectival rating would have been elevated to

“outstanding.”

Plaintiff also cites as evidence of DOE’s fault in this regard the

individual SEB members’ ratings for this factor. Individually, four of the five

SEB members initially rated DM as “outstanding” while only one SEB

member evaluated DM as “good” for the Organizational Structure factor.

Plaintiff argues that the record is inadequate to explain the final consensus

“good” rating in the face of this “virtually unanimous” view of DM’s proposal

for this factor. At oral argument, plaintiff suggested that the agency may have

made a clerical error in the SEB’s consensus report, which may then have

resulted in a faulty best value decision by the SSO.

We cannot engage in speculation as to why the SEB’s consensus report

resulted in only a “good” rating for DM’s proposed Organizational Structure.

The board members were entitled to change their minds after discussion. As

we have held, the initial individual ratings of SEB members have “little

bearing on [a] protest” when the SEB reaches a consensus rating. Tech Sys.,

Inc. v. United States, 98 Fed. Cl. 228, 247-48 (2011). The change from the

initial individual ratings is thus not a basis, standing alone, to upset the SEB’s

consensus rating or the SSO’s reliance on it. And it is clear from the

consensus report and the SSO’s decision that the change was not due to a

clerical error.

DM likewise has not provided any other reason why its “good” rating

for Organizational Structure was arbitrary or capricious. The fact that it

received three strengths but no significant strengths fits squarely within the

definition of “good.” Although the agency reserved for itself discretion to

aggregate strengths to find a significant strength, it did not chose to do so, and

plaintiff has not provided a reason to disturb that decision.

III. Past Performance

The agency rated both offerors “good” for Past Performance. Plaintiff

challenges one aspect of DOE’s past performance evaluation as having

unfairly prevented DM from achieving a better rating and one aspect of Fluor’s

evaluation as having allowed it to receive a higher rating than it should have.

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A. DM Petroleum’s Grass Cutting Incident

DOE evaluated contracts previously performed by DM and two of its

subcontractors, including the incumbent contract for the SPR M&O effort.

DOE found elements of four prior efforts to be “highly favorable,” including

the incumbent M&O contract. DOE found elements of three other contract

efforts to be “favorable.” The agency also cited one aspect of DM’s

performance of the SPR M&O contract to be unfavorable: a fatality suffered

in connection with grass cutting at one of the SPR locations. See AR 5620-21.

OHSA conducted an investigation of the incident and “determined no violation

existed and attributed the accident to the deceased’s willful disobedience.”

AR. 5621. The SEB noted that DM took corrective action above and beyond

what the agency deemed necessary.

DM argues that this incident was unfairly attributed to it in the past

performance evaluation and, had it not been, DM would likely have been rated

higher. As evidence, DM cites OHSA’s findings that the incident was due to

willful disobedience of an employee and DM’s corrective action thereafter.

It argues that it is is unreasonable in the face of those facts to find that incident

to be unfavorable. Without that single “unfavorable” rating, DM’s four

“highly favorable” ratings and three “favorable” ratings might have resulted

in a rating of “outstanding” for Past Performance.7

Aside from the fact that plaintiff has not argued prejudice with regard

to this factor–it argues only that it was arbitrary for DOE to have assigned an

unfavorable rating for the grass cutting incident, but not also that this would

have resulted in a higher overall rating for past performance–DM has not

established that the agency did anything arbitrary or capricious. The agency’s

consideration of this past performance incident is not controlled by OHSA’s

conclusions about the same event. DOE considered OHSA’s finding and

DM’s corrective measures but found that this incident still merited an

“unfavorable” notation. In doing so, it considered DOE’s internal

investigation of the incident in which it found that one of two root causes was

the “failure of SPR-BM site stop work policy and its implementation in

addressing less than imminent danger situations.” AR 4956. DOE further

found “less than adequate work control process” and “unavailability of the

7

Plaintiff does not explicitly allege in its primary brief that the agency would

have rated it higher without the unfavorable rating for the grass cutting

incident. It argues that the evaluation was arbitrary and capricious.

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supervisor due to other duties” as contributing causes. AR 4957. In light of

those findings, we cannot say that it was arbitrary or capricious for the agency

to have found the grass cutting incident to contribute to “an unfavorable”

rating.

