Ernst & Young, LLP v. United States

In the United States Court of Federal Claims

No. 17-1329

Filed: March 5, 2018*

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

* 5 U.S.C. § 706 (Administrative Procedure

* Act, Scope of Review);

ERNST & YOUNG, LLP, * 28 U.S.C. § 1491(b)(1), (4) (United States

* Court of Federal Claims Bid Protest

Plaintiff, * Jurisdiction);

* 48 C.F.R. §§ 1.102-2 (Performance

v. * Standards); 8.404 (Use of Federal

* Supply Schedules); 8.405-3 (Blanket

THE UNITED STATES, * Purchase Agreements (BPAs)); 9.504

* (Contracting Officer Responsibilities);

Defendant, * 9.505 (General Rules); 9.505-2

* (Preparing Specifications or Work

and * Statements); 9.506 (Procedures);

* 15.305 (Proposal Evaluation); 15.306

PRICEWATERHOUSECOOPERS PUBLIC * (Exchanges with Offerors After

SECTOR, LLP, * Receipt of Proposals);

* Rules of the United States Court of

Defendant-Intervenor. * Federal Claims 52.1 (Motion for

* Judgment on the Administrative

* Record); 52.2 (Remand).

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Craig A. Holman, Arnold & Porter Kaye Scholer LLP, Washington, D.C., Counsel for Plaintiff.

Geoffrey M. Long, United States Department of Justice, Civil Division, Washington, D.C.,

Counsel for the Government.

Philip J. Davis, Wiley Rein, LLP, Washington, D.C., Counsel for Defendant-Intervenor.

MEMORANDUM OPINION AND FINAL ORDER GRANTING PLAINTIFF’S MOTION

FOR JUDGMENT ON THE ADMINISTRATIVE RECORD IN PART

*

On February 23, 2018, the court forwarded a sealed copy of this Memorandum Opinion

And Final Order to the parties to redact any confidential and/or privileged information from the

public version and note any citation or editorial errors that required correction. The parties had

until March 2, 2018 at 3:00 p.m. E.S.T., to file any proposed redactions or revisions. The court

has incorporated all appropriate redactions.

BRADEN, Chief Judge.

This bid protest concerns violations of several Federal Acquisition Regulations (“FAR”),

including the failure of the Contracting Officer (the “CO”) to “[i]dentify and evaluate” potential

organizational conflicts of interest (“OCI”), “as early in the acquisition process as possible,” and

“[a]void, neutralize, or mitigate significant potential [OCIs] before contract award.” See 48 C.F.R.

§ 9.504(a). That violation is more than sufficient grounds to support an injunction to set aside the

contract award in this case, but coupled with other prejudicial FAR violations, requires a remand

to the United States Department of Veterans Affairs (the “VA”).

To facilitate review of this Memorandum Opinion And Final Order, the court has provided

the following outline.

I. RELEVANT FACTUAL BACKGROUND.

A. The United States Department Of Veterans Affairs’s Market Area Health System

Optimization Pilot Study.

B. The Solicitation For The Market Area Health System Optimization Project.

C. The Factors By Which Proposals Would Be Evaluated.

1. The Small Business Participation Commitment/Plan Factor.

2. The Non-Price Factors.

a. The Technical Factor.

b. The Corporate Experience Factor.

c. The Past Performance Factor.

d. The Veterans Involvement Factor

3. The Price Factor.

D. Five Proposals For The Market Area Health System Optimization Project Were

Submitted.

E. The Source Selection Evaluation Board’s Evaluation.

1. The Small Business Participation Commitment/Plan Factor.

2. The Non-Price Factors.

a. The Technical Factor.

b. The Corporate Experience Factor.

c. The Past Performance Factor.

d. The Veterans Involvement Factor.

3. The Price Factor.

4. Summary Of The Source Selection Evaluation Board’s Evaluation.

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F. The Contracting Officer’s “Best Value Trade-Off” Determination And Award Of

The Market Area Health System Optimization Contract To

PricewaterhouseCoopers Public Sector, LLP.

II. PROCEDURAL HISTORY.

III. DISCUSSION.

A. Subject Matter Jurisdiction.

B. Standing.

C. Whether The United States Department of Veterans Affairs’s Award to

PricewaterhouseCoopers Public Sector, LLP Was Contrary To Law, Not Rational,

Or Arbitrary And Capricious.

1. Standard Of Review For Judgment On The Administrative Record,

Pursuant To RCFC 52.1.

2. Standard Of Review For A Bid Protest.

3. Ernst & Young, LLP’s Amended Complaint.

4. Ernst & Young, LLP’s Motion For Judgment On The Administrative

Record.

a. The Source Selection Evaluation Board’s Evaluation Failed To

Comply With The Solicitation Or Otherwise Was Arbitrary And

Capricious.

b. PricewaterhouseCoopers Public Sector, LLP’s Assumptions Did

Not Comply With The Solicitation.

c. The Contracting Officer Failed To Conduct Discussions.

d. The Contracting Officer Failed Adequately To Mitigate

Organizational Conflicts Of Interest.

e. Injunctive Relief Is Appropriate.

5. The Government’s Response And Cross-Motion For Judgment On The

Administrative Record.

a. The Source Selection Evaluation Board’s Evaluation Was Proper.

b. PricewaterhouseCoopers Public Sector, LLP’s Assumptions

Complied With The Solicitation.

c. The Contracting Officer Was Not Required To Conduct

Discussions.

d. Ernst & Young, LLP’s Organizational Conflict Of Interest Claims

Are Untimely And Unsupported.

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6. PricewaterhouseCoopers Public Sector, LLP’s Response And Cross-

Motion For Judgment On The Administrative Record.

7. Ernst & Young, LLP’s Reply In Support Of Motion For Judgment On The

Administrative Record And Opposition To The Government’s And

PricewaterhouseCoopers Public Sector, LLP’s Cross-Motions For

Judgment On The Administrative Record.

a. The Extent To Which

Will Be Involved Is Uncertain.

b. Ernst & Young, LLP Did Not Waive Organizational Conflict Of

Interest Claims.

c. Permanent Injunctive Relief Is Appropriate.

8. The Government’s Reply In Support Of Cross-Motion For Judgment On

The Administrative Record.

9. PricewaterhouseCoopers Public Sector, LLP’s Reply In Support Of Cross-

Motion For Judgment On The Administrative Record.

10. The Court’s Resolution.

a. Ernst & Young, LLP Did Not Waive Any Organizational Conflict

Of Interest Claims.

b. The Contracting Officer Violated FAR 9.504(a), By Failing To

Identify, Evaluate, And Mitigate A Significant Unequal Access To

Information Organizational Conflict Of Interest Prior To Award Of

The Market Area Health System Optimization Contract.

c. A Biased Ground Rules Organizational Conflict Of Interest,

However, Did Not Exist.

d. The Source Selection Evaluation Board Violated FAR 8.405-

3(b)(2), By Failing To Evaluate Proposals, Pursuant To The

Requirements Of The Solicitation.

i. As To Ernst & Young, LLP’s Technical Proposal.

ii. As To PricewaterhouseCoopers Public Sector, LLP’s Past

Performance Examples.

e. The Contracting Officer Violated FAR 1.102-2(c)(3), By Failing

To Conduct Discussions Prior To Award Of The Market Area

Health System Optimization Contract.

f. The Administrative Record Does Not Evidence That The

Contracting Officer’s Decision Not To Award The Market Area

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Health System Optimization Contract To Ernst & Young, LLP

Was Arbitrary And Capricious, Or Lacked A Rational Basis.

g. Ernst & Young, LLP Was Prejudiced By The Contracting Officer’s

And The Source Selection Evaluation Board’s FAR Violations.

h. Ernst & Young, LLP Is Entitled To Injunctive Relief.

IV. CONCLUSION.

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I. RELEVANT FACTUAL BACKGROUND.1

A. The United States Department Of Veterans Affairs’s Market Area Health

System Optimization Pilot Study.

On December 6, 2016, the VA awarded The Craddock Group, LLC (“Craddock”) Contract

No. VA101F-17-C-2843 (the “Pilot Study Contract”). Tab 27, AR 930–39. This contract required

Craddock to conduct a pilot study (the “Pilot Study”) in contemplation of “a National Realignment

Plan,” known as the Market Area Health System Optimization Project (the “MAHSO Project”).

Tab 1, AR 4; Tab 4, AR 83; Tab 27, AR 830, 930–39. The MAHSO Project sought to “develop a

National Realignment Strategy . . . to establish high performing health care networks for [Veterans

Health Administration (the “VHA”)] services and facilities.” Tab 1, AR 4.

Under the Pilot Study Contract, Craddock was required to “[d]efine the ideal healthcare

delivery system design processes and outputs.” Tab 27, AR 934. In doing so, Craddock was “to

evaluate feasibility, time, costs, adverse events, strengths and weakness of the proposed [MAHSO

Project] to improve upon the study design.” Tab 1, AR 5. Craddock was required to assess three

VHA market areas (the “Pilot Study Market Areas”) to “develop[] a strategy to provide exceptional

healthcare that improves the health and wellbeing of [v]eterans throughout the country.” Tab 27,

AR 830; see also Tab 27, AR 934. This “strategy,” referred to as the “Methodology,” was “to be

used as a guide for future consulting firms to follow . . . during the . . . national ‘roll out’” of the

MAHSO Project across 96 VHA market areas. Tab 27, AR 830–31; Tab 27, AR 934. Between

April 2017 and August 2017, Craddock together with a subcontractor, PricewaterhouseCoopers

Public Sector, LLP (“PwC”), developed the Methodology. Tab 2, AR 26; Tab 27, AR 831. To

produce the Methodology, the VA provided Craddock and PwC with “proprietary” non-public

“[g]overnment-issued data” (the “Pilot Study Data”) for the three Pilot Study Market Areas. Tab

27, AR 831; Tab 27, AR 835–36 (“Data was directly provided to . . . Craddock . . . by the [VA]

during the development of the [M]ethodology[.]”).

The Methodology was a “straightforward step-by-step process that outline[d] the high level

approach, activities, and data that [would] be used” during the MAHSO Project. Tab 27, AR 835;

see also Tab 9, AR 377 (“The roadmap below outlines the high level approach, activities, and data

that were used for each market assessment.”). The Methodology described a “general approach

for analyzing each [VHA] market [area]” (Tab 27, AR 833), by the performance of eight defined

tasks: (1) “Evaluate Market Geography and Demographics;” (2) “Conduct Site Visits and

Interviews;” (3) “Estimate Current and Future Market Demand;” (4) “Estimate Current and Future

Total Market Supply;” (5) “Assess Quality, Satisfaction, Accessibility, Cost, Facility Condition

and Impact on Mission;” (6) “Review Preliminary Analysis, Results and Conclusions with Local

Market and VISN2 Staff;” (7) “Recommend Market Optimization Plan Based on Enterprise-wide

1

The facts recited herein were derived from the Second Corrected Administrative Record

(Tab 1, AR 1–Tab 27, AR 981). ECF No. 39.

2

The VHA is divided into 18 regional Veterans Integrated Service Networks

(“VISN”). See Locations: Veterans Health Admin., U.S. DEP’T OF VETERANS AFFAIRS,

https://www.va.gov/directory/guide/division.asp?dnum=1 (last visited Feb. 22, 2018).

6

Guiding Principles and Performance Against Quality, Access, Cost, Satisfaction and Mission

Standards;” and (8) “Integrate Market Optimization Recommendations into VISN and National

Strategic Plans.” Tab 9, AR 377.

