US Securities Associates, Inc. v. United States

In the United States Court of Federal Claims

No. 15-1197C

(Filed: December 16, 2015)

(Reissued: January 12, 2016)1

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U.S. SECURITY ASSOCIATES, INC.,

Plaintiff,

v.

Post-award bid protest; fixed

price; lowest priced

THE UNITED STATES,

technically acceptable offer;

contingent offer; jurisdiction;

Defendant,

standing; prejudice.

and

SECURIGUARD, INC.

Intervenor.

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Jerry A. Miles, Rockville, MD, for plaintiff, with whom was Ann M.

Golski.

Amanda L. Tantum, Trial Attorney, Commercial Litigation Branch,

Civil Division, United States Department of Justice, Washington, DC, with

whom were Benjamin C. Mizer, Principal Deputy Assistant Attorney General,

Robert E. Kirschman, Jr., Director, and Steven J. Gillingham, Assistant

Director, for defendant. William S. Meyers and Sigmund Adams, Office of the

General Counsel, Administrative Office of the United States Courts, of

counsel.

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This opinion was first issued under seal to afford the parties an opportunity

to propose redaction of protected information. Plaintiff proposed limited

redactions. We have redacted only that information which we find to be

competition sensitive. Those redactions are indicted by brackets.

Keir X. Bancroft, Washington, DC, with whom was J. Scott Hommer,

Washington, DC, for intervenor.

OPINION

BRUGGINK, Judge.

This is a bid protest of the decision by the Administrative Office of the

United States Courts to award a contract for providing security services at the

Thurgood Marshall Building in Washington, DC to Securiguard, Inc. Pending

are the parties’ cross-motions for judgment on the administrative record and

defendant’s motion to dismiss. As we ruled at the conclusion of oral argument

on December 3, 2015, we lack jurisdiction because plaintiff does not have

standing to challenge the award. The protest therefore must be dismissed

under RCFC 12(b)(1).

PROCEDURAL AND FACTUAL BACKGROUND 2

On June 19, 2015, the Administrative Office of the United States Courts

(“AO”) issued a Request for Quotations (Solicitation No. 061915) under the

General Services Administration (“GSA”) Schedule 84 Contract for security

services at the Thurgood Marshall Building in Washington, DC. Those

services are currently, and were in the recent past, provided under a different

contract with the Architect of the United States Capital, which has authority

to act with respect to the Marshall Building. The incumbent on that contract

is CMI Management, Inc. (“CMI”). Plaintiff, U.S. Security Associates, Inc.,

is the primary subcontractor for CMI under the incumbent contract. That

contract expired on October 31, 2015. Plaintiff, U.S. Security Associates, Inc.

bid on the new contract but was not chosen for award.

The solicitation was conducted pursuant to Federal Acquisition

Regulation (“FAR”) Subpart 8.4, which permits GSA to set up blanket

purchase agreements (“BPAs”) and for authorized entities, such as the AO, to

place task orders under the BPA. The task orders can be competed among the

holders of the BPA, which is what the AO did here. The RFQ contemplated

award of a fixed price task order to a single awardee for one year with options

potentially extending another four and a half years. The award was made to

the “lowest price technically acceptable” (“LPTA”) offeror.

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The facts are drawn from the Administrative Record

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Offerors were asked to submit their quotations in two volumes, one

setting out their price proposal and the second their technical proposal. The

procurement would then proceed in essentially three steps. The first step

involved a determination of whether offerors had self-certified that they had

“at least 5 years security service experience in a Level IV facility.” AR 43.

Those that had so certified were permitted to proceed to step two. In step two,

the bidder offering the lowest overall price was identified. In step three, only

that lowest price offer was evaluated by the Technical Evaluation Team

(“TET”) to determine if the offeror’s technical proposal was acceptable as

measured against three evaluation factors: Key Personnel, Staffing Plan, and

Past Performance. If the lowest price proposal–here Securiguard’s–was

acceptable, as it was here, the search was over and the contract awarded. If

not, then the TET advanced to consideration of the next lowest price offer.