B. Fluor’s Subcontractor APOM’s Past Performance

Eight past contracts performed by Fluor and three subcontractors were

considered by the agency under the Past Performance factor. DOE found

elements of four of them to be “highly favorable,” six elements to be

“favorable,” and one to be “unfavorable.” The agency declined to specifically

rate the past performance of one subcontractor, Arctic Slope Regional

Corporation Petroleum Operations and Maintenance, LLC (“APOM”), because

it was a newly formed venture. DOE found that the two efforts proposed to be

evaluated for APOM were performed by two other subsidiaries of APOM’s

parent corporation, Arctic Slope Petroleum Corporation (“ASRC”), and that

they thus did not provide a basis for evaluating APOM. Pursuant to the

solicitation, APOM was given a “neutral” rating for Past Performance. AR

5519 (definition of “neutral”), 5761 (SSO’s statement that APOM was rated

as “neutral” for past performance).

Plaintiff alleges that a fatality that occurred during performance of a

DOE Construction Management Service (“CMS”) contract by ASRC Gulf

States Constructors, LLC (“AGSC”) should have resulted in an “unfavorable”

past performance rating for APOM. Both APOM and AGSC are subsidiaries

of ARSC. Plaintiff points to parts of Fluor’s proposal in which Fluor seems

to attribute performance of the CMS contract to APOM. See, e.g., AR 1741

(“Fluor chose APOM as our pre-selected small business subcontractor and

Mentor-Protégé based on their experience managing oil field operations,

strong performance on the SPR CMS contract . . . .”). Plaintiff also makes

much of the fact that neither in this protest nor before the GAO did Fluor offer

evidence that APOM is distinct from AGSC or that APOM would not utilize

AGSC’s personnel and resources in performance of the M&O contract.

As with its argument about the grass cutting incident, plaintiff has not

established, or even really argued, that an “unfavorable” rating for this

particular incident for APOM would have resulted in lower past performance

rating for Fluor. APOM was given an overall “neutral” rating for past

performance. Fluor had four other prior efforts found to be “highly favorable”

and six found to be “favorable.” The existence of one additional

“unfavorable” rating in the mix with so many positive ratings is very unlikely

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to have changed Fluor’s past performance rating. DM, in fact, had one

“unfavorable” rating for the same contract on which it also had a “highly

favorable” rating, the incumbent SPR M&O contract. It was nevertheless rated

“good” with respect to past performance.

Putting aside the inability of plaintiff to show prejudice in this regard,

we find that the agency did not act irrationally in its decision not to credit the

negative incidents of AGSC to APOM. The agency considered the same

information that plaintiff presents now and concluded that it was insufficient

to attribute the negative incidents to APOM. See AR 5761 (SSO’s decision).

The SSO specifically concluded that the resources of AGSC would not be

relied upon by APOM in contract performance and that this incident would

not, in any event, affect his rating of Fluor as “good” for past performance. Id.

In the absence of a reason to conclude to the contrary, other than mere

disagreement, we cannot disturb the agency’s conclusion with regard to the

past performance rating of Fluor.8

CONCLUSION

We have considered each of plaintiff’s arguments, including the ones

only briefed and not brought forward at oral argument. Collectively they

merely reflect disagreements with the agency’s exercise of its reasonable

judgment in rating Fluor’s and DM’s proposals with respect to various

technical factors.9 The agency was well within its discretion to evaluate the

proposals as it did. Plaintiff has neither established a violation of law or

8

Defendant does recognize one inadvertent mistake in the SSO’s selection

decision with regard to one of the negative incidents, the death of a dog

belonging to a security subcontractor. The SSO’s decision states that it was

premature to make a conclusion with regard to this incident because the

investigation was still pending. That was not accurate at the time of the actual

contract award, September 2013. The investigation was concluded in July

2013. See AR 6438-39. Defendant points out, however, that this was not

prejudicial to DM because the dog died at the hands of one of DM’s

subcontractors, not Fluor’s.

9

As stated at the outset, we have concentrated this opinion on the issues raised

during oral argument. We have considered all of the arguments raised by

plaintiff in its brief, including any not treated specifically herein, and find that

none of them merit relief.

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regulation nor presented any evidence of arbitrary or capricious action on the

part of the agency. Accordingly, plaintiff’s motion for judgment on the

administrative record is denied. Defendant’s and intervenor’s cross-motions

for judgment on the administrative record are granted. The Clerk is directed

to enter judgment accordingly and dismiss the complaint.

s/Eric G. Bruggink

ERIC G. BRUGGINK

Judge

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