During the time Craddock and PwC were working on the Methodology, the VA separately

“began developing a procurement package” (the “MAHSO Solicitation” or “Solicitation”) with

the assistance of the CO “to acquire consulting services” to perform the MAHSO Project, “based

on . . . experience[] gained . . . through participating in the [P]ilot . . . [S]tud[y] and assisting in the

evolution of the [M]ethodology.” Tab 27, AR 830, 837. The VA completed the MAHSO

Solicitation before the Methodology was finalized (Tab 27, AR 832 (“[T]he methodology was not

complete at the time of solicitation issuance[.]”)), but the VA was aware of the content and status

of the Methodology, as the VA “worked closely” with Craddock and PwC to develop the

Methodology. Tab 27, AR 831; Tab 27, AR 835 (“Craddock . . . and PwC had direct information

concerning the [M]ethodology since they were currently in the process of developing it with the

[VA].”).

On or about May 17, 2017, the CO was informed that Craddock and PwC would “likely

bid” on the MAHSO Project. Tab 27, AR 831.

B. The Solicitation For The Market Area Health System Optimization Project.

On June 30, 2017, the VA issued the MAHSO Solicitation, Solicitation No. VA101-17-Q-

0395. Tab 7, AR 139. The Solicitation was amended on July 7, 2017 (“Amendment A00001”)

and again on July 20, 2017 (“Amendment A00002”). Tab 8, AR 227; Tab 9, AR 337; Tab 27, AR

896. On July 7, 2017, The VA sent the Solicitation directly to Deloitte Consulting LLP

(“Deloitte”), Ernst & Young, LLP (“E&Y”), KPMG LLP (“KPMG”), and PwC, and also posted

the Solicitation on the General Services Administration’s (the “GSA”) eBuy website. Tab 18, AR

678.

The VA requested proposals from contractors “with deep and broad healthcare system

planning expertise” (Tab 9, AR 346), to “execut[e] extensive market studies of 96 . . . [VHA]

markets . . . and coalesce all findings into an integrated synergistic national realignment study.”

Tab 1, AR 4. The Solicitation stated that the VA “intend[ed] to establish a [single-award blanket

purchase agreement (“BPA”)]” under which the VA would place “calls,” or task orders, as “the

need for services ar[ose].” Tab 7, AR 139, 141. The Solicitation called for an initial task order

(“Task Order One”) to be completed within four months, i.e., “120 calendar days.” Tab 9, AR

339–44. The VA expected to award Task Order One “at [the] time of establishing the BPA.” Tab

8, AR 270.

The Solicitation included two Statements of Work (“SOW”): a BPA SOW (Tab 9, AR

346–74); and a Task Order One SOW. Tab 9, AR 339–44. The BPA SOW identified three “Task

Areas.” Tab 9, AR 349–54. “Task Area 1” was described as

[u]sing [the] . . . [M]ethodology defined through [the] [P]ilot [Study] . . . , develop

a National Enterprise Strategy to Create High Performing Networks and Optimize

Health Care Service Delivery by defining an optimum Health Care Service

Delivery System Design for each of the identified markets across the [VHA] (now

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identified as 93 plus three previously completed pilot markets, for a total of 96) that

will continue to improve access, satisfaction, and deliver efficient, high quality care

in a [v]eteran-centric way.

Tab 9, AR 349.

“Task Area 2” was described as

[u]sing [the] . . . [M]ethodology consisting of proven analytical tools and

applications to assess access, quality, and cost of available community care,

conduct market assessments for all V[H]A markets across the nation. Evaluate VA

care in each market and identify opportunities for [the] VA to purchase care from

community providers. Aggregate and analyze assessment results to inform the

Enterprise-wide National Realignment Strategy. Provide clear, data driven,

comprehensive written reports/presentations of findings, options and

recommendations for each market.

Tab 9, AR 351.

“Task Area 3” was described as

additional studies and analyses [to] further enable [the] VA to optimize its High

Performing Network Design and National Realignment Strategy and elicit

appropriate executive support, strategic communication, and stakeholder

management.

Tab 9, AR 352.

The Task Order One SOW, included components of all three Task Areas described in the

BPA SOW, and required the successful offeror to develop Phase I of the National Realignment

Strategy in approximately 32 VHA market areas across six VISNs and “recommend potential

health care service delivery realignments as well as recommendations to continue care as currently

provided in each market [area] for a 10 year period.” Tab 9, AR 339. The Task Order One SOW

required the successful offeror to “have one team per VISN” (Tab 9, AR 339) and, as a “General

Requirement,” the VA advised prospective offerors that “[t]ravel [would be] required for at least

six teams of five healthcare planners and data analysts to assess . . . [VHA market areas] within

each of the six (6) VISNs[.]” Tab 9, AR 344. In addition, the Task Order One SOW provided that

“[t]eams shall be supported by . . . disciplines and specialists[,] as needed. Core team leads include

a Senior Medical Facility Planner (Architect) and a Senior Medical Services Planner (Healthcare

Planner).” Tab 9, AR 344.

The Task Order One SOW required “consistent application” of the Methodology “across

all assessment teams.” Tab 9, AR 339 (“The [c]ontractor will be responsible for ensuring

consistent application of the [M]ethodology across all assessment teams. The market area health

system plans will be conducted according to [the M]ethodology.”); see also Tab 9, AR 341–42.

But, none of the prospective offerors, except PwC had access to the Methodology when the

Solicitation was issued on June 30, 2017. Tab 9, AR 337. Several prospective offerors, however,

requested that the Methodology be provided to all the prospective offerors. Tab 8, AR 298; see

8

also Tab 8, AR 299–300, 302. The CO refused, but promised that the Methodology would “be

provided after award of the BPA.” Tab 8, AR 298. The offerors also requested access to “any

assumptions used in development” of the Methodology. Tab 8, AR 298; see also Tab 8, AR 299–

300, 302. The CO responded that the “[M]ethodology is still being developed . . . but will be

relatively straight forward in nature, and after completion will require extensive

input/customization from the selected contractor.” Tab 8, AR 299. In addition, prospective

offerors requested “information on who developed the [M]ethodology.” Tab 8, AR 298. The CO

responded that Craddock was “assisting” in development of the Methodology, but did not mention

PwC’s involvement. Tab 8, AR 298–300, 302.

After the CO’s initial responses, but prior to release of the Methodology, a prospective

offeror expressed concern that

the [VA] recognizes that the [M]ethodology, which is key to the technical approach,

is currently being developed by contractors as part of the [P]ilot[ Study]. Given

that knowledge of th[e M]ethodology constitutes both unequal access to

information and creates biased ground rules that would subsequently provide an

unfair advantage to the current pilot support contractor and their team; and given

the increased likelihood that participation in development of the [M]ethodology

could subsequently impair a contractor’s ability to provide objective advice in

evaluating market options and developing the subsequent National Enterprise

Strategy, can the [VA] confirm that these companies will not be allowed to bid on

th[e MAHSO Project]?

Tab 9, AR 345 (emphasis added). The CO responded that “there [would] be no such prohibitions.”

Tab 9, AR 345.

A draft of the Methodology was eventually provided to prospective offerors with

Amendment A00002 on July 20, 2017, only seven days before proposals were due on July 27,

2017. Tab 9, AR 337. The underlying Pilot Study Data provided to Craddock and PwC by the

VA, however, was never provided to the other prospective offerors. Tab 27, AR 833.

C. The Factors By Which Proposals Would Be Evaluated.

The Solicitation advised prospective offerors that the VA would “use the best value trade-

off process to select . . . the most beneficial quote, price and other factors considered.” Tab 8, AR

269. Therefore, the award would be made

based on the best overall (i.e., best value) quote that meets or exceeds the minimum

small business participation percentages established by the [VA] under a Small

Business Participation Commitment/Plan Factor, and is determined to be most

beneficial to the [VA], with appropriate consideration given to the [P]rice [F]actor

and the following four additional non-price evaluation factors: Technical

(including Technical Approach, Staffing/Management Plan, and Key Personnel

Résumés), Corporate Experience, Past Performance, and Veterans Involvement.

Tab 8, AR 269 (emphasis added).

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The VA committed to “award a contract resulting from th[e MAHSO S]olicitation to the

responsible offeror whose offer conforming to the solicitation will be most advantageous to the

[VA], price and other factors considered.” Tab 8, AR 268. The Solicitation, however, also advised

offerors that

[t]he [VA] intends to establish a BPA and award [Task ]Order [One] without further

communicating with [c]ontractors. . . . However, the [VA] reserves the right to

communicate with any or all [c]ontractors submitting a quote, if it is determined

advantageous to the [VA] to do so. . . . A [c]ontractor may be eliminated from

consideration without further communication if its non-price and/or pricing quotes

are not among those [c]ontractors considered most advantageous to the [VA] based

on a best value determination.

Tab 8, AR 269 (emphasis added).

1. The Small Business Participation Commitment/Plan Factor.

The Solicitation stated that the “Small Business Participation Commitment/Plan Factor

[was] an acceptable/unacceptable (go/no go) factor, and as such, failure to meet the small business

participation requirements established in the [S]olicitation will render a [q]uoter’s response

unacceptable and therefore not eligible for award, with no further award consideration given.” Tab

8, AR 269. Under the Small Business Participation Commitment/Plan Factor, the Solicitation

required: (1) that “[a]t least 30% of the total dollar value of [Task Order One go] to small

business(es)[;]” and (2) that “[a]t least 10% of the total dollar value of [Task Order One go]

to a . . . Service Disabled Veteran Owned Small Business (“SDVOSB”) or at least 12% of the total

dollar value of [Task Order One go] to a . . . Veteran Owned Small Business (“VOSB”).” Tab 8,

AR 271.

2. The Non-Price Factors.

The Solicitation provided that

[a]fter being determined acceptable for the Small Business Participation

Commitment/Plan, the quote will be evaluated utilizing the four remaining non-

price factors[.] To receive consideration for award, a rating of no less than

“Satisfactory” must be achieved for the Technical and Corporate Experience

Factors. Contractors are cautioned that the award may not necessarily be made to

the [c]ontractor quoting the lowest price, or to the [c]ontractor with the most highly

rated technical quote. Award may be made to other than the lowest priced quote,

if the [VA] determines that a price premium is warranted due to the merits of one

or more of the non-price factors. Additionally, the [VA] will not establish a BPA

with any [c]ontractor whose price cannot be found fair and reasonable.

Tab 8, AR 270 (emphasis added).

As to the “Relative Importance” of the Non-Price Factors, the Solicitation provided that

“[t]he Technical Factor and Corporate Experience [F]actors are equally important. Together, these

two factors are significantly more important than the Past Performance Factor[,] which is

10

significantly more important than the Veterans Involvement Factor. All [N]on-Price Factors, when

combined, are significantly more important than Price.” Tab 8, AR 269.

The following court exhibit depicts the relationship between each of the evaluation factors

and their relative importance.

1. Small Business Participation

Commitment/Plan Factor

2. Non-Price Factors

a. Corporate

Technical

Experience

Relative Importance

b. Past Performance

Veterans

c.

Involvement

3. Price Factor

Notes:

 The Small Business Participation Commitment/Plan Factor was a threshold

“acceptable/unacceptable (go/no go) factor.” Tab 8, AR 269.

 The Technical and the Corporate Experience Factors were “equally important,” but

“[t]ogether . . . significantly more important than the Past Performance Factor.” Tab

8, AR 269.

 The Past Performance Factor was “significantly more important than the Veterans

Involvement Factor.” Tab 8, AR 269.

 Together, all Non-Price Factors were “significantly more important than Price.”

a. The Technical Factor.

Regarding the Technical Factor, the Solicitation stated that each offeror was required to

“provide a Technical Volume that include[d]”: (1) “a description of the [offeror’s] BPA-level

technical approach to providing VHA Health System Optimization . . . demonstrat[ing] its

understanding of the work, including understanding the objectives of the [BPA SOW] . . . and

specific tasks, challenges, and risks[;]” (2) “[a] staffing/management plan tailored to [Task Order

One] covering the first year of performance;” and (3) “[r]ésumés for the key personnel meeting

the requirements in the . . . SOW[.]” Tab 8, AR 282.

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The VA was to evaluate each offeror’s Technical Volume by considering four elements.

