Inforeliance Corporation v. United States

In the United States Court of Federal Claims

No. 14-780C

(Filed under seal October 23, 2014)

(Reissued October 28, 2014) †

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

*

INFORELIANCE CORP., * Post-award bid protest; United States

Plaintiff, * Marine Corps; supplementation of

* administrative record; extra-record

v. * evidence of bad-faith or bias;

* declaration containing specific

THE UNITED STATES, * allegations of bias; conduct hard to

Defendant, * explain absent bias; hard facts

* sufficient to support discovery.

and *

*

SCIENCE APPLICATIONS *

INTERNATIONAL CORP., *

Defendant-intervenor. *

*

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

William A. Shook, Seattle, Washington, for plaintiff.

Jennifer E. LaGrange, Commercial Litigation Branch, Civil Division,

Department of Justice, with whom were Joyce R. Branda, Acting Assistant Attorney

General, Robert E. Kirschman, Jr., Director, and Franklin E. White, Jr., Assistant

Director, all of Washington, D.C., for defendant. Lisa L. Baker, Counsel, Marine

Corps Systems Command, United States Marine Corps, of counsel.

William L. Walsh, Jr., Venable, LLP, with whom were James Y. Boland and

Anna E. Pulliam, Venable, LLP, all of Tysons Corner, Virginia, for intervenor.

MEMORANDUM OPINION AND ORDER

WOLSKI, Judge.

The matter before the Court is plaintiff’s “Motion for Limited Discovery and

Supplementation of the Administrative Record” (Pl.’s Mot.). Specifically, plaintiff

† This opinion was initially filed under seal to allow the parties to propose

redactions. The proposed redactions have been adopted, with the deleted text

replaced in the following manner: “[XXX].” The opinion is released for publication

with some minor, non-substantive corrections.

seeks three depositions and the production of documents related to its allegation

that the procurement decision challenged in this post-award bid protest action was

affected by an evaluator’s bias. The government opposes the motion, arguing that

the evaluator was not the ultimate decision maker and that evidence in the

administrative record is inconsistent with the allegations of bias. For the reasons

given below, plaintiff’s motion is GRANTED.

I. BACKGROUND

Plaintiff, InfoReliance Corp., brought an action in this court challenging the

manner in which the United States Marine Corps (USMC) evaluated offers

submitted in response to Solicitation No. M67854-14-R-4802. Compl. at 1. The

USMC seeks to consolidate fifteen separate information technology systems ---

currently operated by five contractors under thirteen different contracts --- into one

system under a single contractor. Admin. R. (AR), Tab 4 at 72–73. Plaintiff is the

incumbent for five of these contracts, and two of plaintiff’s proposed subcontractors

are incumbents for two others. Id. at 73–74. InfoReliance is protesting the award

to intervenor Science Applications International Corp. (SAIC). See Compl. at 1.

The solicitation indicated that the USMC intended to award the contract

without discussions. AR, Tab 19a at 1011. It further stated that any offeror

receiving an adjectival rating below “acceptable” in any rated evaluation factor 1

would be ineligible for award if, as anticipated, discussions were not conducted. Id.

After the initial review of the six proposals submitted, the USMC determined that

all five offerors other than InfoReliance were ineligible due to low ratings. AR, Tab

46 at 4540. The USMC also decided not to make an award to plaintiff, even though

it was the only offeror not disqualified for low ratings. Id. at 4540–41. 2 Rather, the

USMC determined that there was a risk that plaintiff did not have “a clear

understanding of an important requirement” --- because of unrealistically low

pricing for one of the sample tasks upon which the evaluation was based --- and

1 The solicitation identified four evaluation factors that would receive adjectival

ratings in this best value procurement --- in decreasing order of importance:

Technical Approach, Management Approach, Past Performance, and Small

Business Participation. AR, Tab 19a at 1011–12.

2 InfoReliance received the following adjectival ratings in the initial evaluation:

Technical Approach --- Good; Management Approach --- Outstanding; Past

Performance --- Very Relevant/Substantial Confidence; and Small Business

Participation --- Acceptable. AR, Tab 46 at 4538. In comparison, SAIC received the

following ratings: Technical Approach --- Outstanding; Management Approach ---

Good; Past Performance --- Very Relevant/Substantial Confidence; and Small

Business Participation --- Marginal. Id.

