Xpo Logistics Worldwide Government Services, LLC v. United States

In the United States Court of Federal Claims

BID PROTEST

Nos. 17-452C & 17-455C (Consolidated)

(Filed Under Seal: June 30, 2017 | Reissued: July 24, 2017)*

) Keywords: Bid Protest; 28 U.S.C. § 1491;

XPO LOGISTICS WORLDWIDE ) Corrective Action; Past Performance;

GOVERNMENT SERVICES, LLC, ) Unbalanced Pricing; Best-Value

) Determination; Waiver; IDIQ Contract;

Plaintiff, ) Total Evaluated Price.

)

v. )

)

THE UNITED STATES OF AMERICA, )

)

Defendant, )

)

and )

)

CROWLEY LOGISTICS, INC., )

)

Defendant-Intervenor. )

)

Frederick W. Claybrook, Jr., Claybrook LLC, Washington, DC, for Plaintiff. Daniel R. Forman,

Mark A. Ries, James G. Peyster, and Charles Baek, Crowell & Moring LLP, Washington, DC,

Of Counsel.

Christopher L. Harlow, Trial Attorney, U.S. Department of Justice, Civil Division, Commercial

Litigation Branch, for Defendant, with whom were Patricia M. McCarthy, Assistant Director,

Robert E. Kirschman, Jr., Director, and Chad A. Readler, Acting Assistant Attorney General.

Robert D. Bowers, Willie J. McAlister, and Peter B. Ries, Attorney-Advisors, Offices of the Staff

Judge Advocate, United States Transportation Command, and Michael G. McCormack, Trial

Attorney, Air Force Legal Operations Agency, United States Air Force, Of Counsel.

Kara M. Sacilotto, Wiley Rein LLP, Washington, DC, for Defendant-Intervenor. Rand L. Allen,

Brian G. Walsh, Gary S. Ward, and Cara L. Lasley, Wiley Rein LLP, Washington, DC, Of

Counsel.

*

This Opinion was originally issued under seal on June 30, 2017, and the parties were given the

opportunity to request redactions. In light of the suggested redactions, the opinion is now

reissued, with redactions of potentially sensitive information indicated by brackets.

OPINION AND ORDER

KAPLAN, Judge.

These consolidated bid protests arise out of a solicitation for a contract to provide

transportation services issued by the Department of Defense, through the United States

Transportation Command (USTRANSCOM or “the agency”). The protests were filed after the

agency decided to take certain corrective action recommended by the Government

Accountability Office (GAO), in response to a bid protest filed there by XPO Logistics

Worldwide Government Services, LLC (XPO). GAO had recommended that USTRANSCOM

reconsider its award of the contract to Crowley Logistics, Inc. (Crowley) because of what GAO

considered a flawed analysis of Crowley’s past performance references.

After the agency announced that it intended to follow GAO’s recommendation by re-

evaluating both offerors’ past performance references and issuing a new source selection

decision, both XPO and Crowley filed bid protests with this Court. In its protest, XPO alleges

that the corrective action the agency has elected to take on the basis of GAO’s recommendation

is not broad enough because it does not address other errors the agency allegedly committed in

its award determination. Crowley claims, on the other hand, that the agency’s decision to take

corrective action is unreasonable because GAO’s conclusion that the original award decision was

flawed was itself arbitrary and capricious.

Currently before the Court are the parties’ cross-motions for judgment on the

administrative record with respect to both protests, as well as the government’s motion to

dismiss Crowley’s complaint. For the reasons set forth below, the government’s motion to

dismiss is DENIED. XPO’s motion for judgment on the administrative record in case number

17-452 is DENIED, and the government’s and Crowley’s cross-motions are GRANTED. In

case number 17-455, Crowley’s motion for judgment on the administrative record is DENIED,

and the government’s and XPO’s cross-motions are GRANTED.

BACKGROUND

I. The Solicitation

USTRANSCOM “is a unified, functional combatant command which provides support to

the eight other US combatant commands, the military services, defense agencies, and other

government organizations.” Admin. R. (AR) Tab 6 at 151. On March 25, 2015, it issued

solicitation number HTC711-15-R-R003 (RFP or “the Solicitation”) seeking proposals for an

indefinite-delivery, indefinite-quantity contract to provide services throughout the continental

United States as well as in Alaska and Canada in connection with the Department of Defense

Freight Transportation Services (DFTS) program. Id. at 87, 150. These “transportation

coordination services” would be provided to both the Defense Logistics Agency and the Defense

Contract Management Agency, “from receipt of the shipment request through final payment for

services rendered,” including “management of shipments” and “[t]ransportation support.” Id. at

151–52. Additionally, USTRANSCOM noted that “[o]ther government agencies [could] require

these services over the course of the contract.” Id. at 152. The DFTS contract would be for a

two-year base period with five one-year options. Id. at 89–96.

2

A. The Solicitation’s Instructions

In the Solicitation’s instructions, USTRANSCOM directed offerors to submit their

proposals in five volumes, covering the following topics: 1) Corporate Experience; 2) Business

Proposal; 3) Technical Capability; 4) Past Performance; and 5) Price. Id. Tab 20 at 9485.1 The

parties’ disputes in these bid protests relate primarily to the agency’s evaluation of the past

performance and price volumes.

For the past performance volume, USTRANSCOM instructed offerors that they were to

“provide past performance information for all contracts/efforts submitted in RFP Attachment

11,” a form which was also used to document “corporate experience.” Id. at 9492. Attachment 11

was to contain all of an offeror’s “most relevant contracts and/or efforts within the past three (3)

years.” Id. at 9485. For each contract, offerors were to explain how their performance related to

the tasks required by the DFTS program in “scope, magnitude, and complexity.” Id. at 9485–86.

Offerors were also instructed to request that each of the parties with whom they had contracted

complete past performance questionnaires and return them to USTRANSCOM for evaluation. Id.

With respect to pricing, the Solicitation set forth contract line items (CLINs) for the

different transportation services that the contractor might be required to perform. Id. at 9451–61.

The primary CLIN category was CLIN X001, the line item for transportation services for each

year of the contract. See id. The agency instructed offerors that they were to “provide individual

transportation rates [for this CLIN] in Attachment 2 – Rate Table.” E.g., id. at 9451. Attachment

2, in turn, consisted of multiple rate tables containing tens of thousands of sub-CLINs (SLINs),

which were each based upon the geographical origin and destination of a shipment, the

equipment type required for a shipment, and the weight of the shipment, as well as the required

timeframe for delivery. See id. at 10101–08; see also id. Tabs 20A–20B (pricing sheet

attachments).

B. Evaluation Criteria

The Solicitation provided that in determining the contract award, “[e]xpanded tradeoff

procedures [would] be utilized in accordance with FAR 15.101-1 and DoD Source Selection

Procedures.” Id. Tab 20 at 9494. USTRANSCOM intended to award the contract to the offeror

who was “deemed responsible,” whose proposal “conform[ed] to all required terms and

conditions” of the Solicitation, and whose proposal “represent[ed the] best value to the

Government, price and other factors considered.” Id. In addition, the Solicitation provided that

the agency would “not pay a price premium that it consider[ed] to be disproportionate to the

benefits associated with the proposed margin of service superiority.” Id.

Pursuant to the terms of the Solicitation, the agency would separately evaluate each

proposal volume. See id. Offerors’ corporate experience and business proposal submissions

1

This citation and the Court’s subsequent citations for the Solicitation are to the “conformed”

version following USTRANSCOM’s issuance of thirteen amendments to the Solicitation. AR

Tab 20. According to the administrative record’s table of contents, the conformed version was

issued July 9, 2015.

3

would be rated on an acceptable/unacceptable basis. Id. Technical capability would be rated

based on certain subfactors, using a tiered adjectival rating scale. See id. at 9496–501. As

discussed in more detail below, past performance was to be evaluated to determine its recency

and relevancy and to assess performance confidence, with adjectival ratings assigned to the latter

two factors. Id. at 9501–02. Technical capability was more important than past performance, and

“[a]ll rated evaluation factors (Technical Capability and Past Performance), when combined,

[were] approximately equal to price.” Id. at 9494.

For past performance, the agency stated that it would “determine the recency and the

relevancy of each past performance effort being evaluated.” Id. at 9501 (emphasis in original).

Further, the Solicitation contained a chart setting forth the standards that would determine the

degree of relevancy that the agency would assign to each past performance effort:

Id.