Tab 8, AR 272–73. First, the VA would evaluate the offeror’s understanding of the problem, by

considering “the extent to which [the offeror] demonstrate[d] a clear understanding of all features

involved in solving the problems and meeting and/or exceeding the requirements presented in the

[S]olicitation.” Tab 8, AR 272. Second, the VA would evaluate the feasibility of each offeror’s

approach, by considering “the extent to which the [offeror’s] proposed approach is workable and

the end results achievable[,]” including consideration of the “level of effort and mix of labor

proposed to perform the tasks identified in [Task Order One].” Tab 8, AR 272. Third, the VA

would evaluate the offeror’s key personnel, by considering “whether the quoter’s proposed key

personnel [were] available to begin on [Task Order One] . . . and ha[d] the minimum required

knowledge, skills, and experience to perform the tasks under th[e Solicitation.]” Tab 8, AR 272.

Fourth, the VA would evaluate each offeror’s “Staffing/Management Plan[,]” to “determine

whether the quoter ha[d] adequate key personnel readily available to perform the required services

within the requested period of time.” Tab 8, AR 273.

After evaluation, each offeror would be assigned one of five possible ratings: “Excellent;”

“Good;” “Satisfactory;” “Marginal;” or “Unacceptable.” Tab 18, AR 689. Offerors receiving a

rating of less than “Satisfactory”3 would not be eligible for an award. Tab 8, AR 270.

b. The Corporate Experience Factor.

Regarding the Corporate Experience Factor, the Solicitation stated that each offeror was

required to “provide up to three specific examples of its past corporate experience” and “[d]escribe

how its past experience in commercial and [g]overnment healthcare ha[d] equipped it with the

knowledge, skills and abilities to beneficially impact a healthcare delivery system for a large,

complex enterprise-wide health care network.” Tab 8, AR 283.

In evaluating each offeror’s corporate experience, the VA was to “determine the extent to

which a quoter’s corporate experience ha[d] equipped it with the knowledge, skills and ability to

support transformation and implementation of a health care delivery system for a large, complex

regional (preferably national) health care network.” Tab 8, AR 273. The evaluation would include

a “confidence assessment of the quoter’s corporate experience . . . reflect[ing] the [VA’s]

confidence in and the likelihood that the quoter [would] successfully complete the [S]olicitation

requirements based on previous demonstrated recent and/or relevant experience.” Tab 8, AR 273.

The Solicitation provided that “[i]n this context, ‘quoter’ refers to the prime [c]ontractor and all

proposed major subcontractor(s).”4 Tab 8, AR 273. The Solicitation provided further that “only

3

The VA defined “Satisfactory” as: “[a]dequate understanding; meets the minimum

requirements of the [Solicitation].” Tab 18, AR 689.

4

In response to a prospective offeror’s request regarding “the requirements to determine

what subcontractor is considered a major subcontractor,” the CO indicated that “[a] major sub-

contractor would be defined as any sub-contractor that is performing a critical component of the

work identified. It is up to the quoter to identify their major subcontractors.” Tab 8, AR 303

(emphasis added).

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corporate experience is evaluated and that personnel experience will not be evaluated as part of

this factor.” Tab 8, AR 273 (emphasis omitted).

After evaluation, each offeror would be assigned one of four possible ratings: “Substantial

Confidence;” “Satisfactory Confidence;” “Limited Confidence;” or “No Confidence.” Tab 18, AR

689. Offerors receiving a rating of less than “Satisfactory Confidence”5 would not be eligible for

an award. Tab 8, AR 270.

c. The Past Performance Factor.

Regarding the Past Performance Factor, the Solicitation stated that each offeror was

allowed to submit “a narrative detailing up to three (3) contracts (prime contracts, task/delivery

orders, and/or major subcontracts) in performance during the past three (3) years from the date of

issuance of the . . . [S]olicitation, which are relevant to the efforts required by the [Solicitation].”

Tab 8, AR 284. The Solicitation provided that “[a]reas of relevance include all objectives

addressed in the [BPA] SOW.” Tab 8, AR 284. Although offerors were allowed to include past

efforts of their major subcontractors, the Solicitation stated that “[d]ata concerning the prime

quoter shall be provided first, followed by each proposed major subcontractor, if applicable, in

alphabetical order.” Tab 8, AR 284.

In evaluating each offeror’s past performance, the VA was to “assess the relative risks

associated with a quoter’s likelihood of success in fulfilling the [S]olicitation’s requirements as

indicated by that quoter’s record of past performance.” Tab 8, AR 274. Again, the Solicitation

indicated that “[i]n this context, ‘quoter’ refers to the prime [c]ontractor and all proposed major

subcontractor(s).” Tab 8, AR 274. The Solicitation clarified, however, that “in this assessment,

the [VA] will consider past performance for the proposed prime [c]ontractor (identified in Block

17a of the SF 1449) to be significantly more important than past performance examples submitted

for any other member of the vendor’s proposed structure.” Tab 8, AR 274. The VA would assess

each offeror’s “relative risk” “based on the quality, relevancy (size, scope, and complexity) and

recency (within last 3 years) of the quoter’s past performance, as well as that of its major

subcontractor(s), as it relates to the probability of successful accomplishment of the required

effort.” Tab 8, AR 274.

After evaluation, each offeror would be assigned one of four possible ratings:

“Neutral/Unknown;” “Low Risk;” “Moderate Risk;” or “High Risk.” Tab 18, AR 690.

d. The Veterans Involvement Factor

Regarding the Veterans Involvement Factor, the Solicitation required the VA to

assign full evaluation credit for a quoter (prime [c]ontractor) which is

a . . . registered and verified SDVOSB and partial credit for a verified VOSB prime

[c]ontractor. Non-SDVOSB/VOSB quoters proposing to subcontract 10% or more

5

The VA defined “Satisfactory Confidence” as: “[b]ased on the quoter’s recent/relevant

record of experience, the [VA] has a reasonable expectation that the quoter will successfully

perform the required effort.” Tab 18, AR 689.

13

of [Task Order One’s] value to a verified SDVOSB concern or 12% or more of

[Task Order One’s] value to a verified VOSB concern [would] receive some

evaluation credit.

Tab 8, AR 275.

3. The Price Factor.

Regarding the Price Factor, each offeror was required to “complete and submit [a] Price

Volume,” including: (1) “[t]he BPA Rate Schedule . . . of the [Solicitation], quoting labor rates for

the required labor categories;” and (2) “[t]he Call Labor Basis worksheet . . . of the [Solicitation],

showing the labor categories, hours, and labor rates used to develop the quoted fixed-price.” Tab

8, AR 287. The Solicitation also provided that “[p]rice [was to] be evaluated for reasonableness

by assessing[:] (1) the reasonableness of the quoted labor rates, as well as (2) the reasonableness

of the total quoted price for [Task Order One], considering the level of effort and the mix of labor

proposed to perform the specific tasks being ordered.” Tab 8, AR 276. In addition, the Solicitation

provided that

[t]he [VA] anticipates that the effort and resources required for [Task Order One]

will be representative of future [task orders]. Accordingly, pricing for [Task Order

One] serves to provide the [VA] with a reasonable and realistic estimate for how

each subsequent [task order] will be priced by a respective quoter. The CO is

therefore responsible for determining that the price for [Task Order One] is

reasonable from all responses received in accordance with the evaluation criteria.

In making this determination, the [VA] will consider the level of effort and the mix

of labor proposed to perform the specific tasks being ordered.

The proposed BPA pricing, consisting of [Task Order One] pricing and the

option years’ labor rates will be used in the “best value” analysis and determination

made by the [CO].

Tab 8, AR 276.

After evaluation, “[p]rice [would] not be assigned an adjectival rating, but [would only be

evaluated to determine whether it [was] ‘fair and reasonable.’” Tab 18, AR 691. “[T]he [VA

would] not establish a BPA with any [c]ontractor whose price [could not] be found fair and

reasonable.” Tab 8, AR 270.

The VA estimated that Task Order One would require 81,920 hours of labor, covering eight

labor categories. Tab 18, AR 727. Using “labor rates from approximately four GSA contract

holders with similar labor categories,” the VA estimated a “[t]otal estimate” for Task Order One

of $ , including “the not to exceed travel amount of $600,000.” Tab 18, AR 727. To

evaluate the reasonableness of each offeror’s proposed price, however, an estimate of

$ was used, reflecting . Tab

18, 728–29, 731–33. The VA also prepared an Independent Government Cost Estimate (the

“IGCE”) for the MAHSO Project “through market research, recent contracts for pilot analysis

studies of VHA markets and average GSA labor rates from a sample of potential contractors.” Tab

1, AR 6. The IGCE was $ . Tab 1, AR 6.

14

D. Five Proposals For The Market Area Health System Optimization Project

Were Submitted.

Proposals initially were due on July 21, 2017; the VA, however, extended that date to July

27, 2017 by Amendment A00001. Tab 27, AR 896; see also Tab 9, AR 385. Prior to the final

deadline, five offerors submitted proposals, including: Deloitte, E&Y, Huron Consulting Group

Inc. (“Huron”), McKinsey & Company, Inc. (“McKinsey”), and PwC. Tab 18, AR 678.

The Source Selection Evaluation Board (the “SSEB”) determined that all five offerors

“were . . . responsive and included [them] in the competition.” Tab 18, AR 678.

E. The Source Selection Evaluation Board’s Evaluation.

1. The Small Business Participation Commitment/Plan Factor.

Regarding the Small Business Participation Commitment/Plan Factor, each offeror

received an “Acceptable/Go” rating. Tab 18, AR 692–97.

2. The Non-Price Factors.

a. The Technical Factor.

Regarding the Technical Factor, only PwC received a “Good”6 rating; Deloitte, E&Y,

Huron, and McKinsey each received a less than “Satisfactory” rating of “Marginal.”7 Tab 18, AR

698–709. Consequently, only PwC was eligible for an award. Tab 8, AR 270.

In justifying E&Y’s rating of “Marginal,” the SSEB stated:

E[&]Y’s staffing levels and labor mix8 shown for the proposed plan showed a vague

understanding of the complexity and size of the task at hand.

6

The VA defined “Good” as: “[t]horough understanding.” Tab 18, AR 689.

7

The VA defined “Marginal” as: “[s]uperficial or vague understanding; could not award

without further communications.” Tab 18, AR 689.

8

E&Y proposed “ [VISN] teams each composed of

[.]” Tab 10, AR 404. E&Y explained that

[e]ach [VISN] team [would] have

. Each [VISN] team will also have

Each site team will also use

15

Tab 18, AR 700.

The SSEB expressed concern about the proposed staffing level for E&Y’s VISN teams,

because . Tab 10, AR 404; Tab 18, AR 701;

see also Tab 18, AR 702 (“

”).9 The SSEB also noted a “weakness” in “staffing” for Deloitte, Huron, and McKinsey,

. Tab 18, AR 699, 704, 706, 737.

In contrast, PwC proposed members for each of the VISN teams. Tab 11, AR 519.

As to PwC’s Technical Factor rating of “Good,” the SSEB stated:

P[w]C’s technical write up and staffing levels/labor mix10 shown for the proposed

plan demonstrated a thorough understanding of the complexity and size of the task

at hand. Their overall focus/approach and plan show that PWC can accomplish the

BPA tasks requirement above minimal standards. Explanation of staffing levels

.

Tab 18, AR 707.

Regarding PwC’s proposed “staffing” and “labor mix” the SSEB concluded that “P[w]C

has presented/prepared a team that . P[w]C

presented a good overall management plan that showed a good labor mix. There was some

concern[, however,] . . . that .” Tab 18, AR 709.

Tab 10, AR 420.

9

In the evaluation of E&Y’s technical proposal, the SSEB mistakenly referred to E&Y as

“Deloitte,” stating that E&Y’s “[q]uote did not provide enough detail to show that Deloitte

understood the VA[’]s efforts or the data to be made available.” Tab 18, AR 701 (emphasis added).

10

PwC proposed VISN teams composed of

Tab 11,

AR 519.

16

b. The Corporate Experience Factor.