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concluded that an award to plaintiff “was not in the Government’s best interest.”

Id.

In keeping with the terms of the solicitation, the government established a

competitive range of the highest rated offerors, comprising InfoReliance and SAIC,

in order to conduct discussions. AR, Tab 46 at 4541. InfoReliance and SAIC were

notified of their inclusion in the competitive range, informed of the weaknesses

identified in their respective bids, and given the opportunity to respond by

submitting proposal revisions. See AR, Tab 49 at 4570–71, Tab 50 at 4644–45.

InfoReliance was told that the pricing and number of hours allotted for certain

tasks was deemed unrealistic. AR, Tab 49 at 4570, Tab 49b at 4574–78. Intervenor

was informed that it had received a “Marginal” rating for Small Business

Participation and that its price was high, relative to other offerors, and therefore

potentially non-competitive. AR, Tab 50 at 4644, Tab 50a at 4647, Tab 50b at 4650.

After InfoReliance’s and SAIC’s revisions were submitted and evaluated, the USMC

awarded the contract to SAIC based on its higher technical rating and lower price.

AR, Tab 57 at 5957–59.

In this protest, plaintiff alleges that the USMC was not evenhanded in its

evaluations, Compl. ¶ 73, and gave disproportionate weight to a minor portion of its

proposal which was not identified among the stated evaluation factors, id. ¶ 82.

Plaintiff further asserts that the decision to conduct discussions and the ultimate

award to SAIC resulted from the bias of the Management Evaluation Review Panel

(MERP) chairperson, Sheri Stefaniga, who was also the Contracting Officer

Representative (COR) for one of the SAIC contracts which was to be consolidated

through the solicitation. Id. ¶¶ 52–53; see Def.’s Opp’n to Pl.’s Mot. for Ltd. Disc. &

Suppl’n of Admin. R. (Def.’s Opp’n) at 11. 3 Plaintiff’s contentions are informed by

statements allegedly made to an InfoReliance officer by two procurement officials

who were with the USMC at the time of the procurement. Pl.’s Mot. at 1. 4 These

officials’ impressions are detailed in a declaration filed in support of plaintiff’s

motion for a preliminary injunction, which the Court denied. See Pl.’s Reply to

Def.’s Resp. to Pl.’s Mot. for Prelim. Inj., Attach. 1 (Perry Decl.); Order of Sept. 15,

2014, ECF No. 36 (denying motion for preliminary injunction).

II. DISCUSSION

Although the agency-generated administrative record in informal actions

such as procurement decisions has long been recognized as a legal fiction, see Joint

3Plaintiff also alleges, inter alia, that USMC’s price realism analysis of its proposal

was unnecessary and unreasonable. Compl. ¶¶ 59–61.

4One of the officials, Michael Wright, has apparently since transferred to a position

with the Army. Tr. (Sept. 15, 2014) at 18.

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Venture of Comint Sys. Corp. v. United States, 100 Fed. Cl. 159, 165 (2011); Orion

Int’l Techs. v. United States, 60 Fed. Cl. 338, 343 & n.9 (2004), a court’s review of

the agency decision in a bid protest is usually restricted to the materials in the

administrative record, Axiom Res. Mgmt., Inc. v. United States, 564 F.3d 1374, 1379

(Fed. Cir. 2009); Tech Sys., Inc. v. United States, 97 Fed. Cl. 262, 265 (2011). 5 As

the Federal Circuit indicated in Axiom, the administrative record is supplemented

only in rare cases in which this is “necessary in order not ‘to frustrate effective

judicial review.’” Axiom, 564 F.3d at 1381 (quoting Camp v. Pitts, 411 U.S. 138,

142–43 (1973)). Significantly, the administrative record may be insufficient and

supplementation warranted when it is missing “relevant information that by its

very nature would not be found in an agency record --- such as evidence of bad faith,

information relied upon but omitted from the paper record, or the content of

conversations.” Orion, 60 Fed. Cl. at 343–44 (footnotes omitted). 6

An allegation of bad faith or bias in particular calls for extra-record evidence

to support requests for supplementation or discovery. See Beta Analytics Int’l, Inc. v.

United States, 61 Fed. Cl. 223, 226 (2004) (recognizing that otherwise discovery will

be insensibly limited “to cases involving officials who are both sinister and stupid”).