The RFP provided that after the agency “determined the recency and relevancy of each

past performance effort,” it would assign an “overall Past Performance Confidence Assessment

rating[] . . . to each offeror.” Id. (emphasis in original). The Confidence Assessment ratings were,

in descending order: substantial confidence (i.e., a “high expectation that the offeror will

successfully perform the required effort”); satisfactory confidence (“a reasonable expectation

that the offeror will successfully perform the required effort”); limited confidence (“a low

expectation that the offeror will successfully perform the required effort”); and no confidence

(“no expectation that the offeror will be able to successfully perform the required effort”). Id. at

9501–02.2

With respect to the price volume, the Solicitation provided that “[p]rice [would] be

considered in determining the best value offeror” and that it would “be evaluated for

completeness and reasonableness.” Id. at 9502. Specifically, USTRANSCOM would evaluate

each offeror’s “proposed pricing . . . using one or more of the techniques set forth in FAR

15.404-1(b)(2) to determine [whether] prices [are] fair and reasonable.” Id. “In addition,” the

agency advised, “a Total Evaluated Price (TEP) [would] be calculated by totaling the extended

prices for all proposed pricing of CLIN X001 (Transportation) in the Rate Tables (Attachments

2

The Solicitation also provided a neutral rating of “unknown confidence” where “the offeror’s

performance record [was] so sparse that no meaningful confidence assessment rating [could] be

reasonably assigned.” AR Tab 20 at 9502.

4

2A and 2B).” Id.3 The TEP included both the base years and option years in its calculation. See

id. An offeror’s TEP would thus “reflect[] the proposed transportation costs of CLIN X001 for

all anticipated performance periods . . . based on projected annual escalations.” Id. Finally, the

Solicitation provided that “the TEP [would] be considered in making the contract award

decision.” Id.

II. The First Contract Award

USTRANSCOM received four offers in response to the Solicitation, including proposals

from both Crowley and XPO’s predecessor, Menlo Worldwide Government Services, LLC. Id.

Tab 57 at 11054.4 On December 22, 2015, the Source Selection Authority (SSA) determined that

“GENCO Infrastructure Solutions, Inc. represent[ed] the best overall value to the Government.”

Id. at 11060. He explained that GENCO’s proposal had “the most favorable overall technical

approach, provide[d] the second lowest overall risk . . . , and the second highest past

performance confidence assessment rating.” Id. at 11059. He further noted that “GENCO offered

the second lowest TEP” and that, although Crowley’s TEP was lower, Crowley “had an

Unknown past performance confidence assessment rating.” Id. The SSA also concluded that

“[t]he benefits associated with [] GENCO’s proposed margin of service superiority merit[] the

associated price premium,” and that Crowley’s lower TEP was “not necessarily advantageous . . .

considering the unknown risk the offeror will be unable to perform this effort” and “the lower

technical rating . . . and higher technical risk rating under the Operational Support subfactor.” Id.

On December 30, 2015, the government awarded the contract to GENCO. Id. Tab 58 at

11061.

III. The First GAO Protest

After the agency awarded the contract to GENCO, both XPO and Crowley filed bid

protests with GAO. See id. Tabs 67, 74. XPO withdrew its protest before GAO acted on it. Id.

Tab 72 at 11941–42. Crowley pursued its protest, contending, among other things, that the

discussions that the agency held with it were not meaningful because the agency did not raise

certain concerns that it harbored regarding alleged performance risks in Crowley’s proposal. Id.

Tab 74 at 11950.

On April 19, 2016, GAO sustained Crowley’s protest. Id. at 11946. It recommended that

USTRANSCOM “reopen the competition, conduct meaningful discussions with the competitive

3

The “extended” prices were calculated by multiplying the offeror’s proposed unit price for each

line item by the agency’s estimated quantity for that item. See AR Tab 20 at 10101; see also id.

Tabs 20A–B.

4

During the course of the competition, Menlo’s parent company was purchased by XPO

Logistics, Inc., the parent company of Plaintiff XPO. AR Tab 126 at 12576 n.1. As a result,

beginning with the GAO protest in December 2016, Menlo began referring to itself as XPO, see

id., and the Court will use XPO to refer to the Menlo/XPO offeror throughout this opinion.

5

range offerors, request and evaluate revised proposals, and make a new source selection.” See id.

at 11957.

IV. Corrective Action Based on the First GAO Decision

USTRANSCOM followed GAO’s recommendation. It reopened discussions with all

offerors in the competitive range and informed offerors that they could submit proposal

revisions, which the agency would evaluate and use as the basis for a new award decision. See

id. Tab 88 at 11982. In the meantime, GENCO, the previous awardee, withdrew from the

competition. Id. Tab 86 at 11980. As a result, only Crowley and XPO remained in the

competitive range, and both submitted revised proposals on June 15, 2016. See id. Tab 116 at

12273; see also id. Tab 120 at 12442–43.

A. The Agency’s Revised Price Evaluation

Upon receipt of the offerors’ revised price proposals, USTRANSCOM’s contracting

officer (CO) prepared a price evaluation report. See id. Tab 116 at 12273, 12319. In it, the CO

noted that, in accordance with the Solicitation, he had calculated each offeror’s TEP by using the

extended prices the offerors had submitted for each proposed SLIN under CLIN X001. Id. at

12273. He stated that “[w]here available, the historical volume was utilized as a multiplier to the

rate provided by the Offeror across all lanes by all three tiers.” Id. “Where historical volumes

were unknown,” however, “a volume of either four (two for Tier 1, one for Tier 2, and one for

Tier 3) for truckload shipments or a volume of the minimum weight within weight band limits

for LTL and TD (e.g. a weight of 4001 pounds is used for a weight band between 4001-5000

pounds) [was] used as the multiplier.” Id.

The CO explained that the TEP calculation method “was developed to ensure that all

potential lanes for use under the requirement would be evaluated and [that] the likelihood of

unbalanced pricing would be diminished versus a scenario-based evaluation method.” Id. at

12274. A “scenario-based evaluation would be problematic,” he noted, because “use of

historically used lanes would not be representative of the new acquisition as lanes change

frequently as there is much fluctuation in shipments.” Id. “This [was] evident in the Independent

Government Cost Estimate,” he observed, “as it was based on historical spend of customers, and

potential customers, versus historical by lane spending.”5 Id.

The CO then set out his analyses of the prices that both Crowley and XPO had submitted

in their initial proposals and in each of their proposal revisions. See id. In doing these analyses,

he utilized FAR 15.404-1(b)(2)(i), which entailed “[c]omparison of proposed prices received in

response to the solicitation.” Id. Noting that the prices of the previous awardee, GENCO, had

5

The agency’s independent government cost estimate (IGCE) used historical data from a similar

predecessor program as part of its calculations, and included the possibility of additional military

services opting into the contract during later years. See AR Tab 3 at 29. USTRANSCOM

estimated a total contract value, including all option years, of $2,656,233,390.80. Id. at 31.

Subsequently, the agency set a contract maximum of $3,000,000,000 in the RFP. Id. Tab 20 at

9461.

6

been “determined fair and reasonable,” the CO compared both Crowley’s and XPO’s proposed

prices to GENCO’s and to one another’s. Id. at 12275. Doing so, he asserted, “assisted in

providing a solidified average unit rate and standard deviation.” Id. Further, the CO compared

the offerors’ prices at both the total SLIN level and at the individual unit price level to

“detect[] . . . possible unbalanced pricing.” Id. Where a unit price, average unit price, or total

SLIN price was higher than the average price plus one standard deviation, the CO rated the price

“high.” Id. If any of those were two standard deviations or more above the average, the price was

rated “significantly high.” Id.

The CO first noted that based “on the initial pricing submitted by both offerors after re-

opening discussions, it was determined necessary to send each Offeror Evaluation Notices (ENs)

to address rates identified as high or significantly high.” Id. at 12302. But based on Crowley’s

revisions and certain cost and pricing data it submitted, the CO found that Crowley’s “revised

price changes give[] the Government confidence that Crowley presently has a clear

understanding of the requirement.” Id. at 12305. As a result, he concluded that “all of Crowley’s

rates can be determined fair and reasonable based on adequate price competition and Other Than

Certified Cost or Pricing Data.” AR Tab 116 at 12305. Similarly, after XPO responded to its EN,

the CO determined that XPO’s prices were “fair and reasonable based on adequate price

competition.” Id. at 12308.6

The CO then calculated each offeror’s final TEP. Id. at 12314–15. Crowley’s TEP was

$7,116,365,688, while XPO’s was $7,741,505,204. Id. XPO’s TEP was thus 4.1% higher than

the average, while Crowley’s was 4.3% lower than the average. Id.7 The CO observed that

following final proposal revisions, Crowley had “13,412 individual rates” which were

“considered high,” representing “2.85% of the total number of unit prices.” Id. at 12319. XPO

had 5,672 unit prices which were considered high, representing 1.2% of the total number of unit

prices. Id. The CO concluded that “all unit prices and TEPs are determined fair and reasonable

based on adequate price competition and there remains no indication of unbalanced pricing.” Id.

B. Crowley’s Past Performance Evaluation

On November 8, 2016, the agency’s Past Performance Evaluation Team (PPET) prepared

an addendum to the agency’s previous evaluation of Crowley’s past performance, based upon

revisions made during the reopened competition. Id. Tab 119 at 12407, 12441. The addendum

included a narrative about each of Crowley’s past performance references for which

USTRANSCOM received a past performance questionnaire. Id. at 12408–22.

6

Both Crowley and XPO made slight revisions to their prices in their final proposal revisions.

See AR Tab 116 at 12309, 12311. This did not alter the CO’s conclusions regarding the

reasonableness of either offeror’s pricing. See id. at 12309–14.