Regarding the Corporate Experience Factor, only PwC received a “Substantial

Confidence”11 rating; the other offerors received a less than “Satisfactory Confidence” rating of

“Limited Confidence.”12 Tab 18, AR 710–15. As a result, only PwC was eligible for an award.

Tab 8, AR 270.

PwC submitted three corporate experience examples:

Tab 11, AR 553–59. The SSEB noted that “[o]verall P[w]C ha[d] the corporate

experience needed for a project of this magnitude and

.” Tab 8, AR 714. In contrast, regarding E&Y’s

Corporate Experience rating of “Limited Confidence,” the SSEB observed that “[o]verall

E[&]Y presented a lack of needed experience,

.” Tab 18, AR 711.

c. The Past Performance Factor.

Regarding the Past Performance Factor, only PwC received a “Low Risk”13 rating;

Deloitte, E&Y, Huron, and McKinsey each received a “Moderate Risk”14 rating. Tab 18, AR 716–

22.

With regard to E&Y’s past performance, the SSEB determined that “[a]ll of [E&Y’s]

example[s] . . . .” Tab 18,

AR 717. In contrast, the SSEB was impressed that PwC “[d]emonstrated past performance to

meet[] the needs of the BPA and .” Tab 18, AR 721.

PwC submitted three past performance examples: “

;“

; and “

. Tab 11, AR 564–66. Each

of these projects, however, was performed by

(“ ”), not PwC. Tab 11, AR 564–66 (each project was performed by the contractor

associated with CAGE Code and DUNS Number ); see also SAM Search

11

The VA defined “Substantial Confidence” as: “[b]ased on the quoter's recent/relevant

record of experience, the [VA] has a high expectation that the quoter will successfully perform the

required effort.” Tab 18, AR 689.

12

The VA defined “Limited Confidence” as: “[b]ased on the quoter’s recent/relevant

record of experience, the [VA] has a low expectation that the quoter will successfully perform the

required effort.” Tab 18, AR 689.

13

The VA defined “Low Risk” as: “[l]ittle doubt exists, based on the quoter's performance

record, that the quoter can perform the proposed effort.” Tab 18, AR 690.

14

The VA defined “Moderate Risk” as: “[s]ome doubt exists, based on the quoter's

performance record, that the quoter can perform the proposed effort.” Tab 18, AR 690.

17

Results, , SYS. FOR AWARD MGMT.,

https://www.sam.gov/portal/SAM/#1 (follow the “SEARCH RECORDS” hyperlink; then perform

a “CAGE Code Search” for “ ” or a “DUNS Number Search” for “ ”) (showing

that is associated with CAGE Code and DUNS Number ). PwC,

however, did not list as a “major subcontractor.” Tab 11, AR 571. PwC’s proposal

indicated, however, that

PwC will . . . draw on the staff and expertise of its teaming partners and the

experience, resources, and capabilities of its affiliate, . . . [.] Both

PwC and . . . are partners in their common parent

PricewaterhouseCoopers LLP (“PwC US”) and report ultimately to PwC US

management. resources will be directly and meaningfully involved

in this effort.

Tab 11, AR 519.

d. The Veterans Involvement Factor.

Regarding the Veterans Involvement Factor, each offeror received a rating of “Some

Consideration.” Tab 18, AR 723–26.

3. The Price Factor.

Regarding PwC’s proposed price of $11,981,646.00 for Task Order One (Tab 11, AR

580.4), the SSEB concluded that

[t]he overall level of effort basis was evaluated and determined to be acceptable for

accomplishing the tasks identified. The [VA] estimate lists approximately

[l]abor hours needed to complete [Task Order One’s] associated tasks and PwC

proposed for labor hours putting them of the estimated hours

needed to complete the tasks. PwC presented a good mix of labor categories to

develop their teams and properly estimated the appropriate level of staffing/effort

needed to complete this large and complex task.

Given that PwC’s level of effort to perform the [MAHSO Project] has been

determined . . . acceptable, the total price of $11,981,646.00 is fair and reasonable.

PwC[’s] proposed costs are than the [VA’s IGCE]. The difference

between PWC’s fixed price after discounts of and the IGCE is driven by the

fact that the IGCE applies discount assumed for all vendors.

Tab 18, AR 734.

Accordingly, the SSEB determined that PwC’s price was “Fair and Reasonable.” Tab 18,

AR 733–35.

18

In contrast, as to E&Y’s proposed price of $ for Task Order One (Tab 10, AR

467.7), the SSEB concluded that

[t]he overall level of effort basis was evaluated and determined [by the SSEB] to

not be acceptable for accomplishing the tasks identified. The [VA] assumed

level of effort to be involved to ensure a

. The [VA] estimate list[s]

approximately [l]abor hours needed to complete [Task Order One’s]

associated tasks and E[&]Y proposed . . . labor hours. Although E[&]Y

presented

.

Given that E[&]Y’s level of effort to perform the [MAHSO Project] has

been determined not acceptable, the total price of $ is not fair and

reasonable. The difference between E[&]Y’s fixed price and the IGCE

.

Tab 18, AR 730.

For Task Order One, Deloitte’s proposed price was $ , Huron’s proposed price

was $ , and McKinsey’s proposed price was $ . Tab 18, AR 736. The

SSEB, however, found similar “staffing” and “level of effort” problems in each of their proposals.

Tab 18, AR 699, 704, 706; see also Tab 18, AR 736 (“Although, Individual labor rates were

and determined fair and reasonable by [the] GSA and the SSEB, the labor mix[/]level

of effort were by [Deloitte, E&Y, Huron, and McKinsey]. Since

[Task Order One] was indicative of future [task] orders, and all four quoters provided staffing in

their level of effort that would , there was

”). Therefore, the SSEB concluded that

it could not determine whether the prices proposed by Deloitte, E&Y, Huron, and McKinsey were

“Fair and Reasonable.” Tab 18, AR 727–33, 735. As a result, these offerors were not eligible for

an award. Tab 8, AR 270.

19

4. Summary Of The Source Selection Evaluation Board’s Evaluation.

The SSEB’s “findings from evaluations” are summarized in the following table:

Tab 18, AR 736.

F. The Contracting Officer’s “Best Value Trade-Off” Determination And Award

Of The Market Area Health System Optimization Contract To

PricewaterhouseCoopers Public Sector, LLP.

On August 30, 2017, the CO issued a “Best Value Determination and Award Decision”

(Tab 18, AR 675), wherein the CO “concur[red] with the [SSEB’s] evaluations” and summarized

the “best value trade-off” determination, as follows:

The [Solicitation] stated that “To receive consideration for award, a rating

of no less than [‘]Satisfactory[’] must be achieved for the Technical and Corporate

Experience Factors.” For the Corporate Experience Factor, one quoter, PwC,

earned confidence ratings of Satisfactory or above. For the Technical Factor, only

one quoter, PwC, achieved a rating of Satisfactory or above. As a result, all quoters

are ineligible for award except for PwC.

The [VA] provided in the [S]olicitation that it “intends to establish a BPA

and award [Task ]Order [One] without further communicating with [c]ontractors.”

Based on the evaluations of each quote against all evaluation criteria, the [CO] has

determined that award can be made on the basis of the initial quotes to PwC and

that it is in the best interest of the [VA] to do so. Although, four of the five quoters

presented problems within their technical [proposals] and [Task Order One] pricing

quotes that raised concerns, it was determined by the [CO] that discussions would

only allow the unsuccessful quoters to better their technical quotes and pricing to

become more competitive with PwC and not actually provide any real benefit to the

[VA]. Several quoters provided

based on the scope and methodology provided.

Enough detailed information was provided to the quoters throughout the

20

solicitation for them to understand the importance of staffing and the level of

effort/methodology needed to accomplish the stated tasks and it would be unfair to

PwC for properly following the [S]olicitation[’s] requirements, by opening

discussions and allowing quoters a second chance. In addition, since every quoter

other than PwC received a less than satisfactory rating for corporate experience,

they would not have been eligible for award if discussions for technical and price

were opened.

PwC’s technical quote was good, with many strengths identified in their

quote that will benefit [the] VA. They provided a superb delineation

. PwC made an effort to clearly distil[l] and detail the

composition of the individual VISN . . . teams. The other vendors

.

PwC’s detailed labor mix of

is in line with the

level of effort experienced in the Pilot [S]tud[y], and more importantly in line with

what would be expected of a contract of this scale.

PwC’s corporate experience was stronger than that of each of the other

[q]uoters. PwC’s corporate experience examples demonstrated comparable scale

and complexity to the [MAHSO P]roject. Additionally, the corporate experience

examples demonstrated national scope, and included experience relevant to all the

critical portfolios. The relevancy of PwC’s experience will translate into a

reduction in overall project risk and reduced risk of a delayed National Realignment

Strategy.

PwC’s past performance was relevant with high quality, and resulted in low

past performance risk.

* * *

PwC’s [Task Order One] price is fair and reasonable and an excellent value

to the [VA]. Its price is

. At the same time, the hours

are to the [VA’s] original expectation.

Tab 18, AR 737–38 (emphasis added).

Accordingly, the CO concluded that

PwC[’]s quote is technically the strongest among all quotes and its corporate

experience offers to the [VA] the greatest level of confidence. Its past performance

offers low risk to the [VA] due to the recency, relevance, and quality of its past

work. . . . Its fair and reasonable price is supported by an appropriate labor mix and

level of effort to perform the work under [Task Order One]. Its proposed BPA

hourly rates are published GSA schedule rates for the base and all

21

Option Periods. No other quoter, based on evaluation results, is eligible for award.

PwC’s quote is therefore the best value to the [VA].

* * *

The [VA] will therefore establish a [BPA] with [PwC] covering a base

period and two option periods. . . . The estimated BPA amount will be established

at $110,000,000.00 to reflect BPA [task orders] over the base and two option

periods.

[Task Order One] will be awarded to PwC in the amount of $11,981,646.00.

Fiscal Year 2017 funds are available to cover the price for [Task Order One].

Tab 18, AR 738.

On August 31, 2017, the VA issued PwC a “Notification of BPA Award,” indicating that

PwC was the successful awardee. Tab 23, AR 814–17. The CO asked PwC to “sign [the task

order] and return [it] in an expedited manner in order to allow for a September 1st award.” Tab 23,

AR 816–17.

On September 1, 2017, PwC was awarded the BPA, including Task Order One, Order No.

VA101F-17-J-3076 under BPA No. VA101F-17-A-3074 (the “MAHSO Contract”).15 Tab 20, AR

752; Tab 21, AR 799. On that same day, the VA issued E&Y a “Notification to Unsuccessful

Offerors,” stating E&Y16 was “an unsuccessful offeror” and identifying PwC as the awardee. Tab

24, AR 818.

PwC’s proposal assumed that the “VA [would] support the proposed VISNs

15

, and being performed in [Task Order One] to help meet the accelerated timeline of Phase 1

delivery. These proposed VISNs represent

.” Tab 11, AR 587. The proposal also assumed that “

.” Tab 11, AR 587.

16

The VA’s September 1, 2017 letter to E&Y mistakenly referred to E&Y as “Deloitte,”

stating that “[t]his letter constitutes official notification to Deloitte . . . that it is an unsuccessful

offeror.” Tab 24, AR 818 (emphasis added).

22

The following court exhibit depicts a timeline of the Pilot Study and the MAHSO

procurement.