But because of the presumptions of regularity and of good faith conduct, see Tecom,

Inc. v. United States, 66 Fed. Cl. 736, 769 (2005), “to put facts relating to bad faith

in play a plaintiff must first make a threshold showing of either a motivation for the

5 The Administrative Dispute Resolution Act of 1996 (ADRA) requires bid protests

to be reviewed in this court using the standards employed in Administrative

Procedure Act (APA) review. See 28 U.S.C. § 1491(b)(4) (2012) (“[T]he courts shall

review the agency’s decision pursuant to the standards set forth in section 706 of

title 5.”). Courtesy of an apparent misreading of the legislative history, see Gulf

Grp. Inc. v. United States, 61 Fed. Cl. 338, 350 n.25 (2004), the Supreme Court had

determined, before the 1996 enactment of the ADRA, that informal agency decisions

are to be reviewed under the APA’s arbitrary and capricious standard, rather than

de novo, see Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 415

(1971).

6 Adding relevant materials to the record in the situations described in Orion

“might be viewed not as supplementation at all, but merely requiring that the

administrative record be complete.” Murakami v. United States, 46 Fed. Cl. 731,

735 n.4 (2000), aff’d, 398 F.3d 1342 (Fed. Cir. 2005); see also Tauri Grp. LLC v.

United States, 99 Fed. Cl. 475, 480–81 (2011) (“[T]he relevant doctrine entails

‘limiting review to the record actually before the agency,’ not to the record the agency

chooses to present. Thus, when the ‘focal point for judicial review should be the

administrative record already in existence, not some new record made initially in

the reviewing court,’ this ‘existence’ depends on what the agency did in reaching its

decision, not what it chooses to assemble after a protest is lodged.” (citations

omitted) (quoting Axiom, 564 F.3d at 1380, and Pitts, 411 U.S. at 142)).

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Government employee in question to have acted in bad faith or conduct that is hard

to explain absent bad faith,” Beta Analytics, 61 Fed. Cl. at 226; see also DataMill,

Inc. v. United States, 91 Fed. Cl. 722, 730–31 (2010). When, as here, discovery is

sought, a second hurdle must be surmounted, and “the plaintiff must persuade the

Court that discovery could lead to evidence which would provide the level of proof

required to overcome the presumption of regularity and good faith.” Beta Analytics,

61 Fed. Cl. at 226 (citing Orion, 60 Fed. Cl. at 343 n.11, 344).

A plaintiff seeking supplementation or discovery need not, however, meet the

same burden of proof that it ultimately must carry on the merits, and “[t]he test for

supplementation is whether there are sufficient well-grounded allegations of bias to

support” supplementation. Pitney Bowes Gov’t Solutions, Inc. v. United States, 93

Fed. Cl. 327, 332 (2010) (citing L–3 Commc’ns Integrated Sys., L.P. v. United States,

91 Fed. Cl. 347, 354–55 (2010)). These allegations must rest on “hard facts,” not

merely innuendo or suspicion. See Int’l Res. Recovery, Inc. v. United States, 61 Fed.

Cl. 38, 43 (2004); Beta Analytics, 61 Fed. Cl. at 226. The Court concludes that this

is one of those rare cases in which “the proffered extra-record material . . .

indicate[s] some personal animus or bias on the part of agency officials,” Madison

Servs., Inc. v. United States, 92 Fed. Cl. 120, 130 (2010), based on the hard facts

contained in the declaration submitted with plaintiff’s motion for preliminary

injunction.

Much of the conduct attributed to Ms. Stefaniga by the Perry Declaration is

“hard to explain absent bad faith.” Beta Analytics, 61 Fed. Cl. at 226. The

declaration relates the statements of two witnesses that Ms. Stefaniga “expressed

extreme frustration because a written justification for an award of contract was

being rejected by legal counsel at the USMC,” Perry Decl. ¶ 4, and that she “had

gone out of her way during the review process to let it be known to the acquisition

team that SAIC was the only contractor that could properly support” the

consolidated information technology systems, id. ¶ 6. The declaration further

reports that one of the witnesses --- Michael Wright, a member of the evaluation

panel chaired by Ms. Stefaniga --- alleged that she “‘went out of her way’ to address

a Level of Effort weakness regarding the [sample task order] pricing offered by

InfoReliance so as to prevent award to InfoReliance without discussions,” id. ¶ 7,

and that she “spent a significant amount of time building a consensus to highlight

doubts about the InfoReliance proposal so that award could be made to SAIC,” id.