7

Although not repeated in this final TEP analysis, when the CO calculated the offerors’ TEPs

prior to final proposal revisions, he observed that the “differences in TEPs” were “large in terms

of actual dollars,” but that “the relative dispersion of the TEPs indicates competitive proposals.”

AR Tab 116 at 12274, 12309.

7

The narratives followed a standard format. Each one began with a quotation regarding the

type and number of services or transactions encompassed by the contract, drawn from the past

performance questionnaire. E.g., id. at 12408. The narratives then set forth the agency’s

determination whether the particular reference was “recent” and identified the total value of the

contract. Id. Next, each narrative included quotations from the questionnaire regarding the

quality of Crowley’s past performance, an adjectival quality rating assigned by the commercial

entity, and a statement whether the respondent would award a contract to Crowley in the future.

Id.

Finally, each narrative concluded with a standard sentence that assigned an adjectival

relevancy rating to the reference discussed. Id. Sixteen of the narratives concluded that the

reference “was determined Somewhat Relevant as the effort involved some of the scope and

magnitude of effort and complexities as this solicitation requires.” Id. at 12408–36. The

remaining narratives concluded with a sentence stating that the reference “was determined Not

Relevant as the effort involved little of the scope and magnitude of effort and complexities as

this solicitation requires.” See id.

The PPET next assigned a confidence assessment rating to Crowley based on Crowley’s

sixteen “Somewhat Relevant” references. Id. at 12440–41. It noted that it had considered all of

these references because they showed “that the Offeror has successfully performed transportation

coordination services to include transportation support and management of shipments via

ground, specialized equipment, air freight, and time-definite service level shipments.” Id. at

12440. The PPET also explained that:

The Somewhat Relevant references were rated individually; more,

when all of the Somewhat Relevant references were considered

together, they reflect that the Offeror has successfully performed

transportation and coordination services via ground, specialized

equipment, air freight, and time-definite service level which include

some of the scope and magnitude of effort and complexities this

solicitation requires.

Id. at 12441.

The PPET concluded that:

In terms of scope and complexity, the Somewhat Relevant

references combined are similar to the Defense Freight

Transportation Services (DFTS) requirement. In terms of

magnitude, the Somewhat Relevant references pertaining to

specialized equipment, air freight, and time-definite service level

combined are similar to the DFTS requirement. Although, the

Somewhat Relevant references pertaining to ground truckload and

less-than-truck transportation combined are not as similar to the

DFTS requirement in terms of magnitude, the experience is

sufficient to provide the Government confidence the Offeror can

perform those types of services.

8

Id. Accordingly, the agency assigned Crowley a rating of Satisfactory Confidence based on its

“reasonable expectation that the Offeror [would] successfully perform the required effort.” Id.

C. The Source Selection Evaluation Board Report

On November 7, 2016, the Source Selection Evaluation Board (SSEB) issued its report,

which included an evaluation of the revisions submitted by XPO and Crowley during the

reopened competition. See id. Tab 117 at 12383–85.

The SSEB reaffirmed the Substantial Confidence assessment rating it had assigned to

XPO in its initial report. Id. at 12388. In that report, the SSEB had concluded that XPO had

thirty-three past performance references that were either somewhat relevant, relevant, or very

relevant. Id. Tab 55 at 11027. The SSEB rated these references from marginal to exceptional in

terms of quality. Id. XPO’s Substantial Confidence rating was based on the agency’s “high

expectation that the Offeror [would] successfully perform the required effort.” Id.

With respect to Crowley’s past performance, the SSEB stated that:

In establishing the overall confidence assessment rating for

Crowley, the Government gave more consideration to the references

considered Somewhat Relevant as they reflect the Offeror has

successfully performed transportation coordination services to

include transportation support and management of shipments via

ground, specialized equipment, air freight, and time-definite service

level shipments within a single contract.

Id. Tab 117 at 12387.

The SSEB further stated that “when all of the Somewhat Relevant references are

considered together, they reflect that the Offeror has successfully performed transportation and

coordination services via ground, specialized equipment, air freight, and time-definite service

level as required in this solicitation.” Id. It observed that all of Crowley’s somewhat relevant past

performance references rated Crowley’s performance as exceptional or very good. Id.

Accordingly, it concurred in the PPET’s Satisfactory Confidence rating, based upon “a

reasonable expectation that the Offeror will successfully perform the required effort.” Id.

The SSEB also agreed with the CO’s conclusions that both offerors’ price proposals were

“fair and reasonable based on competition.” Id. at 12390. Additionally, it noted that XPO’s “past

performance confidence assessment rating [was] more favorable than Crowley’s rating,” but that

“Crowley’s [TEP was] more favorable than [XPO’s].” Id. at 12395–96.

D. The Source Selection Advisory Council Comparative Analysis

On November 8, 2016, the Source Selection Advisory Council (SSAC) prepared an

updated comparative analysis. Id. Tab 118. It reviewed the “underlying evaluation documents”

and “concur[red] with [their] findings.” Id. at 12398. The SSAC also “verified [that] the SSEB’s

evaluation followed the solicitation evaluation criteria and that the ratings were consistently

applied.” Id. It then prepared the following table presenting the final evaluation results:

9

Id.

The SSAC also performed a comparative analysis and integrated assessment of the two

proposals. Id. at 12399–405. It used the evaluation factors and subfactors set out in the

Solicitation and discussed the specific strengths of each proposal within each technical subfactor.

E.g., id. at 12400 (noting that for the IT/management subfactor, Crowley’s “first strength was for

a proposed 24/7 support line and tools which will facilitate timely resolution of customer

inquiries and issues” and “exceed[ed] the PWS requirement”). The SSAC concluded that for

subfactor one, there was “no discernible difference in the risk or quality of the proposed

technical approaches.” Id. at 12401. For subfactor two, the SSAC stated that “[w]hile both

Offerors’ approaches contain multiple strengths with benefits, [XPO’s] approach is considered

more favorable in that the Offeror provides an implementation plan utilizing a transportation

management system that is currently in use by the Government and requires minimal revisions to

conform to the DFTS requirement.” Id. at 12402. With respect to the third subfactor, the SSAC

noted that “Crowley’s approach is considered more favorable in that the Offeror is proposing to

use [***].” Id. at 12403–04. Finally, for the fourth subfactor, the SSAC reported that there was

no discernible difference between XPO and Crowley’s proposals. Id. at 12404.

The SSAC did not discuss past performance other than to note that XPO’s Substantial

Confidence rating was higher and thus more favorable than Crowley’s Satisfactory Confidence

rating. Id. at 12405. It then wrote the following with respect to its overall tradeoff

recommendation:

It is our recommendation that the cost difference of approximately

$625M, or 8.4%, is disproportionate to the benefit associated with

[XPO’s] lower risk rating in Subfactor 2 and more favorable past

performance rating. Although Crowley has a higher risk rating in

Subfactor 2, the risk associated with Implementation is not enough

to offset the price difference. It is recognized that [XPO’s] past

performance assessment rating of Substantial Confidence is higher

than Crowley’s assessment rating of Satisfactory Confidence;

however, the Government has a reasonable expectation Crowley

will successfully perform the required effort. The Government will

not pay a price premium that it considers disproportionate to the

benefits associated with the proposed margin of service superiority,

and overall, it is our recommendation that it is not beneficial to pay

a price premium for [XPO’s] better past performance rating of

10

Substantial Confidence or Low Risk rating for the subfactor of

Implementation.

Id. The SSAC concluded that “Crowley’s proposal [was] the best value to the Government.” Id.

at 12398.

V. The New Source Selection Decision and Contract Award

On November 9, 2016, the SSA authored a new Source Selection Decision Document, in

which he set forth his determination that Crowley’s proposal “provides the best overall value to

satisfy the Government’s requirement.” Id. Tab 120 at 12442. He based his decision on his

“integrated assessment of proposals submitted in response to the solicitation,” the SSEB and

SSAC reports (with which he explicitly concurred), and “the capabilities of the Offerors to

successfully fulfill the Government’s requirement.” Id. at 12442, 12444.

On November 22, 2016, the agency awarded the contract to Crowley. Id. Tabs 121–122.

VI. GAO’s Second Decision

On December 5, 2016, XPO filed a protest with GAO. Id. Tab 126. It asserted that

USTRANSCOM’s award to Crowley should be set aside because 1) the agency’s evaluation of

XPO’s proposal “under the technical capability factor was unreasonable and contrary to the

RFP”; 2) the agency “unreasonably assigned Crowley a ‘Low’ technical risk rating under

subfactor 1” of the technical evaluation; and 3) the agency’s “best value analysis was

unreasonable and incomplete.” Id. at 12577–96. On January 19, 2017, XPO supplemented its

protest with two additional grounds, asserting that USTRANSCOM “conducted an unreasonable

assessment of unbalanced pricing in the Crowley price proposal” and that its “evaluation of

Crowley’s past performance violated the evaluation criteria.” Id. Tab 139 at 12831, 12833.