PILOT STUDY AND MAHSO PROCUREMENT TIMELINE

Pilot Study Contract Awarded

December 6, 2016

Awarded to Craddock

MAHSO Solicitation Developed

Pilot Study Performed Developed by the VA and the CO

April 2017–August 2017

Performed by Craddock and PWC

MAHSO Solicitation Issued

June 30, 2017

Requests for Information and

Amendments Issued

Methodology

 July 7, 2017: Amendment A00001

 July 20, 2017: Amendment A00002

(draft Methodology produced)

Proposals Due

July 27, 2017

Deloitte, E&Y, Huron, Mckinsey, and

PwC submit proposals

SSEB Evaluation

Deloitte, E&Y, Huron, and Mckinsey are

rendered not eligible for an award

“Best Value Trade-Off” Determination

August 30, 2017

The CO selects PwC

MAHSO Contract Awarded

September 1, 2017

Awarded to PwC

23

II. PROCEDURAL HISTORY.

On September 25, 2017, E&Y (“Plaintiff”) filed a Complaint (“Compl.”) in the United

States Court of Federal Claims alleging that the VA improperly awarded PwC the MAHSO

Contract, because: (1) the VA’s evaluation of E&Y’s proposal was “arbitrary, capricious, and

lacked reason,” Compl. ¶¶ 75–92; (2) the VA’s decision to issue the award to PwC “involved [the]

application of . . . unstated evaluation criteri[a],” Compl. ¶¶ 93–103; (3) PwC is “ineligible for

award[,] because of . . . OCI[s],” Compl. ¶¶ 104–15; (4) the VA’s evaluation of PwC’s proposal

was “unreasonable,” Compl. ¶¶ 116–23; and (5) the VA’s “[best value trade-off] determination is

arbitrary, capricious, and lacks a rational basis.” Compl. ¶¶ 124–28. ECF No. 1. On that same

day, Plaintiff filed a Motion For Protective Order. ECF No. 5.

On September 26, 2017, the court issued a Protective Order. ECF No. 8. On that same

day, the court issued an Order directing PwC, “as a prospective intervenor,” to comply with the

same terms and conditions set forth in the Protective Order. ECF No. 9.

On September 27, 2017, PwC filed an unopposed Motion To Intervene. ECF No. 15. On

that same day, the court issued an Order granting PwC’s Motion To Intervene pursuant to Rule of

the United States Court of Federal Claims (“RCFC”) 24(a)(2). ECF No. 21.

On September 28, 2017, the court issued an Order reflecting the VA’s representation that

it would not “permit the performance of any work under either BPA [No.] VA101F-17-A-3074

or . . . [O]rder [No.] VA101F-17-J-3076 prior to and including December 1, 2017.” ECF No. 22.

On October 3, 2017, the Government filed an unopposed Motion To Remand requesting

the court to “remand this case to the [VA] . . . for 14 days to reconsider, and to make further inquiry

regarding, certain allegations of [an OCI] . . . contained in the [C]omplaint[.]” ECF No. 24.

On October 4, 2017, the court issued an Order remanding this case to the VA for fourteen

(14) days to allow the CO to investigate potential OCIs and consider whether remedial measures

were necessary and directing the “parties [to] file a Joint Status Report with the court on, or by,

October 20, 2017[.]” ECF No. 25. On that same day, the Clerk of Court issued a Remand Letter

to the VA. ECF No. 26.

On October 18, 2017, the Government filed an unopposed Motion To Extend The

Voluntary Remand requesting the court to extend the remand until October 25, 2017. ECF No.

27. On that same day, the court issued an Order granting the Government’s Motion To Extend

The Voluntary Remand and directing the “parties [to] file a Joint Status Report with the court on,

or by, October 27, 2017[.]” ECF No. 28.

On October 27, 2017, the parties filed a Joint Status Report, wherein the parties provided

the CO’s “OCI Assessment,” proposed a briefing schedule, and indicated that the VA would

voluntarily continue to stay performance through January 12, 2018. ECF No. 29. The CO’s OCI

Assessment stated, in part, as follows:

During planning activities associated with the [MAHSO Solicitation], the

[VA] . . . informed the CO on or around May 17, 2017, that . . . Craddock . . . , with

PwC as a sub-contractor, was currently working on [the P]ilot [S]tudy . . . under

24

contract # VA101F-17-C-2843 [and] was performing market analysis activities and

developing the [M]ethodology listed in the [SOW] that would be used

for the upcoming [MAHSO Project]. Under th[e P]ilot [S]tudy

[C]ontract, . . . Craddock . . . worked closely with the [VA], off-site, using

[g]overnment issued data from three out of ninety [six] geographically unique

locations (markets) the VA serves . . . to develop a prototype for Healthcare

Delivery System Design. The prototype was refined through extensive market

analysis activities and [VA] oversight resulting in [the] final developed

[M]ethodology to be used as a guide for future consulting firms to follow and

maintain consistency during the anticipated national “roll out” of ninety [six]

market-level assessments needed to inform the [VA] for creation of [the] National

Realignment Strategy.

Other than working closely with the [VA] to provide the [M]ethodology to

be used as a guide for market analysis activities, . . . Craddock . . . would not be

involved in developing the procurement package, oversight, provide expertise

during the BPA market assessments, or assist in establishing the resulting National

Realignment Strategy. Issues identified during the initial study and ongoing

activities to develop the [M]ethodology helped the [VA] define the SOW based on

their own experience, but . . . Craddock . . . did not have a hand in or provide input

for the SOW’s development, other than developing the [M]ethodology itself.

The [VA] further informed the [CO] that . . . Craddock . . . will likely bid

as a sub-contractor on the subject anticipated acquisition . . . . After being informed

of . . . Craddock[’s] . . . involvement, and gaining a better understanding of the

[M]ethodology, it was advised to the [VA] around the beginning of June 2017 while

developing the solicitation package by the CO, that the [M]ethodology should be

provided to the market in order to avoid an unfair competitive advantage situation

or the appearance of one. The [VA] agreed and worked diligently

with . . . Craddock . . . to complete the [M]ethodology since it was not completed

at the time of procurement package receipt by the CO.

While the [M]ethodology was not complete at the time of solicitation

issuance, due to strict timelines set forth for this procurement it was discussed with

the [VA] and determined by th[e] CO, that the SOW and attached documentation

had enough information for a [prospective offeror] to provide a quote, even without

the [M]ethodology, the SOW was developed based on the extensive knowledge the

[VA] gained during the oversight of the pilot study contract. Sufficient information

was determined based on the premise that the SOW provided enough information

on the services required without including the [M]ethodology and any [offeror]

with VA experience applying basic market analysis techniques, as required by the

[S]olicitation at the time, would be on equal ground. Because of this, the

[S]olicitation was issued without the [M]ethodology and the [M]ethodology was

later included under Amendment A00002.

Additionally, several other steps were taken prior to solicitation issuance to

avoid any OCI concerns or the appearance of [an] OCI by developing the

25

procurement package in house (by the [VA]), making revisions to and broadening

the . . . [SOW] based on CO and [VA] input, and the Inclusion of VAAR provision

852.209-70 ORGANIZATIONAL CONFLICTS OF INTEREST in the

[S]olicitation. After the [S]olicitation was issued, the CO provided

Craddock[’s] . . . information to the market under Amendment A00001 as a

response to Requests for Information[.]

* * *

Based on the above review of Craddock[’s] . . . pilot contract . . . , the CO

determined that by providing a quote for [the MAHSO S]olicitation . . . , the

contractor for the pilot study, . . . Craddock . . . and their sub-contractor, PwC,

other than having prior knowledge of the method for analysis, would have no other

competitive advantage. The SOW was not developed by . . . Craddock . . . or

PwC . . . , nor was any other portion of the solicitation other than the

[M]ethodology, as the majority of the solicitation was developed by the CO with

input from the [VA]. The developed evaluation factors listed in the solicitation and

used during the source selection process were general in nature and not unique

regarding the pilot contract other than the technical evaluation criteria that

discussed understanding methods of approach and how to staff those methods. In

order to minimize any OCI concerns that may refer to the technical

evaluations, . . . the [M]ethodology was issued to potential quoters in order to

mitigate any advantage or perceived advantage by PwC and . . . Craddock . . . for

work on the pilot contract.

In addition, the [Pilot Study Data] provided to PwC and . . . Craddock . . .

during the pilot contract was unique to the specific markets and would not benefit

them in providing a quote for the resulting solicitation as each market is

independent and the general approach for analyzing each market is specifically

spelled out in the [M]ethodology provided to all potential quoters. The

development of the [M]ethodology was performed under the strict oversight and

control of [VA] officials indicating . . . Craddock . . . participated in the

development of the [M]ethodology with the [VA] . . . to create an end product that

could be used on future market analysis activities.

Based on the facts above, [and] the supporting documents . . . my analysis

shows that FAR 9.505-2(a)(3)17 is relevant, there is no evidence that [VA] worked

17

FAR 9.505-2(a)(3) provides that

[i]n development work, it is normal to select firms that have done the most

advanced work in the field. These firms can be expected to design and develop

around their own prior knowledge. Development contractors can frequently start

production earlier and more knowledgeably than firms that did not participate in

the development, and this can affect the time and quality of production, both of

which are important to the [g]overnment. In many instances the [g]overnment may

have financed the development. Thus, while the development contractor has a

26

with . . . Craddock . . . to develop the procurement package, other than the

[M]ethodology, and while the development contractor has a minor competitive

advantage because of that, it has been determined by the CO that it is an

unavoidable one that is not considered unfair; hence no prohibition should be

imposed.

* * *

To minimize any OCI concerns that may refer to the technical

evaluations, . . . the [M]ethodology was issued to all potential quoters in order to

mitigate any advantage or perceived advantage by PwC and . . . Craddock . . . for

work on the pilot contract. The [M]ethodology is a straightforward step-by-step

process that outlines the high level approach, activities, and data that will be used

for each market assessment and was issued to all vendors to mitigate any OCI

concerns seven days prior to proposals being due. After issuance, there were no

further questions or requests for time extensions due to the new information. This

led to the CO determination that the vendors had enough time to evaluate the

[M]ethodology and incorporate it into their quote.

* * *

The . . . [CO] . . . has considered the facts surrounding the acquisition and

finds no significant [OCI] exists. If an advantage for either . . . Craddock . . . or

PwC exists, it is a fair competitive advantage under FAR 9.505-2(a)(3) as an

incumbent contractor due to the success of the [P]ilot [S]tudy and any additional

instances of OCI were mitigated by the multiple steps addressed above, most

importantly by providing extensive information to all vendors under the

competitive procurement. It is understood by the CO that not including the

[M]ethodology with the solicitation when it was issued on July 7, 2017 may have

raised some initial concerns. But this concern was mitigated since it was issued

under [A]mendment A00002 seven days prior to quotes being due, it is a

straightforward methodology that gives clear direction and no vendor expressed

concerns about the timeframe after issuance.

Tab 27, AR 831–37 (emphasis added).

On October 30, 2017, the court issued an Amended Scheduling Order. ECF No. 30.

On November 2, 2017, the Government filed the Administrative Record. ECF No. 31. On

November 8, 2017, the Government filed a First Corrected Administrative Record. ECF No. 32.

competitive advantage, it is an unavoidable one that is not considered unfair; hence

no prohibition should be imposed.

48 C.F.R. § 9.505-2(a)(3) (emphasis added).

27

On November 20, 2017, Plaintiff filed a Motion For Leave To File Amended Complaint.

ECF No. 36. On that same day, Plaintiff filed a Motion For Judgment On The Administrative

Record. ECF No. 37.

On November 21, 2017, the court issued an Order granting Plaintiff’s November 20, 2017

Motion For Leave To File Amended Complaint. ECF No. 38. On that same day, the Government

filed a Second Corrected Administrative Record. ECF No. 39.

On November 29, 2017, PwC filed an unopposed Motion For Modification Of Scheduling

Order. ECF No. 41. On November 30, 2017, the court issued an Order granting PwC’s Motion

For Modification Of Scheduling Order. ECF No. 42. On that same day, Plaintiff filed an Amended

Complaint (“Am. Compl.”), further detailing Counts I and IV. ECF No. 43.

On December 8, 2017, the Government filed a Response And Cross-Motion For Judgment

On The Administrative Record. ECF No. 45. On that same day, PwC filed a Cross-Motion For

Judgment On The Administrative Record. ECF No. 46.

On December 14, 2017, Plaintiff filed a Reply And Opposition To Defendant’s And

Defendant-Intervenor’s Cross-Motions For Judgment On The Administrative Record. ECF No.