With respect to key personnel, offerors were required to submit at least

one resume for two senior positions: On-Site Security Manager and Captain.

The staffing plan needed to reflect how the staff would be recruited, selected,

and allocated over the required posts. In order to satisfy the past performance

requirement, offerors were required to submit information concerning five

contracts of similar size, scope and complexity in a comparable facility that

had been performed within the past three years or were being currently

performed.

Amendment 1 to the solicitation incorporated a number of attachments

to the solicitation, including a set of questions and answers and the currently-

in-place Collective Bargaining Agreement (“CBA”) for security personnel at

the Thurgood Marshall building. AR 82-148. Question 1 asked the agency

whether a CBA applied and the answer supplied was “yes” and attached was

the agreement. AR 77. Amendment 2 confirmed the applicability of the CBA

in answer to a question concerning the inclusion of both a CBA and a

prevailing wage determination. AR 166 (stating that the CBA applied and

attaching the prevailing wage determination was an error).

The AO received quotations from five entities, including plaintiff and

the intervenor, Securiguard, Inc. All five met the five years of security

experience certification requirement. The contracting officer then determined

that Securiguard offered the lowest proposed price. The TET therefore

evaluated Securiguard’s proposal and concluded that it was technically

acceptable in all areas and had no deficiencies. Securiguard was awarded the

task order on September 8, 2015.

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Plaintiff filed a protest with GAO on September 14, 2005, and the

statutory stay attached. In order to maintain security services under the

incumbent contract, the Architect of the Capitol extended the contract with

CMI through the end of October. GAO denied the protest on October 8, 2015,

and the AO instructed Securiguard to begin transition preparations with the

goal of commencing performance on November 1, 2015. Plaintiff filed its

complaint in this court on October 13, 2015, along with a motion for a

temporary restraining order and permanent injunction. We received briefing

and heard oral argument on the motion for preliminary relief on October 29,

2015. We denied the motion for a preliminary injunction on November 2,

2015, holding that plaintiff had not met the test for preliminary injunctive

relief because of the lack of likelihood of success on the merits. U.S. Secuirty

Associates v. United States, 123 Fed. Cl. 663, 667 (2015).

The parties have since filed cross-motions for judgment on the

administrative record and defendant has filed a motion to dismiss for lack of

subject matter jurisdiction and lack of standing. The motions are fully briefed,

and oral argument was held on December 3, 2015. We need only reach the

jurisdictional issues.

DISCUSSION

Normally in the bid protest context, we would consider the four-part

test for permanent injunctive relief, including the merits of the protestor’s

challenge to the agency’s procurement action. Here, however, we do not reach

those questions because plaintiff has neither shown that it has standing to

pursue this lawsuit nor that the court is possessed of subject matter jurisdiction

over the merits of this case.

In any case before the court, plaintiff must establish jurisdiction before

the court can consider the merits of the complaint. Plaintiff bears the burden

of establishing jurisdiction by a preponderance of the evidence. M. Maropakis

Carpentry, Inc. v. United States, 609F.3d 132, 1327 (Fed. Cir. 2010).

Jurisdiction includes both the question of whether the subject matter of the

case is appropriately before the court (subject matter jurisdiction) and the

question of whether plaintiff has a right to bring the challenge itself (standing).

Defendant’s motion to dismiss raises both grounds for dismissal.

I. Standing

Standing is a baseline element of the“case or controversy” requirement

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of Article III, but, in the bid protest context, this requirement is heightened by

28 U.S.C. § 1491(b)(1)’s limitation of bid protest jurisdiction to only those

brought by an “interested party.” Sys. Application & Techs. v. United States,

691 F.3d 1374, 1382 (Fed. Cir. 2012). The threshold question in every bid

protest is thus whether the protestor is an “interested party” that will be

prejudiced by the award to another entity, which is to say that the protestor has

an economic interest in the outcome of the case. See Tinton Falls Lodging

Realty, LLC v. United States, 800 F.3d 1353, 1358 (Fed. Cir. 2015). If not,

plaintiff does not have standing, and the court has no jurisdiction under the

statute.