On March 14, 2017, GAO issued a decision sustaining in part and dismissing in part

XPO’s protest. Id. Tab 148 at 13003–04. GAO noted that the record provided “no basis on which

to sustain [XPO’s] protest” as to the agency’s evaluation of XPO’s own proposal. Id. at 13008

n.8. Further, GAO found untimely XPO’s allegations that Crowley’s prices were materially

unbalanced. Id. at 13008. XPO had argued before GAO (as it does here) that Crowley’s prices

for the [***] SLINs were understated, while its prices for the [***] SLINs were overstated. Id. at

13009. GAO observed that the premise of XPO’s unbalanced pricing argument was that the

quantity estimates the government used in the Solicitation were not reasonably accurate and that

those estimates “led to a situation where offerors could ‘game’ the solicitation’s pricing structure

by proposing unbalanced pricing.” Id. at 13010. GAO thus found the argument untimely because

“the estimates and the way they were to be applied in the price evaluation were evident from the

solicitation” such that XPO waived any argument regarding their accuracy by not raising it prior

to submitting a proposal. Id.

On the other hand, GAO sustained XPO’s allegations as to USTRANSCOM’s evaluation

of Crowley’s past performance. Id. at 13008. XPO had contended that “Crowley’s past efforts

were substantially smaller in magnitude than the effort required under the solicitation,” noting

that each of the sixteen Crowley references that the agency characterized as somewhat relevant

were “miniscule” in dollar value when measured as a percentage of the total DFTS contract

11

value of $3 billion. Id. at 13011. In response, the agency argued that GAO should instead look at

the “average annual value” of each performance reference and compare that value to “the

maximum value for the transportation CLIN for the 2-year base period of the contract awarded to

Crowley,” which was $105 million. Id. at 13012.

GAO, however, rejected the agency’s arguments for two reasons. First, GAO found that

“it [was] not clear from the contemporaneous record how the agency determined that the

magnitude of Crowley’s past efforts supported the ratings of somewhat relevant.” Id. at 13013–

14. GAO noted that the agency’s past performance evaluation report identified only “the number

of monthly shipping transactions, the period of performance, and an approximate total value”

“for most of the past efforts at issue.” Id. at 13014. GAO found no evidence that the agency had

in fact “calculated an average annual value for the efforts in order to make an ‘apples-to-apples’

comparison of the efforts’ magnitude relative to the magnitude of the solicitation.” Id. Moreover,

according to GAO, there was “nothing in Crowley’s past performance evaluation report to reflect

what benchmarks might have been used to assess whether Crowley’s past efforts met the criteria

for the various relevancy ratings defined in the solicitation.” Id.

Second, and in any event, GAO concluded that “the agency’s selection of only the

relatively low-value base period of the contract as awarded to Crowley unreasonably distort[ed]

the comparison of the magnitude of Crowley’s past efforts to the magnitude of the solicitation.”

Id. It agreed that “where the period of performance of an offeror’s past effort materially differs

from the period of performance in a solicitation, some method of making an ‘apples-to-apples’

comparison of the magnitude of the two efforts is necessary.” Id. But it rejected the argument

that the agency only consider the two-year base period, rather than the value of the entire

contract. See id. GAO noted that the IGCE and the value of Crowley’s contract as awarded both

showed that “the value of each option year [was] significantly higher than the value of the base

period.” Id. at 13015. It concluded that because the record reflected that the agency itself

“anticipated the value of the option years to be significantly higher than the value of the base

period” and included option year pricing in calculating offerors’ TEPs, using “the significantly

lower-valued transportation CLIN for the base period . . . [was] an unreasonable benchmark for

assessing the relevance of the magnitude of Crowley’s past efforts.” Id.

Based on this conclusion, GAO recommended “that the agency reevaluate Crowley’s past

performance in a manner that is reasonable and consistent with both the solicitation and [its]

decision, and then make a new source selection determination.” Id. at 13017. “Alternatively,”

GAO recommended, “if the agency determines that the solicitation’s evaluation criteria do not

reasonably reflect its needs . . . the agency [should] amend the solicitation, engage in discussion

with offerors, and request revised proposals.” Id.8

8

GAO stated that “[b]ecause a new best-value determination [was] necessary to implement [its]

recommendation . . . [it would] not address XPO’s allegations regarding the best-value tradeoff

analysis.” AR Tab 148 at 13017.

12

VII. This Action

On March 23, 2017, the CO announced that the agency was “taking corrective action in

accord with the GAO decision dated March 14, 2017.” Id. Tab 176 at 15860. Six days later, on

March 29, 2017, XPO filed a complaint in this court (No. 17-452), which was followed later in

the day by a complaint filed by Crowley (No. 17-455). On March 30, 2017, the Court granted

XPO’s and Crowley’s motions to intervene in the other’s protest. Orders, ECF Nos. 11, 21. The

Court also consolidated the cases, designating XPO’s protest as the lead case. See Order, ECF

No. 14. On April 10, 2017, XPO filed an amended complaint. ECF No. 28.

XPO’s amended complaint includes five counts: 1) that USTRANSCOM’s unbalanced

pricing evaluation failed to comply with the FAR and that the agency unreasonably concluded

that Crowley’s pricing was not unbalanced, Am. Compl. ¶¶ 71–74; 2) that the agency’s

corrective action plan is “arbitrary, capricious, and unlawful in scope” because “it fails to

remediate a violation of law” by failing to address Crowley’s unbalanced pricing, id. ¶¶ 80–81;

3) that the agency performed an unreasonable best value assessment because it relied exclusively

on the TEPs in evaluating offerors’ price proposals, id. ¶¶ 86–88; 4) that the agency failed to

appropriately document its best value tradeoff decision and relied upon adjectival ratings alone,

id. ¶¶ 91–99; and 5) that the agency engaged in misleading discussions by altering its

interpretation of best value and how it conducted the price evaluation, id. ¶¶ 103–07.

Crowley asserts one cause of action in its complaint. See Crowley Compl. at 17–20. It

alleges that the agency’s decision to take any corrective action at all is arbitrary and capricious

because the underlying GAO decision is itself arbitrary and capricious. Id. ¶¶ 58–62.

On April 24, 2017, both XPO and Crowley moved for judgment on the administrative

record in their respective protests. ECF Nos. 37, 39. On May 8, 2017, the government filed a

cross-motion for judgment on the administrative record with respect to each protest, and also

moved to dismiss Crowley’s protest for lack of jurisdiction. ECF No. 41. Both XPO and Crowley

cross-moved for judgment on the administrative record in the other’s protest. ECF Nos. 42–43.

The Court held oral argument on all pending motions on June 2, 2017. See Order, ECF No. 27.

DISCUSSION

I. Subject Matter Jurisdiction

The Court of Federal Claims has jurisdiction over bid protests in accordance with the

Tucker Act, 28 U.S.C. § 1491, as amended by the Administrative Dispute Resolution Act of

1996 § 12, 28 U.S.C. § 1491(b). Specifically, the Court has the authority “to render judgment on

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); see also Sys. Application & Techs., Inc. v. United States,

691 F.3d 1374, 1380–81 (Fed. Cir. 2012) (observing that § 1491(b)(1) “grants jurisdiction over

objections to a solicitation, objections to a proposed award, objections to an award, and

objections related to a statutory or regulatory violation so long as these objections are in

connection with a procurement or proposed procurement”).

13

A. Standing

To possess standing to bring a bid protest, a plaintiff must be an “interested party”—i.e.,

an actual or prospective bidder (or offeror) who possesses a direct economic interest in the

procurement. Sys. Application & Techs., Inc., 691 F.3d at 1382 (citing Weeks Marine, Inc. v.

United States, 575 F.3d 1352, 1359 (Fed. Cir. 2009)); see also Orion Tech., Inc. v. United States,

704 F.3d 1344, 1348 (Fed. Cir. 2013). An offeror has a direct economic interest if it suffered a

competitive injury or prejudice as a result of an alleged error in the procurement process. Myers

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

that “prejudice (or injury) is a necessary element of standing”); see also Weeks Marine, Inc., 575

F.3d at 1359.

In post-award protests, like this one, a plaintiff may demonstrate competitive injury or

prejudice by showing that it would have had a “substantial chance” of winning the award “but

for the alleged error in the procurement process.” Weeks Marine, Inc., 575 F.3d at 1359–62

(quoting Info. Tech. & Applications Corp. v. United States, 316 F.3d 1312, 1319 (Fed. Cir.

2003)). In making the standing determination, the Court assumes well-pled allegations of error in

the complaint to be true. Square One Armoring Serv., Inc. v. United States, 123 Fed. Cl. 309,

323 (2015) (citing Digitalis Educ. Sols., Inc. v. United States, 97 Fed. Cl. 89, 94 (2011), aff’d,

664 F.3d 1380 (Fed. Cir. 2012)); see also Salmon Spawning & Recovery All. v. U.S. Customs

& Border Prot., 550 F.3d 1121, 1131–32 & n.9 (Fed. Cir. 2008) (citing Lujan v. Defs. of

Wildlife, 504 U.S. 555, 561 (1992)); Linc Gov’t Servs., LLC v. United States, 96 Fed. Cl. 672,

694–95 (2010) (noting that the showing of prejudice as an element of standing “turns entirely on

the impact that the alleged procurement errors had on a plaintiff’s prospects for award, taking the

allegations as true,” and distinguishing “allegational prejudice” required to establish standing

from the “prejudicial error” required to prevail on the merits).