48.

On December 20, 2017, the Government filed a Reply. ECF No. 50. On that same day,

PwC filed a Reply. ECF No. 51.

On January 12, 2018, the Government filed a Notice of Voluntary Stay Extension

indicating that the VA would extend the voluntary stay of performance “for thirty-one days, to and

including Monday, February 12, 2018.” ECF No. 52.

On February 12, 2018, the Government filed a Notice Regarding Extension Of Voluntary

Stay stating that the VA would extend the voluntary stay of performance “through Tuesday,

February 20, 2018.” ECF No. 53.

On February 15, 2018, the court issued an Order reflecting the Government’s

representation that the VA would extend the voluntary stay of performance through Tuesday,

February 20, 2018. ECF No. 54.

On February 21, 2018, the Government filed another Notice Regarding Extension Of

Voluntary Stay stating that the VA would extend the voluntary stay of performance “for three

days, to and including Friday, February 23, 2018.” ECF No. 55.

On February 22, 2018, the court issued an Order reflecting the Government’s

representation that the VA would extend the voluntary stay of performance through Friday,

February 23, 2018. ECF No. 56.

28

III. DISCUSSION.

A. Subject Matter Jurisdiction.

Subject matter jurisdiction is a threshold issue that a court must determine at the outset of

a case. See Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94–95 (1998) (“The requirement

that jurisdiction be established as a threshold matter ‘spring[s] from the nature and limits of the

judicial power of the United States’ and is ‘inflexible and without exception.’” (quoting Mansfield,

C. & L.M.R. Co. v. Swan, 111 U.S. 379, 382 (1884))).

Pursuant to the Administrative Dispute Resolution Act of 1995, the United States Court of

Federal Claims has jurisdiction

to render judgment on an action by an interested party objecting to a solicitation by

a [f]ederal agency or proposals for a proposed contract or to a proposed award of a

contract or any alleged violation of statute or regulation in connection with a

procurement or a proposed procurement. . . . [T]he United States Court of Federal

Claims . . . shall have jurisdiction to entertain such an action without regard to

whether suit is instituted before or after the contract is awarded.

28 U.S.C. § 1491(b)(1) (emphasis added).

In this case, E&Y’s November 30, 2017 Amended Complaint alleges that: (1) the VA’s

evaluation of E&Y’s proposal was “arbitrary, capricious, and lacked reason,” Am. Compl. ¶¶ 75–

94; (2) the VA’s decision to issue the award to PwC “involved [the] application of . . . unstated

evaluation criteri[a],” Am. Compl. ¶¶ 95–105; (3) PwC is “ineligible for award because

of . . . OCI[s],” Am. Compl. ¶¶ 106–17; (4) the VA’s evaluation of PwC’s proposal was

“unreasonable,” Am. Compl. ¶¶ 118–27; and (5) the VA’s “[best value trade-off] determination is

arbitrary, capricious, and lacks a rational basis.” Am. Compl. ¶¶ 128–32.

For these reasons, the court has determined that it has subject matter jurisdiction, under 28

U.S.C. § 1491(b)(1), to adjudicate the claims alleged in E&Y’s November 30, 2017 Amended

Complaint.

B. Standing.

“Standing is a threshold jurisdictional issue.” Myers Investigative & Sec. Servs. v. United

States, 275 F.3d 1366, 1369 (Fed. Cir. 2002). “The party invoking federal jurisdiction bears the

burden of establishing the[ ] elements [of standing].” Lujan v. Defs. of Wildlife, 504 U.S. 555, 561

(1992). To establish standing under 28 U.S.C. § 1491(b)(1), a complaint must allege sufficient

facts to show that the plaintiff: (1) is an interested party; and (2) was prejudiced by alleged errors

in the procurement process. See Myers, 275 F.3d at 1370 (holding that standing under § 1491(b)(1)

is limited to “interested parties”); see also Labatt Food Serv., Inc. v. United States, 577 F.3d 1375,

1378–79 (Fed. Cir. 2009) (“[T]he question of prejudice goes directly to the question of

standing[.]”).

The United States Court of Appeals for the Federal Circuit has held that the term “interested

party” in 28 U.S.C. § 1491(b)(1) “is construed in accordance with the Competition in Contracting

29

Act.” Rex Serv. Corp. v. United States, 448 F.3d 1305, 1307 (Fed. Cir. 2006) (citing 31 U.S.C. §§

3551–3556). Therefore, to qualify as an interested party, “a protestor must show that: (1) it was

an actual or prospective bidder or offeror[;] and (2) it had a direct economic interest in the

procurement or proposed procurement.” Distributed Sols., Inc. v. United States, 539 F.3d 1340,

1344 (Fed. Cir. 2008). A protestor has a “direct economic interest” if, after a successful protest,

“the government would be obligated to rebid the contract, and [the protestor] could compete for

the contract once again.” Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d

1324, 1334 (Fed. Cir. 2001).

In this case, E&Y submitted a timely and “responsive” proposal for the MAHSO Project.

Tab 11, AR 486595. Therefore, E&Y was “an actual . . . offeror.” See Distributed Sols., 539 F.3d

at 1344. In addition, E&Y’s November 30, 2017 Amended Complaint alleges that the VA’s

decision to award the MAHSO Contract to PwC violated the FAR and was “arbitrary, capricious,

an abuse of discretion, or otherwise not in accordance with law.” Am. Compl. ¶¶ 75–132. If

established, these allegations would render the VA’s decision unlawful and “the [VA] would be

obligated to rebid the contract.” See Impresa, 238 F.3d at 1334. Accordingly, E&Y has established

that it is an “interested party.” See Distributed Sols., 539 F.3d at 1344.

To establish standing, a protestor also must demonstrate prejudice. See Myers, 275 F.3d at

1370 (“[P]rejudice (or injury) is a necessary element of standing.”). “A party has been prejudiced

when it can show that[,] but for the error, it would have had a substantial chance of securing the

contract.” Labatt, 577 F.3d at 1378; see also Bannum, Inc. v. United States, 404 F.3d 1346, 1353

(Fed. Cir. 2005) (“To establish ‘significant prejudice’ [the protestor] must show that there was a

‘substantial chance’ it would have received the contract award[,] but for the [alleged] errors[.]”).

Our appellate court has held that the test for prejudice “is more lenient than showing actual

causation,” because the plaintiff need not “show[] that[,] but for the errors[, it] would have won

the contract.” Bannum, 404 F.3d at 1358 (emphasis added). Instead, the complaint must allege

that the plaintiff has a “greater than insubstantial chance of securing the contract if successful on

the merits of the bid protest.” See Info. Tech. & Applications Corp. v. United States, 316 F.3d

1312, 1319 (Fed. Cir. 2003) (“In other words, the protestor’s chance of securing the award must

not have been insubstantial.”)

In this case, the CO determined that only PwC was eligible for award of the MAHSO

Contact. Tab 18, AR 737. E&Y’s November 30, 2017 Amended Complaint, however, alleges

that PwC was “ineligible for award because of . . . OCI[s]” and that the CO’s failure to timely and

adequately mitigate these OCIs violated FAR 9.504(a) and 9.505. Am. Compl. ¶¶ 106–17. In

addition, the Amended Complaint alleges that the SSEB’s evaluation of E&Y’s proposal was

“arbitrary, capricious, and lacked reason.” Am. Compl. ¶¶ 75–94. Finally, the Amended

Complaint alleges that the CO’s “best value trade-off” determination violated FAR 8.405-3. Am.

Compl. ¶¶ 128–32. If these FAR violations are established, PwC would not be eligible for an

award. The remaining offerors, Deloitte, E&Y, Huron, and McKinsey, however, each received

identical ratings from the SSEB. Tab 18, AR 736 (table summarizing the SSEB’s “findings from

evaluations”). As such, E&Y would have an equal chance, i.e., a “substantial chance,” of being

awarded the MAHSO Contract. See Bannum, 404 F.3d at 1353; see also Cyios Corp. v. United

States, 122 Fed. Cl. 726, 735 (Fed. Cl. 2015). Under these circumstances, E&Y has

“demonstrate[d] prejudice.” See Myers, 275 F.3d at 1370.

30

For these reasons, the court has determined that E&Y has standing to challenge the VA’s

award of the MAHSO Contract.

C. Whether The United States Department of Veterans Affairs’s Award to

PricewaterhouseCoopers Public Sector, LLP Was Contrary To Law, Not

Rational, Or Arbitrary And Capricious.

1. Standard Of Review For Judgment On The Administrative Record,

Pursuant To RCFC 52.1.

In this case, the parties filed Cross-Motions For Judgment On The Administrative Record,

pursuant to RCFC 52.1. The United States Court of Appeals for the Federal Circuit requires that

the court treat a judgment on the administrative record as if it were an expedited trial on the record.

See Bannum, 404 F.3d at 1356. Therefore, the existence of material issues of fact does not prohibit

the court from granting a RCFC 52.1 motion. Id. at 1354. Instead, the court can base a

determination on “factual findings from the record evidence.” Id.

2. Standard Of Review For A Bid Protest.

Congress amended the Tucker Act through the Administrative Dispute Resolution Act,

Pub. L. No. 104-320, § 12, 110 Stat. 3870, 3874 (Oct. 19, 1996), to authorize the United States

Court of Federal Claims to adjudicate bid protests under the standards set forth in the

Administrative Procedure Act (“APA”), 5 U.S.C. § 706. See 28 U.S.C. § 1491(b)(4) (“In 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.”); see also 5 U.S.C. § 706(2)(A) (“The reviewing court

shall . . . hold unlawful and set aside agency action, findings, and conclusions found to

be . . . arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law[.]”);

Banknote Corp. of Am., Inc. v. United States, 365 F.3d 1345, 1350 (Fed. Cir. 2004) (“Among the

various APA standards of review in section 706, the proper standard to be applied in bid protest

cases is provided by 5 U.S.C. § 706(2)(A): a reviewing court shall set aside the agency action if it

is ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.’”

(citations omitted)).

Therefore, the trial court’s first responsibility in a bid protest is to determine whether a

federal agency violated a federal statute or regulation in the procurement process and whether any

such violation was prejudicial. See Axiom Res. Mgmt. v. United States, 564 F.3d 1374, 1381 (Fed.

Cir. 2009) (holding that “the disappointed bidder must show a clear and prejudicial violation of

applicable statutes or regulations” (internal quotation marks and citations omitted)).

If no prejudicial violation of law or regulation is found, however, the court next is required

to determine whether the agency decision evidences a rational basis. See Savantage Fin. Servs.

Inc. v. United States, 595 F.3d. 1282, 1286 (Fed. Cir. 2010) (holding that a court “must sustain an

agency action unless the action does not evidence rational reasoning and consideration of relevant

factors” (quotations omitted)); see also Bowman Transp., Inc. v. Ark.-Best Freight Sys., Inc., 419

U.S. 281, 285–86 (1974) (holding that as long as a rational basis is articulated and relevant factors

are considered, the agency’s action must be upheld). In this respect, “contracting officers are

‘entitled to exercise discretion upon a broad range of issues confronting them’ in the procurement

process.” Impresa, 238 F.3d at 1332. “Accordingly, the test for reviewing courts is to determine

31

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

discretion, and the disappointed bidder bears a heavy burden of showing that the award decision

had no rational basis.” Id. at 1332–33 (internal quotations omitted).

Finally, the court is required to ascertain whether the federal agency otherwise acted in an

arbitrary or capricious manner with respect to the procurement at issue. See Banknote, 365 F.3d

at 1350 (“[A] reviewing court shall set aside the agency action if it is ‘arbitrary, capricious, [or] an

abuse of discretion.’”). The United States Supreme Court has held that a federal agency’s decision

is “arbitrary and capricious,” when an agency “entirely fail[s] to consider an important aspect of

the problem, offer[s] an explanation for its decision that runs counter to the evidence before the

agency, or [the decision] is so implausible that it could not be ascribed to a difference in view or

the product of agency expertise.” Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co.,

463 U.S. 29, 43 (1983).

3. Ernst & Young, LLP’s Amended Complaint.

Count I of E&Y’s November 30, 2017 Amended Complaint alleges that “the VA’s

evaluation of E[&]Y’s proposal was arbitrary, capricious, and lacked reason.” Am. Compl. ¶¶ 75–

94. The VA arbitrarily evaluated portions of E&Y’s proposal, resulting in the wrongful

assignment of marginal ratings under the Technical and Corporate Experience Factors. Am.