¶ 8.

It would not be remarkable for an evaluator, once convinced that a particular

proposal possessed superior merit, to attempt to persuade others to agree with her

opinion. But the allegations regarding Ms. Stefaniga suggest behavior that seems

inconsistent with what would be expected of an objective evaluator. If, as plaintiff

contends, Ms. Stefaniga drafted a document supporting a contract award to SAIC

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that was rejected upon legal review, 7 the resulting “extreme frustration” at that

result implies a greater personal investment in the outcome than is typical in a

federal procurement. The government argues that the administrative record

contradicts any claims of bias on Ms. Stefaniga’s part, as the MERP she chaired

rated the initial InfoReliance proposal higher than SAIC’s, and assigned the latter

the marginal rating that precluded award before discussions. See Def.’s Opp’n at

18. But that makes her attempts to secure an award to SAIC at that juncture, if

true, even harder to explain absent bias. The USMC procurement official who

discussed this matter with Ms. Stefaniga --- Danny Franco, the COR for two of the

InfoReliance contracts 8 --- allegedly reached the conclusion that the process was

manipulated to result in the award to SAIC. See Perry Decl. ¶ 13.

Even more curious is the conduct allegedly witnessed by Ms. Stefaniga’s

MERP team member, Mr. Wright. The MERP was charged with evaluating the

management, past performance, and small business participation portion of the

proposals. See AR, Tab 44 at 4407–85 (initial MERP report); see also AR, Tab 27 at

3904–05. The level of effort plaintiff proposed for the sample transition task order

was contained in the volume of its proposal reviewed by the Technical Evaluation

Review Panel (TERP), see AR, Tab 25a at 2987–89, and was discussed in the TERP

report, see AR, Tab 43 at 4339, 4345. Those hours of work, and the associated costs,

were also contained in the pricing volume of the proposal, see AR, Tab 25d at 3274–

76, and were evaluated for realism in the Price Evaluation Report, see AR, Tab 45

at 4494–99. Neither the proposed level of effort nor the associated price for the

transition sample task order were mentioned in the proposal volume evaluated by

the MERP, see AR, Tab 25 at 3139–52, and were not discussed in the MERP’s

evaluation of plaintiff’s proposal, see AR, Tab 44 at 4422–32. Yet, according to Mr.

Wright, the MERP chairperson “went out of her way” to focus on these matters, to

stop an award to plaintiff without discussions. Perry Decl. ¶ 7. While there might

be an innocuous explanation for the MERP chairperson’s seeming preoccupation

with a matter outside her charge, bias could more easily explain such zeal.

The statements attributed to Mr. Wright further suggest that Ms. Stefaniga

had assumed a role more akin to an advocate on SAIC’s behalf than an objective

evaluator. See id. ¶¶ 6, 8. He alleged that he was not alone in believing that bias

had infected the process. Id. ¶ 11. For his troubles, he purportedly “was brought

before the contracting officer and other members of the acquisition team for what he

7 The Court notes that the Source Selection Plan for the solicitation assigned to the

MERP chairperson the task of “perform[ing] a Best Value Recommendation to be

presented to the [Source Selection Authority].” AR, Tab 6 at 118.

8 Neither Mr. Franco nor the other three CORs for the five contracts held by

plaintiff were selected to participate in the source selection under challenge in this

case. See Def.’s Opp’n at 12.

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described as ‘an intervention’ in order for him to change his position about the

conduct of the acquisition and award decision.” Id. From this vantage point, it is

impossible to tell whether his characterization of the MERP chairperson’s conduct is

fair or is instead tainted by the same sort of frustration Mr. Franco attributed to

Ms. Stefaniga, but one supposes evaluation team members do not lightly level

claims of bias. In any event, these allegations of bias are specific enough, and

difficult enough to explain in the absence of bias, to support the discovery sought by

plaintiff. 9

The government argues that since Ms. Stefaniga was not the Source Selection

Authority and did not make the award decision, the plaintiff must (but has failed to)

“elaborate on how [she] exerted improper influence on the decision-maker.” Def.’s

Opp’n at 9 (citing DataMill, 91 Fed. Cl. at 731 and Terry v. United States, 96 Fed.