Both XPO and Crowley have standing to pursue the claims alleged in their complaints.

XPO, an actual offeror, alleges that the agency should have rejected Crowley’s offer because its

pricing was materially unbalanced. Am. Compl. ¶¶ 71–73. It also challenges the agency’s

reliance upon each offer’s TEP in making an award decision, alleging that the agency should

have instead considered the actual cost to the government of each offer, and that, if it had done

so, XPO would have had a price advantage over Crowley. Id. ¶¶ 86–88. Considering that XPO

and Crowley were the only two offerors within the competitive range and that price played a

significant role in the agency’s decision to award the contract to Crowley over XPO, these

allegations are sufficient to demonstrate that XPO had a substantial chance of securing the award

absent the errors it alleges.

Crowley, the awardee, also has standing to press its claim that the agency should not have

implemented the corrective action GAO recommended. Thus, absent that alleged error, the

agency would not have set aside the award to Crowley. Therefore, taking its allegations as true

for purposes of the standing inquiry, Crowley has clearly demonstrated the requisite competitive

injury to be an interested party for purposes of the Court’s bid protest jurisdiction.

14

B. The Government’s Motion to Dismiss

The government seeks dismissal of Crowley’s protest on the grounds that it is moot or

premature. Def.’s Partial Mot. to Dismiss, Cross-Mot. for J. on the Admin. R., & Opp’n to Pl.’s

& Def.-Intervenor’s Mots. for J. on the Admin. R. (Def.’s Mot.) at 14, ECF No. 41. These

contentions lack merit. “In general, a claim must be dismissed as moot ‘when the issues

presented are no longer live or the parties lack a legally cognizable interest in the outcome.’”

Rothe Dev. Corp. v. Dep’t of Def., 413 F.3d 1327, 1331 (Fed. Cir. 2005) (quoting City of Erie v.

Pap’s A.M., 529 U.S. 277, 287 (2000)). “A claim is not ripe for judicial review when it is

contingent upon future events that may or may not occur.” Sys. Application & Techs., Inc., 691

F.3d at 1383 (citing Thomas v. Union Carbide Agric. Prods. Co., 473 U.S. 568, 580–81 (1985)).

Crowley’s claim is neither moot nor unripe. Crowley challenges the reasonableness of the

agency’s decision to reopen a competition that Crowley had already won. If the Court agreed

with Crowley’s arguments, then it might enjoin the agency from taking the challenged corrective

action. Thus, the controversy is a live one in which Crowley has a cognizable interest. Further,

Crowley’s challenge to the agency’s decision is ripe for review because it is not contingent on

how the agency executes the corrective action, as the government claims. Def.’s Mot. at 15

(asserting that because Crowley challenges the “manner in which TRANSCOM may ultimately

carry out corrective action that has not yet been completed,” its challenge is not ripe for

decision). The gravamen of Crowley’s argument is that no corrective action at all should be

taken.

Because Crowley is an interested party and its bid protest is neither moot nor unripe, the

Court has subject matter jurisdiction. The government’s motion to dismiss is therefore DENIED.

II. Standard of Review

Pursuant to Rule 52.1 of the Rules of the Court of Federal Claims (RCFC), the Court

reviews an agency’s procurement decision based on the administrative record. Bannum, Inc. v.

United States, 404 F.3d 1346, 1353–54 (Fed. Cir. 2005). The court makes “factual findings under

RCFC [52.1] from the record evidence as if it were conducting a trial on the record.” Id. at 1357.

Thus, “resolution of a motion respecting the administrative record is akin to an expedited trial on

the paper record, and the Court must make fact findings where necessary.” Baird v. United

States, 77 Fed. Cl. 114, 116 (2007). The Court’s inquiry is “whether, given all the disputed and

undisputed facts, a party has met its burden of proof based on the evidence in the record.” A&D

Fire Prot., Inc. v. United States, 72 Fed. Cl. 126, 131 (2006). Unlike a summary judgment

proceeding, genuine issues of material fact will not foreclose judgment on the administrative

record. Bannum, Inc., 404 F.3d at 1356.

In a bid protest, the Court reviews challenges to procurement decisions under the same

standards used to evaluate agency actions under the Administrative Procedure Act, 5 U.S.C.

§ 706. See 28 U.S.C. § 1491(b)(4) (stating that “[i]n any action under this subsection, the courts

shall review the agency’s decision pursuant to the standards set forth in section 706 of title 5”).

Thus, to successfully challenge an agency’s procurement decision, a plaintiff must show that the

agency’s decision was “arbitrary, capricious, an abuse of discretion, or otherwise not in

accordance with law.” 5 U.S.C. § 706(2)(A); see also Bannum, Inc., 404 F.3d at 1351.

15

This “highly deferential” standard of review “requires a reviewing court to sustain an

agency action evincing rational reasoning and consideration of relevant factors.” Advanced Data

Concepts, Inc. v. United States, 216 F.3d 1054, 1058 (Fed. Cir. 2000) (citing Bowman Transp.,

Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 285 (1974)). Thus, the Court cannot

substitute its judgment for that of the agency. See Honeywell, Inc. v. United States, 870 F.2d

644, 648 (Fed. Cir. 1989) (holding that as long as there is “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” (quoting M. Steinthal & Co. v. Seamans, 455 F.2d 1289, 1301

(D.C. Cir. 1971))). Instead, the Court’s function is limited to “determin[ing] whether ‘the

contracting agency provided a coherent and reasonable explanation of its exercise of

discretion.’” Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324,

1332–33 (Fed. Cir. 2001) (quoting Latecoere Int’l, Inc. v. U.S. Dep’t of Navy, 19 F.3d 1342,

1356 (11th Cir. 1994)); see also Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co.,

463 U.S. 29, 43 (1983) (court should review agency action to determine if the agency has

“examine[d] the relevant data and articulate[d] a satisfactory explanation for its action”). A

disappointed offeror “bears a heavy burden” in attempting to show that a procuring agency’s

decision lacked a rational basis. Impresa Construzioni, 238 F.3d at 1338.

III. Crowley’s Bid Protest

In its protest, Crowley attacks the agency’s decision to take the corrective action GAO

recommended by setting aside the contract award and reevaluating the offerors’ past

performance. As the court of appeals has observed, “a procurement agency’s decision to follow

the Comptroller General’s recommendation, even though that recommendation differ[s] from the

contracting officer’s initial decision, [is] proper unless the Comptroller General’s decision itself

was irrational.” Honeywell, Inc., 870 F.2d at 648; see also Centech Grp. v. United States, 554

F.3d 1029, 1039 (Fed. Cir. 2009). Thus, in reviewing an agency’s implementation of corrective

action recommended by GAO, the court’s “task is to evaluate the rationality of the GAO

decision.” Turner Constr. Co. v. United States, 645 F.3d 1377, 1383 (Fed. Cir. 2011). And in

determining whether GAO’s decision is rational, the court must necessarily consider the

reasonableness of the underlying agency decision as to which GAO recommended corrective

action. Sys. Application & Techs., Inc. v. United States, 100 Fed. Cl. 687, 714–15 (2011)

(finding GAO recommendation for corrective action irrational where record showed agency

performed proper analysis and tradeoff to which GAO did not give appropriate deference), aff’d,

691 F.3d 1374 (Fed. Cir. 2012).

In this case, Crowley contends that GAO’s decision was irrational, arguing that “GAO’s

decision ignores the very thing it was charged with reviewing: the Agency’s contemporaneous

evaluation record.” Crowley Logistics, Inc.’s Mem. in Supp. of Its Mot. for J. on the Admin. R.

at 16, ECF No. 39-1. According to Crowley, that “contemporaneous record provides a rational,

documented basis for the Agency’s determination to assign Crowley a Satisfactory Confidence

rating.” Id. at 15. It claims that instead of reviewing the agency’s reasoning and deferring to the

agency’s methodology, GAO imposed upon the agency its own “new, unwritten dollar-value

benchmark to be used in evaluating whether each offeror’s past performance references met even

the lowest rating of Somewhat Relevant.” Id. at 14. According to Crowley, “[b]y imposing its

own dollar-value threshold in the context of evaluating Past Performance, GAO fundamentally

altered the Solicitation’s tailored evaluation criteria and created the false appearance that

16

Crowley—which indisputably has the transport and logistics experience to perform this

Contract—apparently lacked any so-called ‘relevant’ performance history.” Id. at 20.

Crowley’s arguments are based on a misapprehension of GAO’s reasoning and decision.