When the protest is brought after award of the contract, the Federal

Circuit has defined the test for the requisite economic interest as a showing of

“substantial chance” of award absent the alleged error. Meyers Investigative

& Sec. Servs., Inc. v. United States, 275 F.3d 1366, 1370 (Fed. Cir. 2002). In

order to have a substantial chance of receiving the award, the protestor must

be able to show that, if the competition were reopened and the contract rebid,

it would, at a minimum, be eligible for award. See Impressa Construzioni

Geom. Demonico Garufi v. United States, 238 F.3d 1324, 1334 (Fed. Cir.

2001). Further, a protestor may not be able to show prejudice because, even

if eligible for the award, its ranking or relative position on one or several

evaluation factors make it so unlikely that it would receive the award that it

was not actually harmed by the agency’s error. See, e.g., Comint Sys. Corp.

v. United States, 700 F.3d 1377, 1383-84 (Fed. Cir. 2012).

Defendant argues that plaintiff’s proposal was not compliant with the

RFQ’s requirement of a firm fixed-price offer, and therefore U.S. Security

lacks standing to protest the award to Securiguard. We agree.

The solicitation makes clear that the price offered had to be fixed:

“Offerors must propose a firm fixed price for each of the potential periods of

performance.” AR 43, 164. Prices had to be “in accordance with the offerors’

approved GSA schedule rates although discounts [are] encouraged.” Id.

Offerors were instructed to use Attachment 4, which was a Schedule of Prices

with blank columns, to be filled by the offerors, for number of hours and

hourly rate for each security officer position and each year. AR 51.

Plaintiff did as instructed and provided a completed Schedule of Prices

along with its technical proposal. AR 423. The cover letter to its proposal,

however, included the proviso that its bid was “contingent on [its] ability to

negotiate the contract,” AR 387, presumably referring to the contract at issue

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because the next line requests discussions regarding the addition of two

clauses to the contract:

[1.] [

].

[2.] [

].

Id. In other words, plaintiff’s bid was conditioned on the negotiation of two

additional clauses: one to let it out of its performance obligations at will and

the second to give it the right to request a change in pricing. Even if the AO

were legally able to accept either or both of those conditions, either would

materially change the nature of the contract from a firm fixed price for a fixed

period (one base year plus four and a half option years) to something

indefinite, and award of the contract to U.S. Security under those revised terms

would open the agency to protest liability for running a “bait and switch”

procurement: soliciting one thing but buying another.

Plaintiff argues that the inclusion of that proviso and the two proposed

modifications were the result of its best business judgment in light of its

understanding and experience that the CBA, to which many of the workers

would be subject, would likely result in year-over-year increases in labor rates

for the life of the contract, including option years that had not yet been

negotiated in the current CBA. It argues that it was attempting to put the

agency on notice of the tension between a firm fixed price contract for a

potential five and a half years and the mandatory adherence to a CBA that has,

for at least some of the out years, yet to be negotiated. Because the agency had

the right to enter discussions, avers plaintiff, U.S. Security’s inclusion of that

proviso did not render its bid noncompliant.

This court held in Bannum, Inc. v. United States, that a conditional bid

in a fixed price procurement was noncompliant, and thus the bidder there

lacked standing to protest the award because it did not have a substantial

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chance of winning the contract. 115 Fed. Cl. 148, 155 (2014), aff’d on other

grounds, 779 F.3d 1376 (Fed. Cir. 2015). In that case, the protestor included

a proviso in its price proposal that a recent amendment to the solicitation had

made it impossible for the protestor to firmly price the added requirements

without extensive further analysis, but it submitted a bid anyway. Id. at 154.