Cl. 156, 164 (2010)). But the reason such influence was required to be

demonstrated in the cases cited by the government is that the individuals whose

bad faith was alleged had no apparent role in the procurement decisions under

challenge. See DataMill, 91 Fed. Cl. at 730–31; Terry, 96 Fed. Cl. at 164–65. By

contrast, here Ms. Stefaniga chaired one of the evaluation panels, holding a position

the very point of which was to influence the procurement decision. Whether, if she

is proven to have been biased, she wielded sufficient influence to taint the ultimate

award is a question of fact “best left to the merits determination.” Tech Sys., 97

Fed. Cl. at 266.

The Court is persuaded that the discovery requested by plaintiff --- as

modified in its reply, see Pl.’s Reply to Def.’s Opp’n to Pl.’s Mot. for Disc. (Pl.’s

Reply), Ex. A --- “could lead to evidence which would provide the level of proof

required to overcome the presumption of regularity and good faith.” Beta Analytics,

61 Fed. Cl. at 226. InfoReliance seeks to depose Messrs. Franco and Wright and

Ms. Stefaniga, see Pl.’s Mot. at 2. It also requests the production of certain

documents relating to Ms. Stefaniga’s actions concerning plaintiff or intervenor, and

documents relating to Mr. Wright’s criticisms of the procurement process, see Pl.’s

Reply, Ex. A. 10 Plaintiff has provided the “hard facts” supporting discovery through

9 The Court notes that one allegation of “‘very suspect’ conduct” reportedly made by

Mr. Wright, Perry Decl. ¶ 10 --- the change in SAIC’s price from $[XXX] above

plaintiff’s initial proposal down to $[XXX] below it, see AR, Tab 45 at 4488; AR, Tab

54c at 5773 --- appears to rest on little more than suspicion and innuendo. But the

Court finds that the other, plausible allegations of bias are sufficient to support the

limited discovery sought in this area, which would at the margin add little to the

government’s compliance burden.

10 The government argues that if a draft award document prepared by Ms.

Stefaniga exists, it would be “protected by the deliberative process privilege, and

exempt from inclusion in the administrative record.” Def.’s Opp’n at 22. If relevant

to plaintiff’s claim of bad faith, however, such a document cannot be sheltered under

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the declaration of Mr. Perry. See Beta Analytics, 61 Fed. Cl. at 226. 11 Under these

circumstances, in which plaintiff is alleging bias on the part of a member of the

Source Selection Evaluation Board, and has provided a declaration describing

suspect conduct that supports the plaintiff’s claim, effective judicial review would be

frustrated if the Court were not to allow discovery. See Axiom, 564 F.3d at 1381.

InfoReliance is entitled to limited discovery and supplementation of the

administrative record so that the merits of its claim may be tested on a complete

record. See Murakami, 46 Fed. Cl. at 735 n.4; Tauri Grp., 99 Fed. Cl. at 480–81.

III. CONCLUSION

For the reasons stated above, plaintiff’s motion for discovery --- as modified,

see Pl.’s Reply, Ex. A, is accordingly GRANTED. Counsel for the parties shall

confer and submit a Joint Status Report on or by Tuesday, October 28, 2014,

proposing a schedule for further proceedings.

IT IS SO ORDERED.

s/ Victor J. Wolski

VICTOR J. WOLSKI

Judge

a claim of deliberative process privilege. See Tummino v. Von Eschenbach, 427 F.

Supp. 2d 212, 234 (E.D.N.Y. 2006) (noting that the deliberative process privilege

does not apply where a showing of bad faith has been made (citing Citizens to

Preserve Overton Park, Inc. v. Volpe, 401 U.S. at 420)).

11 The government objects that the Perry Declaration contains inadmissible

hearsay which the Court may not consider. See Def.’s Opp’n at 13–17 (discussing

Fed. R. Evid. 801–803). But the statements of Messrs. Franco and Wright are not

being considered “to prove the truth of the matter[s] asserted,” Fed. R. Evid.

801(c)(2), but rather to support plaintiff’s effort to obtain their testimony in

admissible form. Moreover, the statements of Mr. Wright and Ms. Stefaniga are not

hearsay, when offered against the government, as each “was made by the party’s

agent or employee on a matter within the scope of that relationship and while it

existed.” Fed. R. Evid. 801(d)(2)(D).

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