GAO did not ignore the record developed by the agency regarding Crowley’s past performance;

rather, it found that the record did not reflect the basis for the agency’s decision to rate sixteen of

Crowley’s past performance references “Somewhat Relevant.” GAO concluded that the agency’s

past performance evaluation was unsupported by the record because “it [was] not clear . . . how

the agency determined that the magnitude of Crowley’s past efforts supported the ratings.” AR

Tab 148 at 13013–14. Specifically, there was “nothing in Crowley’s past performance evaluation

report to reflect what benchmarks might have been used to assess whether Crowley’s past efforts

met the criteria for the various relevancy ratings defined in the solicitation.” Id. And the absence

of any stated explanation was particularly problematic to GAO given the relatively low dollar

value of Crowley’s efforts when compared to the value of the DFTS contract. Id. at 13013.

GAO’s criticisms were well-taken. Although the discussion of Crowley’s past

performance references was thirty-five pages long (as Crowley emphasizes), the narratives for

each of the past performance references set forth in those thirty-five pages simply restate

information contained in the performance questionnaires and then end with a conclusory

characterization of the relevance of the reference. The narratives do not include any discussion

that compares the scope and magnitude of effort and complexities of the offeror’s past

performance references to those of the DFTS contract. To be sure, an agency’s past performance

analysis does not need to contain “an exhaustive comparison” of a reference’s relevance to the

performance work statement. See Westech Int’l, Inc. v. United States, 79 Fed. Cl. 272, 294

(2007). Nonetheless, an agency must supply enough detail to allow the reviewing body to ensure

that the agency action “evinc[es] rational reasoning and [the] consideration of relevant factors.”

See Weeks Marine, Inc., 575 F.3d at 1369 (internal quotation omitted). It was not unreasonable

for GAO to find the level of detail inadequate in this case, particularly in light of the fact that the

dollar value of each of the past performance references was relatively low as compared to the

value of the DFTS contract.

Moreover, GAO reasonably rejected agency counsel’s attempt to supply an explanation

of the agency’s methodology during the protest. Counsel argued that the agency’s “Somewhat

Relevant” ratings were reasonable because the “aggregate of the average annual value” of twelve

of Crowley’s past performance references exceeded “the maximum value for the transportation

CLIN for the 2-year base period of the contract awarded to Crowley.” AR Tab 148 at 13012.

First, GAO observed that the rationale counsel offered was “not reflected in the

contemporaneous record.” Id. at 13012; see also id. at 13014 (“[T]here is no evidence that the

agency calculated an average annual value for the efforts in order to make an ‘apples-to-apples’

comparison of the efforts’ magnitude relative to the magnitude of the solicitation.”).

Second, even if the record had supported the proffered rationale, GAO reasonably found

the rationale itself fatally flawed because it used only the contract’s two-year base period for

purposes of comparing an offeror’s past performance efforts to the effort required by the

Solicitation and did not include the efforts required during the option years. See id. at 13014–15.

By contrast, the IGCE encompassed the entire possible period of performance including the

17

option years. Id. at 13015. Similarly, the calculation of TEP (which was to be considered in

making the award decision) also included the option years. Id. Further, each option year was

expected to cost at least $50 million more than the entire two-year base period.9 See id. Tab 4 at

57; see also id. Tab 148 at 13015. Accordingly, GAO found the “agency’s selection of the

significantly lower-valued transportation CLIN for the base period . . . to be an unreasonable

benchmark.” Id. Tab 148 at 13015.

The Court agrees with GAO that the agency’s proffered methodology was unreasonable.

Indeed, in determining relevance, the agency was required to compare an offeror’s past

performance efforts to the scope, magnitude, and complexity of efforts that “this solicitation

requires.” See id. Tab 20 at 9501. The Solicitation “requires” that offerors be able to undertake

the efforts that are included in the option years. It was not irrational, therefore, for GAO to reject

the methodology agency counsel suggested.10

Finally, contrary to Crowley’s contentions, GAO did not alter the Solicitation’s past

performance evaluation methodology or set any bright-line benchmark that the agency must use

upon reevaluation to determine whether a past performance reference is somewhat relevant.

Rather, in explaining why it had rejected the agency’s purported method of comparison, it stated

that “[o]ne reasonable benchmark under the circumstances here could be the average value of

each year of performance (including options) of the contract.” Id. Tab 148 at 13016 (emphasis

added). But it did not require the agency to use any particular benchmark. It merely

recommended that “the agency reevaluate Crowley’s past performance in a manner that is

reasonable and consistent with both the solicitation and [its] decision.” Id. at 13017. GAO’s

decision even noted the possibility of a different, non-monetary benchmark: “such benchmarks

might have included . . . the number of total or monthly shipment transactions under the effort.”

Id. at 13014. USTRANSCOM is thus free, in its corrective action, to consider other aspects of a

past performance reference either in addition to or, if appropriate, in lieu of dollar amount.

In short, because GAO’s decision was rational, USTRANSCOM’s decision to take

corrective action in accordance with GAO’s recommendation was reasonable. Crowley’s motion

for judgment on the administrative record in case number 17-455 is DENIED and the

government’s and XPO’s cross-motions are GRANTED.

9

As GAO noted, the option years were expected to cost more than the base period because of the

“potential addition of military users of the contract.” AR Tab 148 at 13015 (internal quotation

omitted).

10

In its reply memorandum, Crowley similarly suggests its own rationale for assigning a

“Somewhat Relevant” rating to its past performance based upon factors in addition to dollar

value, such as the kind of services, the volume and types of shipments, and the complexity of

past performance efforts. Crowley Logistics, Inc.’s Reply to the Government’s and XPO’s

Resps. & Resp. to the Government’s and XPO’s Cross-Mots. at 15–18, ECF No. 45. The Court

does not consider whether Crowley’s suggested methodology would provide a reasonable basis

for a “Somewhat Relevant” rating, because the record is silent as to whether the agency relied on

any of these factors.

18

IV. XPO’s Bid Protest

A. Unbalanced Pricing

In Counts I and II of its amended complaint, XPO challenges the agency’s unbalanced

pricing evaluation and alleges that USTRANSCOM’s corrective action is “arbitrary, capricious,

and unlawful in scope” because it will not address the alleged flaws in that evaluation. Am.

Compl. ¶¶ 71–73; 77–81. Specifically, XPO contends that “while claiming to have reviewed

Crowley’s proposal for unbalanced bidding, the agency somehow missed the fact that Crowley’s

evaluated price advantage was the product of Crowley low-balling the [***] subcontract line

items (‘SLINs’), especially those [***].” XPO’s Br. in Supp. of Mot. for J. on the Admin. R.

(XPO’s Br.) at 2, ECF No. 37-1. It asserts that “[o]n the [***] SLINs [***], XPO was

significantly lower in price, but this is not acknowledged or analyzed anywhere in the evaluation

materials.” Id. XPO further argues that “the agency was required to have eliminated Crowley’s

proposal for this reason alone.” Id.

Citing Blue & Gold Fleet, LP v. United States, 492 F.3d 1308 (Fed. Cir. 2007), both the

government and Crowley argue that XPO’s unbalanced pricing claim has been waived because

XPO did not file a protest challenging the accuracy of the Solicitation’s quantity estimates before

the time for responding to the Solicitation expired. In any event, they argue, XPO’s unbalanced

pricing argument lacks merit. For the reasons set forth below, the Court rejects the government

and Crowley’s contention that XPO waived its right to pursue its unbalanced pricing claims. It

agrees, however, that XPO’s argument fails on the merits.

FAR 15.404-1(g)(1) states that “[u]nbalanced pricing exists when, despite an acceptable

total evaluated price, the price of one or more line items is significantly over or understated as

indicated by the application of cost or price analysis techniques.” FAR 15.404-1(g)(2), in turn,

provides that “[a]ll offers with separately priced line items or subline items shall be analyzed to

determine if the prices are unbalanced.”

Mere mathematical imbalance, however, is not enough to justify the rejection of an offer;

the imbalance must be material. J&D Maint. & Servs. v. United States, 45 Fed. Cl. 532, 536–37

(1999); see also Ralph C. Nash & John Cibinic, Unbalanced Bids and Proposals: Trying to Beat

the System, 5 No. 4 Nash & Cibinic Rep. ¶ 21 (1991) (“It is material unbalancing which

concerns the Government.” (emphasis in original)). An imbalance is material “if a [CO]

determines that the lack of balance poses an unacceptable risk to the Government,” i.e., a risk

that “award of the contract will result in paying unreasonably high prices for contract

performance.” FAR 15.404-1(g)(3), (g)(2)(ii); see also Southgulf, Inc. v. United States, 30 F.

App’x 977, 978 (Fed. Cir. 2002) (“A bid is materially unbalanced when . . . there is a reasonable

doubt that the bid will result in the lowest overall cost.” (internal quotation omitted)); Ultimate

Concrete, LLC v. United States, 127 Fed. Cl. 77, 83 (2016) (stating that materially unbalanced

pricing exists when “significantly overstated or understated” prices give rise to a “reasonable

doubt that the bid will . . . result in the lowest overall cost to the government”).