Compl. ¶¶ 75–90. The VA also ignored several circumstances surrounding the Solicitation that

necessitated discussions. Am. Compl. ¶ 92. Finally, the VA “unreasonably concluded that it

could not determine whether E[&]Y’s [Task Order One] fixed price of $ was fair and

reasonable.” Am. Compl. ¶ 93.

Count II of E&Y’s November 30, 2017 Amended Complaint alleges that the VA employed

unstated evaluation criteria to analyze E&Y’s proposal. Am. Compl. ¶¶ 95–105. The VA’s basis

for evaluating proposals is limited to information and standards stated in the Solicitation. Am.

Compl. ¶ 97. Despite the Solicitation requiring five-person VISN teams, the VA assigned E&Y

“a weakness for dedicating team to each VISN.” Am. Compl. ¶¶ 98–102.

Without providing staffing guidelines or team lead specifications, the VA assigned E&Y additional

weaknesses for

” Am. Compl. ¶¶ 103–04. “The VA’s improper application of unstated criteria” led to

E&Y’s proposal not being eligible for an award. Am. Compl. ¶ 105.

Count III of E&Y’s November 30, 2017 Amended Complaint alleges that “PwC is

ineligible for award because of . . . OCI[s].” Am. Compl. ¶¶ 106–17. Craddock and PwC had an

existing contract with the VA to develop the Methodology, i.e., the Pilot Study Contract. Am.

Compl. ¶ 108. PwC’s “deep, unequal, and unfair access to non-public information that other

[offerors] did not have[,]” presented an unequal access to information OCI. Am. Compl. ¶ 114.

Months of early access to the Methodology and the underlying Pilot Study Data allowed PwC to

use additional information relevant to the Solicitation and better understand the Solicitation’s

requirements. Am. Compl. ¶ 115. “Further, . . . Craddock[’s] . . . work in developing the

[M]ethodology meant that it drafted a key aspect of the [Solicitation’s SOWs]. Thus, PwC had

both unequal access to information and biased ground rules OCIs.” Am. Compl. ¶ 114.

Count IV of E&Y’s November 30, 2017 Amended Complaint alleges that “the [SSEB’s]

evaluation of PwC’s proposal was unreasonable” because the SSEB arbitrarily evaluated the

32

Technical, Corporate Experience, and Past Performance Factors of PwC’s proposal. Am.

Compl. ¶¶ 119–24. PwC’s inexperience in conducting federal health market assessments, labor

inefficiencies, and price difference called for the SSEB’s assignment of weaknesses to

PwC’s proposal. Am. Compl. ¶¶ 120–22. Additionally, the SSEB “unreasonably credited PwC

with the [c]orporate [e]xperience and [p]ast [p]erformance of its affiliate ” and

“failed to reject PwC’s proposal as ineligible for its inclusion of assumptions that contradict[ed]

requirements of the [Solicitation].” Am. Compl. ¶¶ 123–24.

Count V of E&Y’s November 30, 2017 Amended Complaint alleges that “[t]he VA’s [best

value trade-off] determination is arbitrary, capricious, and lacks a rational basis.” Am.

Compl. ¶¶ 128–32. Contracting officers have broad discretion to conduct a best value trade-off

determination, provided that the determination is not arbitrary and capricious or a violation of law.

Am. Compl. ¶ 130. By applying unstated evaluation criteria and ignoring PwC’s higher

price, the VA “conducted an unreasonable [best value] trade[-]off [determination].” Am.

Compl. ¶ 131.

4. Ernst & Young, LLP’s Motion For Judgment On The Administrative

Record.

a. The Source Selection Evaluation Board’s Evaluation Failed

To Comply With The Solicitation Or Otherwise Was

Arbitrary And Capricious.

E&Y argues that federal agencies are required to evaluate proposals in accordance with the

solicitation. Pl. Br. at 18–19. The MAHSO Solicitation’s SOWs required six VISN teams

of five members each to conduct site visits and assessments. Pl. Br. at 19. Pursuant

to this requirement, E&Y “proposed to provide in

its . . . Staffing/Management proposal.” Pl. Br. at 19 (emphasis and bold in original). The SSEB,

however, assigned E&Y a weakness, based on the proposed number of team members in each

VISN team although E&Y’s proposed “staffing level” met the requirements of the Solicitation.

Pl. Br. at 19–20. In addition, notwithstanding the Solicitation’s requirement that one Architect

and one Healthcare Planner would lead each VISN team, the SSEB assigned E&Y’s proposal an

additional weakness for . Pl. Br. at 20. Moreover, although

E&Y’s proposal included

, the SSEB assigned E&Y technical weaknesses for

. Pl.

Br. at 23–24. The SSEB’s assignment of these weaknesses was inconsistent with the Solicitation’s

evaluation criteria and also unfairly affected the evaluation of every offeror, except PwC. Pl. Br.

at 21.

The SSEB also failed to evaluate PwC’s proposal as required by the Solicitation, by

crediting PwC with the corporate experience and past performance of even though

the Solicitation limited the SSEB’s evaluation to the “prime contractor” and “major

subcontractors.” Pl. Br. at 34. PwC did not list as a “major subcontractor” in its

proposal, but the SSEB nevertheless credited PwC with the past performance of .

Pl. Br. at 35–36. In addition, despite the SSEB’s indication that PwC’s staffing levels

, the SSEB assigned PwC a “Good” rating under the Technical Factor. Pl. Br. at 43.

33

Finally, in evaluating PwC’s Price, the SSEB also overlooked the difference

between PwC’s proposed price and that of all the other offerors. Pl. Br. at 44.

b. PricewaterhouseCoopers Public Sector, LLP’s Assumptions

Did Not Comply With The Solicitation.

PwC’s proposal failed to comply with the Solicitation by making “two

substantial . . . assumptions that conflict with the [Solicitation] and [that] should have rendered

PwC’s proposal unacceptable.” Pl. Br. at 38. Specifically, PwC’s proposal assumed that data

provided by the VA ” and that the VA would “support

[PwC’s] proposed VISNs.” Pl. Br. at 38–39. These assumptions, however, are inconsistent with

the Solicitation, because the VA “did not warrant” to be provided and did not

indicate which VISNs would be supported in Task Order One. Pl. Br. at 38–40. Consequently,

PwC’s proposal was unacceptable. Pl. Br. at 37–38; see also Centech Grp., Inc. v. United States,

554 F.3d 1029, 1037 (Fed. Cir. 2009) (“To be acceptable, a proposal must represent an offer to

provide the exact thing called for in the request for proposals, so that acceptance of the proposal

will bind the contractor in accordance with the material terms and conditions of the request for

proposals.”).

c. The Contracting Officer Failed To Conduct Discussions.

Although the VA reserved the right to award the MAHSO Contract without conducting

discussions, an agency’s discretion not to engage in discussions must be “reasonably based on the

particular circumstances of the procurement, including consideration of the proposals received and

the basis for selection decision.” Pl. Br. at 40–41 (quoting Day & Zimmerman Servs. v. United

States, 38 Fed. Cl. 591, 604 (Fed. Cl. 1997)). E&Y argues that the discrepancies in proposed

pricing and the fact that three of the “largest and most successful consulting firms in the world”

were determined not to be eligible for a contract award, rendered the CO’s decision to make an

award without conducting discussions arbitrary and capricious. Pl. Br. at 42. Specifically, the VA

failed to “notice that it potentially could save the taxpayers more than $ due to the

‘excessive’ staffing proposed by PwC, if it reopened discussions.” Pl. Br. at 42.

d. The Contracting Officer Failed Adequately To Mitigate

Organizational Conflicts Of Interest.

E&Y also argues that the CO failed adequately to mitigate two OCIs. Pl. Br. at 46. First,

Craddock and PwC had access to the Pilot Study Data, which was not disclosed to the other

offerors. Pl. Br. at 47. VA correspondence shows that VA data sets and other “proprietary” non-

public government information was used to create the Methodology. Pl. Br. at 48–49 (citing Tab

27, AR 978). Although the CO ultimately provided the Methodology to all prospective offerors,

seven days before proposals were due, the CO’s failure to provide all the offerors with the

underlying Pilot Study Data resulted in an unequal access to information OCI. Pl Br. at 50–51. In

addition, PwC also is ineligible for an award, because of a biased ground rules OCI. Pl. Br. at 51.

The VA admitted that the Methodology developed by Craddock and PwC was the basis for the

Solicitation’s SOWs and evaluation criteria, but decided that no conflict existed, because PwC and

Craddock qualified as “development contractor[s]” under FAR 9.505-2. Pl. Br. at 53–56. PwC’s

work on the Pilot Study, however, “fits neatly under the definition for ‘nondevelopmental’ work

34

set forth in . . . FAR [2.101]” rendering PwC not eligible to work on the MAHSO Project. Pl. Br.

at 56. Therefore, E&Y contends that the VA did not mitigate two OCIs that gave PwC an unfair

competitive advantage over E&Y and the other offerors. Pl. Br. at 57.

e. Injunctive Relief Is Appropriate.

Because of these FAR violations and arbitrary and capricious decisions made by the SSEB

and CO, E&Y argues that it has established the “requirements for permanent injunctive relief.” Pl.

Br. at 58. “A protest[o]r suffers irreparable injury when it has been deprived the opportunity to

compete fairly for a contract[, and] . . . the VA has deprived E[&]Y of the opportunity to compete

fairly in a number of ways.” Pl. Br. at 59. In addition, “[t]he public has no interest in paying PwC

a higher price[,] based upon an unreasonable and unequally applied evaluation.” Pl. Br. at

59. The public does, however, have an interest in “insuring that public officials treat contractors

fairly and generally obey procurement laws and regulations.” Pl. Br. at 59 (quoting Transatlantic

Lines LLC v. United States, 68 Fed. Cl. 48, 57 (Fed. Cl. 2005)). In addition, “the balance of

hardships falls squarely in favor of injunctive relief.” Pl. Br. at 60. Specifically, “[i]njunctive

relief would not harm the [VA’s] interests at all. Indeed, the [VA] would avoid the wasteful

performance of PwC at an exorbitant cost.” Pl. Br. at 60. And, “[g]iven the irreparable harm to

E[&]Y caused by the deprivation of the opportunity to compete fairly for th[e MAHSO C]ontract,

the balance of interests falls decidedly in E[&]Y’s favor.” Pl. Br. at 60.

5. The Government’s Response And Cross-Motion For Judgment On The

Administrative Record.

a. The Source Selection Evaluation Board’s Evaluation Was

Proper.

The Government responds that, because procurement officials apply technical knowledge

in evaluating proposals, the courts must review procurement decisions with a great deal of

deference. Gov’t Br. at 19. This is particularly true in this case, where E&Y failed to meet the

burden of proving that the VA improperly evaluated E&Y’s proposal. Gov’t Br. at 19; see also

CRAssociates, Inc. v. United States, 102 Fed. Cl. 698, 717 (Fed. Cl. 2011) (“[T]he evaluation of

proposals for their technical excellence or quality is a process that often requires the special

expertise of the procurement officials, and thus reviewing courts give [the] greatest deference

possible to these determinations.”).