The court concluded that the protestor’s provisional language rendered its

price indefinite and thus non-responsive to the RFQ because the RFQ was for

a fixed price contract. Id. at 155. The court dismissed the complaint for lack

of standing. Id. at 156.

We are faced with the same circumstances here. The offer tendered by

U.S. Security, just as in Bannum, cannot be accepted by the government

without the addition of new terms. In the context of a fixed price procurement,

that makes the protestor’s bid non-responsive and deprives it of standing to

challenge the award.3

II. Subject Matter Jurisdiction

Defendant also argues that our bid protest jurisdiction does not extend

to procurements conducted by the AO and that plaintiff has not met its burden

of establishing that the AO is a“Federal agency” within the meaning of 28

U.S.C. § 1491(b)(1). We agree. While the matter is not without doubt, we

reject plaintiff’s underlying position that it is up to defendant to disprove

subject matter jurisdiction; plaintiff has not carried its burden.

Section 1491(b)(1), our statutory grant of bid protest jurisdiction gives

this court jurisdiction to hear challenges to “a solicitation by a Federal agency

for bids or proposals for a proposed contract or to a proposed award or the

award of 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). Section 451 lists the definitions of certain terms used in Title 28. The

term “agency” is defined as including “any department, independent

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We also agree with defendant that, because plaintiff obviously perceived a

hazard in offering a fixed price subject to a CBA that potentially could be

renegotiated, it should have raised that objection prior to submitting a bid.

Having submitted the bid, it waived the argument that the terms of the

solicitation were arbitrary and capricious, and it was limited to making a fixed

price offer. Having waived any objection, plaintiff could not try to bargain

away that risk by conditioning its proposal on additional terms.

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established commission, administration, authority, board or bureau of the

United States or any corporation in which the United States has a proprietary

interest, unless the context shows that such term was intended to be used in a

more limited sense.” 28 U.S.C. § 451.

In Novell, Inc. v. United States, 46 Fed. Cl. 601 (2000), Judge Miller

went through a lengthy analysis of whether procurements by the AO can be

protested under the court’s bid protest jurisdiction. She resolved the issue

based on plaintiff’s burden of establishing the existence of jurisdiction,

concluding that it had not done so. Id. at 613-14. Neither party is able to cite

to subsequent consideration of the precise issue, and we are left in the same

position as Judge Miller. Plaintiff has not persuaded us that any of the entities

enumerated in section 451 embrace the AO 4 , and plaintiff’s argument drawn

from the “unless” clause is particularly unpersuasive. We conclude, therefore,

in the alternative, that plaintiff has not demonstrated that the court has subject

matter jurisdiction over bid protests directed at procurement decisions of the

AO.

Given our ruling on jurisdiction, it is unnecessary to address the parties’

arguments concerning the merits, or plaintiff’s entitlement to injunctive relief.

CONCLUSION

Defendant’s motion to dismiss for lack of jurisdiction is granted. All

other motions are denied as moot. The clerk is directed to enter judgment for

defendant and dismiss the case. No costs.

4

Plaintiff points to the Federal Circuit’s consideration of the same issue

regarding the United States Postal Service in Emery Worldwide Airlines, Inc.

v. United States, 264 F.3d 1071 (Fed. Cir. 2001), and this court’s consideration

of the issue with regard to the Architect of the Capital in Bell BCI Co. v.

United States, 56 Fed. Cl. 465 (2003) (relying on the Federal Circuit Emery

decision). Plaintiff argues that, in these instances, the two courts declined to

place the burden on plaintiff and ruled against the government on the basis that

it did not show that those entities were not included in section 451’s definition

of an agency. We need not treat these cases in great detail except to say that

neither dealt with the AO and neither displaced the long-standing rule that it

is plaintiff’s burden to establish jurisdiction in every case. Here, we hold that

it has not done so.

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s/Eric G. Bruggink

ERIC G. BRUGGINK

Judge

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