In the context of an indefinite-delivery, indefinite-quantity (IDIQ) contract like the one

awarded in this case, if the quantity estimates are accurate a mathematically unbalanced bid

“poses little risk to the government.” Daniel I. Gordon, Unbalanced Bids, 24 Pub. Cont. L.J. 1,

19

33–34 (1994). But by definition, because an “estimate” is only an approximation, an “accurate

estimate” is merely an estimate that is based upon the best information reasonably available to

the agency. See id. at 34. As a result, “where the agency, while confirming that the estimates are

as accurate as possible, lacks complete confidence in their accuracy, the agency may reject the

mathematically unbalanced bid because of ‘reasonable doubt’ that it will ultimately represent the

low[est] cost to the Government.” Id. “Rejection of the unbalanced bid is particularly justifiable

where, in comparison with competing bids, its prices appear extremely skewed.” Id.

As noted, GAO concluded (and both Crowley and the government argue) that XPO

waived its unbalanced pricing claim by failing to challenge the reasonableness of the quantity

estimates during the pre-offer stage of the competition. That conclusion was based on the

premise that—in the context of an IDIQ contract—an unbalanced pricing claim will rise or fall

based entirely on whether the quantity estimates in the solicitation are accurate, i.e., whether they

are based on the best information available to the agency. But, as noted above, even when the

estimates are as accurate as possible based on the information before the agency, it may still be

appropriate to find a price proposal materially unbalanced where the prices that are proposed are

so over- or understated that even a relatively small deviation from the agency’s reasonable

estimates gives rise to a risk that the agency will pay unreasonably high prices for contract

performance. Further, even if the quantity estimates contained in the Solicitation are reasonably

accurate, that does not relieve the agency of the obligation to undertake the unbalanced pricing

analysis required by the FAR. Accordingly, the Court concludes that XPO is not precluded from

pressing its unbalanced pricing claims because it did not file a protest challenging the

reasonableness of the agency’s quantity estimates before the time for submitting an offer expired.

While the Court rejects the government’s and Crowley’s waiver arguments, however, it is

not persuaded of the merits of XPO’s challenge. XPO argues that “USTRANSCOM violated

procurement law by failing to abide by the terms of FAR § 15.404-1(g) during the evaluation of

offerors’ pricing proposals.” XPO’s Br. at 8. In particular, XPO argues that the agency’s alleged

failure to follow the required evaluation process resulted in its lack of consideration of whether

there was a risk that the agency would pay unreasonably high prices for Crowley’s services. See

id. at 9–10. The record, however, reveals that these assertions are incorrect.

As noted above, FAR 15.404-1(g)(2) requires that “[a]ll offers with separately priced line

items or subline items . . . be analyzed to determine if the prices are unbalanced.” The

regulations permit the CO to use either cost or price analysis techniques. See FAR 15.404-

1(g)(2). The latter include the “[c]omparison of proposed prices received in response to the

solicitation,” as “[n]ormally, adequate price competition establishes a fair and reasonable price.”

Id. § 15.404-1(b)(2). This technique is one of the FAR’s two “preferred” price analysis

techniques. Id. § 15.404-1(b)(3). Only if this analysis reveals an unbalanced offer must the CO

proceed to consider the risk to the government. Id. § 15.404-1(g)(2).

Here, the CO performed the preferred price analysis technique of comparing the

“proposed prices received in response to the solicitation” in accordance with FAR 15.404-

1(b)(2)(i). AR Tab 116 at 12274. He compared the individual unit prices and SLIN prices of both

proposals with each other and with the prices in GENCO’s previous proposal. Id. at 12275.

Further, he used the unit price comparisons to create a standard deviation against which each

price could be measured and assessed as high or significantly high. Id. The CO performed this

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analysis for both XPO’s and Crowley’s prices each time they revised their price proposals. Id. at

12275–313. Thus, the record is quite clear that the CO complied with the price evaluation

requirements of FAR 15.404-1(g), as he extensively compared the proposed prices received in

response to the Solicitation.

Moreover, the CO used this analysis to draw conclusions about each offeror’s proposed

prices. He concluded that both Crowley’s and XPO’s prices were “fair and reasonable based on

adequate price competition” (and on other than certified cost or pricing data with respect to

Crowley). Id. at 12305, 12308. The CO further determined that “there remain[ed] no indication

of unbalanced pricing.” AR Tab 116 at 12319. In other words, the CO found that the offerors’

prices were neither over- nor understated. This conclusion is adequately supported by the record.

And, because the CO concluded there was no unbalanced pricing, FAR 15.404-1(g) did not

require him to further consider any risk to the government from the offerors’ prices. XPO’s

arguments thus lack merit. Accordingly, XPO’s motion for judgment on the administrative

record in case number 17-452, with respect to Counts I and II, must be DENIED, and the

government’s and Crowley’s cross-motions must be GRANTED.

B. The Agency’s Alleged Failure to Consider Likely Actual Cost

XPO contends that the agency violated the terms of the Solicitation by giving what it

calls “exclusive, controlling weight in the best value tradeoff to the TEPs of the offerors.” XPO’s

Br. at 18. It argues that the agency could not lawfully use TEP in this competition to determine

cost differences between proposals because “the TEP numbers, at $7+ billion, were almost three

times the IGCE of $2.7 billion and over three times the announced expected cost of $2.2 billion.”

Id. at 19. According to XPO, “[c]ommon sense tells one that it is irrational to rely on a ‘cost

difference’ that does not comport with the actual cost to be paid.” Id. It argues that “[t]o be

meaningful, a best value determination must weigh the value of a proposal’s non-price benefits

against the cost to the government associated with those benefits.” Id. (citations omitted,

emphasis in original).

XPO’s contentions are unavailing. In this case, the Solicitation explicitly provided that

the agency would use TEP as the common basis for comparing relative costs. The relevant

paragraph reads, in pertinent part, as follows:

Price will be considered in determining the best value offeror. Price

will be evaluated for completeness and reasonableness; however,

price will not be rated. The Offeror’s proposed pricing will be

evaluated using one or more of the techniques set forth in FAR

15.404-1(b)(2) to determine [if] prices [are] fair and reasonable.

Proposed pricing will also be evaluated to determine that all prices

are complete . . . . In addition, a Total Evaluated Price (TEP) will be

calculated by totaling the extended prices for all proposed pricing of

CLIN X001 (Transportation) in the Rate Tables. . . . The TEP does

not include the Not-To-Exceed costs for CLIN X002, Customs

Brokerage. The TEP does not include the offeror’s proposed pricing

for CLINs 0003, Site Implementation and CLIN 0004, Systems

Implementation. Both CLIN 0003 and 0004 will be evaluated to

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determine prices are fair and reasonable; however, they will not be

included in the TEP. The TEP will be considered in making the

contract award decision.

AR Tab 20 at 9502 (emphasis supplied).

The underscored text clearly conveys that it is the proposals’ TEPs that “will be

considered in making the contract award decision.” There is no mention in the paragraph of

“actual cost.” Further, the Court is not persuaded by XPO’s argument that the statement at the

beginning of the passage that “[p]rice will be considered in determining the best value offeror”

should be read to mean that the agency would also take into account some other measure of

“actual cost to the government.” In particular, contrary to XPO’s arguments, the use of the

phrase “in addition” at the beginning of the section that introduces the TEP as a relevant factor

does not suggest that there is some distinction between “price” and “TEP” for purposes of the

paragraph, or that “price” means actual cost. See XPO’s Reply at 2, 19. The phrase “in addition”

is used to transition from a discussion of how price would be evaluated for completeness,

reasonableness, and fairness, to a discussion of how the agency would compare the proposals for

purposes of making the contract award—i.e., through calculation and comparison of the TEPs.

See AR Tab 20 at 9502.

Further, XPO’s argument—that the agency was required by law to consider something

other than TEP in making its best value determination in this case—essentially challenges the

terms of the Solicitation itself, not an error made in the evaluation process. Because the argument

was not made until after proposals were submitted and evaluated, it has been waived under Blue

& Gold Fleet. See Linc Gov’t Servs., LLC, 96 Fed. Cl. at 713 (finding that “plaintiff’s challenges

to the Army’s price evaluation . . . amount to allegations of a patent error . . . in the Solicitation”

and that “[h]aving failed to raise these objections . . . prior to submitting its proposal, plaintiff

has waived its right to do so before this court”).

In any event, XPO’s argument that the agency was legally required to consider something

beyond TEP fails on the merits. Thus, both 10 U.S.C. § 2305(a)(3)(A)(ii) and FAR 15.304(c)(1)

recognize that agencies may consider either price or cost as an evaluation factor when making a

source selection decision. Further, in the context of an IDIQ contract like the present one, “a

comparative price evaluation of competing proposals presents a particular challenge” because the

agency’s needs are uncertain at the time of the solicitation. Linc Gov’t Servs., 96 Fed. Cl. at 713.

Therefore “at the solicitation stage, the crucial decision confronting the procurement official

turns on the relative prices of competing proposals, not the absolute cost that the government will

pay for the procured goods or services.” Id. at 714. The government may use any reasonable

methodology that provides “a common basis for comparing the relative costs of the proposals.”

Magnum Opus Techs., Inc. v. United States, 94 Fed. Cl. 512, 535 (2010) (quoting Aalco

Forwarding, Inc., B–277241, 98–1 CPD ¶ 87, 1998 WL 121352, at *7 (Comp. Gen. March 11,

1998)). “The issue [i]s not whether the [government] could have selected a pricing methodology

that (from plaintiffs’ perspective) was better—the issue is whether the pricing methodology the

[government] did select is arbitrary, capricious, or otherwise contrary to law.” Qwest Gov’t

Servs., Inc. v. United States, 112 Fed. Cl. 24, 34 (2013) (quotation omitted, second and third

alteration in original). Examining each offeror’s TEP provides a common basis for comparing

the costs of each offeror’s proposal, and therefore was entirely reasonable.

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Finally, there is no merit to XPO’s argument that the agency engaged in misleading

discussions with the offerors by failing to advise them of an alleged change in its method of

evaluating price between its first and second evaluations. See XPO’s Br. at 24. According to

Count V of XPO’s complaint, the agency had taken likely actual costs into consideration when it

conducted its first evaluation, but during the second evaluation it changed its standards by

relying only on TEP. Am. Compl. ¶¶ 105–06. It claims that “[h]ad the agency informed XPO of

its changed interpretations, rather than informing XPO that it would follow the same procedures,

XPO could have further improved its pricing relative to the TEP and likely would have been

found to have offered the best value proposal.” Id. ¶ 107.

XPO’s argument that the agency considered something other than TEP to make its best

value determination during the first evaluation lacks merit. It is based upon GAO’s discussion of

a statement by the CO asserting that the TEPs were “not indicative of what will truly be spent

over the lifetime of the contract.” AR Tab 74 at 11954 n.8 (quoting the CO’s Statement). This

statement was submitted as part of the agency’s defense of its decision to award the contract to

GENCO (rather than Crowley) notwithstanding GENCO’s significantly higher TEP. In a

footnote, GAO commented that “in evaluating competitive proposals, agencies are required to

meaningfully consider the cost to the government,” and that “to the extent the agency does not

consider the [TEPs] here to be a reasonable assessment of the cost of performance, the agency

should consider whether the solicitation’s price evaluation methodology should be revised.” Id.

First, the CO’s statement suggesting that the TEPs did not reflect actual costs over the

lifetime of the contract was a defensive point made in the context of litigation and was not a

stated basis for awarding the contract to GENCO rather than Crowley. Further, and more

significantly, USTRANSCOM did not, in fact, revise the price evaluation methodology after the

first GAO decision. Given the fact that GAO instructed that the agency should revise the terms

of the Solicitation if the TEP did not represent a reasonable assessment of cost, the agency’s

decision not to change the RFP shows that it intended its use of the TEP to be its reasonable

assessment of cost for the second evaluation as well. Therefore, there was nothing misleading

about the discussions between the agency and XPO because there was no change in the agency’s

method of evaluating price between its first and second evaluations.

For these reasons, XPO’s motion for judgment on the administrative record in case

number 17-452 with respect to Counts III and V of the complaint is DENIED and the

government’s and Crowley’s cross-motions are GRANTED.

C. Alleged Flaws in the Agency’s Evaluation of Non-Price Factors

In Count IV of its complaint, XPO challenges the agency’s conclusion that the benefits of

XPO’s proposal were insufficient to justify its higher TEP, claiming that the agency did not

engage in a meaningful comparison of the offerors’ past performance or technical capability. See

Am. Compl. ¶¶ 90–100. XPO contends that “[t]he agency’s best value determination was . . .

fundamentally flawed because the SSA failed to consider the underlying merits of the proposals

and, instead, based his trade-off solely on the adjectival ratings.” XPO’s Br. at 24; see also Am.

Compl. ¶ 95 (asserting that the source selection decision “lack[ed] any substantive consideration

. . . of Crowley’s and XPO’s proposals . . . [and] fail[ed] adequately to document the . . .

decision”).

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To the extent that XPO challenges the agency’s comparison of the past performance of

Crowley and XPO, that challenge is moot. As part of the corrective action the Court has already

found reasonable, the agency will be re-evaluating the performance risk presented by each

offeror’s proposal. There is no live controversy, therefore, regarding the merits of the agency’s

original performance assessments.

As noted, XPO also challenges the agency’s comparison of the parties’ technical

proposals. It argues that the comparative assessment of the technical proposals was flawed

because it was allegedly “almost exclusively based on top-level adjectival ratings” and also

allegedly “whitewash[ed]” the differences in proposal merit that the agency identified. XPO’s

Br. at 29–30. This aspect of XPO’s challenge is not moot because the agency will not revisit this

comparative assessment as part of the corrective action, unless the Court directs it to do so. The

challenge, however, lacks merit.

FAR 15.308 provides that the SSA’s “decision shall be based on a comparative

assessment of proposals against all source selection criteria in the solicitation.” He or she may

“use reports and analyses prepared by others,” but the decision must “represent the SSA’s

independent judgment.” FAR 15.308. This comparative assessment requires “consideration not

only [of] the proposals’ adjectival ratings but also information on advantages and disadvantages

of the proposals,” and the agency is required to “[l]ook[] beyond the adjectival ratings . . .

because proposals with the same adjectival ratings are not necessarily of equal quality.” Mil-Mar

Century Corp. v. United States, 111 Fed. Cl. 508, 553 (2013) (quotation and citation omitted).

In this case, an examination of the administrative record reveals that the agency and the

SSA clearly considered more than the adjectival ratings in comparing the proposals. First, the

agency engaged in an analysis of the specific strengths of each offeror’s technical proposal as

relevant to the evaluation subfactors. AR Tab 117 at 12385–88. For instance, the agency noted

that Crowley’s proposal to use “[***].” Id. at 12385. Similarly, it noted a strength in XPO’s

proposal to use a claims processing system known as “ONE TMS,” because it would allow XPO

to “exceed[] the Government’s requirement of processing claims in less than 180 days.” Id. at

12388.

Second, the SSEB engaged in a detailed comparative discussion of the various strengths

of each proposal with respect to each subfactor. Id. at 12391–95. These comparisons were based

on more than a tallying of the number of strengths or a comparison of the adjectival ratings

received for each subfactor; they included an analysis of why particular aspects of the proposals

warranted designation as a strength and why one proposal was more favorable than the other

with respect to that subfactor. E.g., id. at 12391 (SSEB report assigning a strength to XPO for

subfactor one for its “proposed 24/7 technical support” because “it allow[ed] the Government the

potential for faster response to unforeseen systems issues”).

To be sure, the SSEB concluded with respect to subfactors one and four that “there [was]

no discernable difference in the proposed technical approach and all Offerors [were] considered

equal under [the] subfactor.” Id. at 12392, 12395. But that conclusion does not suggest that the

agency was somehow “artificial[ly] levelling” the parties’ proposals, as XPO contends. XPO’s

Br. 30. Thus, the SSEB also concluded, with respect to subfactor two, that XPO’s approach was

“considered more favorable in that the Offeror provide[d] an implementation plan utilizing a

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proven and reliable transportation management system that is currently in use by the

Government and requires minimal revisions to conform to the DFTS requirement.” Id. at 12393.

It noted this “would require less training” and would provide “assurance of a tested and proven

transportation management system.” Id. With respect to subfactor three, the SSEB concluded

that “Crowley’s approach [was] considered more favorable” because it used “[***].” Id. at

12394.

Finally, both the SSAC and SSA adopted and used these discussions and comparisons.

See id. Tab 118 at 12398, 12400–04; id. Tab 120 at 12442–45. The SSA noted in the source

selection decision, for example, that for the second subfactor, “[b]oth Offerors provided a

technical approach that was considered Good,” but “[t]here [was] a discernible difference . . . in

the proposed technical approaches.” Id. Tab 120 at 12444. He stated that “[w]hile both Offerors’

approaches contain multiple strengths with benefits, [XPO’s] approach is considered more

favorable” because it “provides an implementation plan utilizing a transportation management

system that is currently in use,” which would “require less training [for] several of the DFTS

customers as well as assurance of a tested and proven transportation management system that

connects with DoD shipper systems.” Id.

Thus, XPO’s argument that the SSA did not consider and compare the substance of the

proposals has no merit. The SSA looked beyond the adjectival ratings and considered the

advantages and disadvantages of the offerors’ technical approaches. Therefore, because XPO’s

arguments all lack merit, XPO’s motion for judgment with respect to Count IV in case number

17-452 is DENIED and the government’s and Crowley’s cross-motions are GRANTED.

CONCLUSION

For the reasons set forth above, the government’s motion to dismiss Crowley’s complaint

is DENIED. Crowley’s motion for judgment on the administrative record in case number 17-455

is DENIED, and the government’s and XPO’s cross-motions are GRANTED. With respect to

case number 17-452, XPO’s motion for judgment on the administrative record is DENIED, and

the government’s and Crowley’s cross-motions are GRANTED. The Clerk shall enter judgment

accordingly. Each side shall bear its own costs.

IT IS SO ORDERED.

s/ Elaine D. Kaplan

ELAINE D. KAPLAN

Judge

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