The SSEB properly evaluated E&Y’s technical proposal as “Marginal.” Gov’t Br. at 18–

19. Although the Solicitation provided that there must be “at least six teams of five health care

planners and data analysts,” the qualifier “at least” modified the phrase “five health care planners

and data analysts.” Gov’t Br. at 21. Therefore, E&Y’s proposed “

reflect E&Y’s misunderstanding of the scope of the Task Order One SOW and

justify E&Y’s poor ratings. Gov’t Br. at 21–22. The SSEB’s ratings also were justified, because

portions of E&Y’s proposal

. Gov’t Br. at 22–23. Although the SSEB believed that PwC’s proposed

staffing levels , the SSEB determined that PwC exhibited

. Gov’t Br. at

31. Moreover, the VA’s reference to “Deloitte” in E&Y’s technical evaluation was a typographical

35

error, evidenced by the absence of any reference to a similar weakness in Deloitte’s evaluation.

Gov’t Br. at 23–24.

In addition, the SSEB properly evaluated E&Y’s corporate experience. Gov’t Br. at 24.

E&Y’s failure to focus on

led the SSEB to conclude that E&Y lacked adequate experience. Gov’t Br. at 24. Therefore, E&Y

was found not to be eligible for an award, because the SSEB properly determined that E&Y’s

proposal received less than “Satisfactory” technical and corporate experience ratings. Gov’t Br.

at 28.

The SSEB properly also rated E&Y’s past performance as entailing a “Moderate Risk,”

because E&Y’s past performance examples “

.” Gov’t Br. at 30 (quoting Tab 14, AR 643). And, the SSEB correctly credited

PwC with the corporate experience and past performance of , because PwC’s

proposal confirmed the availability of resources and “a contracting officer has

discretion to take offerors at their word that the resources of their affiliates will be made available.”

Gov’t Br. at 32–33 (quoting PricewaterhouseCoopers Pub. Sector, LLP v. United States, 126 Fed.

Cl. 328, 353 (Fed. Cl. 2016)). Moreover, the VA’s overall evaluation of PwC’s proposal properly

concluded that PwC’s price was “fair and reasonable,” because it offered an “excellent value,”

including . Gov’t Br. at 35–36.

b. PricewaterhouseCoopers Public Sector, LLP’s Assumptions

Complied With The Solicitation.

The Government argues that the VA also was free to accept the assumptions included in

PwC’s proposal, because they did not violate or conflict with the terms of the Solicitation, since

the Solicitation “sa[id] nothing about which VISNs would be included in [Task Order One]” and

the “VA [did not] .” Gov’t Br. at 37.

c. The Contracting Officer Was Not Required To Conduct

Discussions.

The Government argues that FAR Part 15 is inapplicable in this case, because it does not

govern BPAs. Gov’t Br. at 38 (citing FAR 8.404(a)18). Moreover, “[w]here the applicable

procurement regulations do not require discussions, the procuring agency is not required to

conduct them.” Gov’t Br. at 39. As such, the terms of the Solicitation control the CO’s discretion

in deciding whether to conduct discussions. Gov’t Br. at 38–39. In this case, the CO appropriately

proceeded without conducting discussions, because the Solicitation stated that a “[c]ontractor may

be eliminated from consideration without further communication[,] if its non-price and/or pricing

quotes are not among those [c]ontractors considered most advantageous to the [VA] based on a

best value determination.” Gov’t Br. at 38–39 (quoting Tab 8, AR 269).

18

FAR 8.404(a) provides, in relevant part, that “[p]arts 13 . . . , 14, 15, and 19 . . . do not

apply to BPAs[.]” 48 C.F.R. § 8.404(a).

36

d. Ernst & Young, LLP’s Organizational Conflict Of Interest

Claims Are Untimely And Unsupported.

The Government also argues that E&Y’s OCI claims are untimely and not supported.

Gov’t Br. at 40–43. Requests for information during the solicitation process evidence that

prospective offerors, including E&Y, had knowledge of at least Craddock’s involvement in

developing the Methodology. Gov’t Br. at 42 (citing Tab 8, AR 298). The United States Court of

Appeals for the Federal Circuit has held that “a party who has the opportunity to object . . . and

fails to do so prior to the close of the bidding process waives its ability to raise the same objection

subsequently . . . in the [United States] Court of Federal Claims.” Gov’t Br. at 41 (quoting Blue

& Gold Fleet, L.P. v. United States, 492 F.3d 1308, 1313 (Fed. Cir. 2007)). The United States

Court of Federal Claims has observed that “[l]ogically, the waiver rule . . . applies where a

[protestor] fails to raise OCI claims before the close of the bidding process.” Gov’t Br. at 41

(quoting Concourse Grp., LLC v. United States, 131 Fed. Cl. 26, 29 (Fed. Cl. 2017)). As a result,

E&Y’s OCI claims are waived as a matter of law, because E&Y failed to raise OCI claims prior

to close of the MAHSO Solicitation. Gov’t Br. at 43. In the alternative, E&Y did not establish

that the CO’s OCI Assessment and mitigation efforts were “arbitrary, capricious, or otherwise

contrary to law.” Gov’t Br. at 43 (quoting PAI Corp. v. United States, 614 F.3d 1347, 1352 (Fed.

Cir. 2010)). In addition, because PwC did not assist in preparing the Solicitation’s SOWs or gain

access to information other than the Methodology, any informational advantage the PwC may have

had did not rise to the level of an unfair competitive advantage. Gov’t Br. at 45–46.

6. PricewaterhouseCoopers Public Sector, LLP’s Response And Cross-

Motion For Judgment On The Administrative Record.

PwC emphasizes that the CO’s “best value trade-off” determination was reasonable, and

thus, E&Y is not entitled to injunctive relief. Int. Br. at 43–44. Although a determination was not

required, “because there [was] only one acceptable offeror,” the CO nevertheless proceeded to

conduct a “best value trade-off” analysis. Int. Br. at 43–44. In this regard, E&Y “failed to

demonstrate that the CO erred in evaluating E[&]Y’s Technical Approach, Corporate Experience,

and Past Performance.” Int. Br. at 43. Moreover, the CO also applied the appropriate evaluation

criteria in concluding that PwC was the only offeror eligible for an award. Int. Br. at 44.

A party seeking injunctive relief must demonstrate that “it has actually succeeded on the

merits.” Int. Br. at 44 (quoting Ceres Gulf, Inc. v. United States, 94 Fed. Cl. 303, 322 (Fed. Cl.

2010)). Therefore, E&Y’s failure to establish success on the merits bars it from obtaining

injunctive relief. Int. Br. at 44–45. In addition, public interest and hardship concerns in this case

prevent the court from granting injunctive relief. Int. Br. at 45–46. The public interest is not

served by injunctive relief where the VA did not abuse its discretion or act in an arbitrary and

capricious manner. Int. Br. at 45–46. In addition, an injunction is not appropriate where it would

cause undue hardship to the VA and other interested parties, and the administrative burden of

reopening the MAHSO Solicitation would harm veterans by further delaying commencement of

the MAHSO Project. Int. Br. at 46.

37

7. Ernst & Young, LLP’s Reply In Support Of Motion For Judgment On

The Administrative Record And Opposition To The Government’s

And PricewaterhouseCoopers Public Sector, LLP’s Cross-Motions For

Judgment On The Administrative Record.

a. The Extent To Which

Will Be Involved Is Uncertain.

E&Y replies that the VA “improperly credited PwC . . . with the corporate experience and

past performance of . . . [ ].” Pl. Reply at 14. Although PwC’s proposal suggests

that resources will be available, PwC “lack[s] . . . concrete support for this

statement . . . , [and] Reuters News has reported that PwC [US] is selling its government services

practice, disproving any assertions that [ ] . . . will have involvement, let alone ‘direct

and meaningful involvement,’ in PwC[’s] . . . performance.” Pl. Reply at 17–19 (citing Tab 11,

AR 513).

b. Ernst & Young, LLP Did Not Waive Organizational Conflict

Of Interest Claims.

E&Y did not waive any OCI claims by protesting the VA’s OCI determination after the

contract award. Pl. Reply at 28. The general rule is that “a protestor is not required to protest an

agency’s OCI determination until after contract award.” Pl. Reply at 29 (quoting REEP, Inc., B-

290688, 2002 WL 31103566 (Comp. Gen. Sept. 20, 2002)).

In this case, E&Y did not have any knowledge of PwC’s involvement in drafting the

MAHSO Solicitation or intent to submit a proposal until after the MAHSO Contract was awarded.

Pl. Reply at 29 (citing Tab 8, AR 298). PwC’s involvement in the Pilot Study permitted it to gain

access to “proprietary” non-public government information that was more than that acquired

through “mere incumbency.” Pl. Reply at 31 (quoting Gov’t Br. at 44). In addition to the Pilot

Study Data, PwC also received information discussed in team and data orientation meetings,

internal metrics, and input from VA leadership. Pl. Reply at 31 (citing Tab 27, AR 978–80). This

additional access to specific Solicitation-related information created an unequal access to

information OCI that the VA failed to adequately mitigate. Pl. Reply at 31–32.

c. Permanent Injunctive Relief Is Appropriate.

E&Y is entitled to injunctive relief, because it has demonstrated that all offerors did not

compete for the MAHSO Contract on a level playing field. Pl. Reply at 34. Moreover, it is in the

public’s best interest to “secure the best value for the [VA]” and avoid payment of a price

premium. Pl. Reply at 34–35.

8. The Government’s Reply In Support Of Cross-Motion For Judgment

On The Administrative Record.

The Government adds that the SSEB appropriately evaluated E&Y’s past performance

examples. Gov’t Reply at 8. The VA conducted a “size, scope, and complexity” analysis of

E&Y’s past performance examples. Gov’t Reply at 9. E&Y’s examples were

,” particularly when contrasted with the cost

38

and substance of a “

.” Gov’t Reply at 9.

In addition, PwC appropriately was credited with the corporate experience of

, because the potential divestiture of is not “imminent and essentially

certain.” Gov’t Reply at 12–13. Thus, is available to assist PwC in the MAHSO

Project as a corporate affiliate. Gov’t Reply at 12.

9. PricewaterhouseCoopers Public Sector, LLP’s Reply In Support Of

Cross-Motion For Judgment On The Administrative Record.

PwC adds that the VA appropriately assigned E&Y weaknesses under the Technical Factor.

Int. Reply at 7. In fact, the “ambiguous and confusing” nature of E&Y’s proposal alone merits the

VA’s assignment of weaknesses. Int. Reply at 10.

10. The Court’s Resolution.

a. Ernst & Young, LLP Did Not Waive Any Organizational

Conflict Of Interest Claims.

In Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308, 1313 (Fed. Cir. 2007), the

United States Court of Appeals for the Federal Circuit held that

a party who has the opportunity to object to the terms of a government solicitation

containing a patent error and fails to do so prior to the close of the bidding process

waives its ability to raise the same objection subsequently in a bid protest action in

the [United States] Court of Federal Claims.

Id. at 1313 (emphasis added); see also Patent, BLACK’S LAW DICTIONARY (10th ed. 2014)

(defining “patent” as “[o]bvious [or] apparent”).

In CRAssociates, the United States Court of Federal Claims observed that

the rationale of Blue [&] Gold [Fleet] leads to the conclusion that a contractor

should not be allowed to protest an agency's failure to identify and mitigate an OCI

when the contractor knew about the alleged OCI from the start, but failed to assert

it, via protest, prior to the award.

CRAssociates, 102 Fed. Cl. at 712 (emphasis added); see also Concourse Grp., 131 Fed. Cl. at 29

(“Logically, the waiver rule also applies where a [protestor] fails to raise OCI claims before the

close of the bidding process.”).

In this case, prior to the award of the MAHSO Contract, other prospective offerors were

not informed by the CO or otherwise of PwC’s involvement in the Pilot Study or intent to bid on

the MAHSO Contract. Tab 8, AR 298–300, 302. Nor were other prospective offerors informed

that PwC received “proprietary” non-public government information from the VA that was used

to develop the Methodology, i.e., the Pilot Study Data. Tab 8, AR 298–300, 302. Consequently,

neither E&Y nor the other prospective offerors had any information from which they could assert

39

OCI claims prior to submitting their proposals. Although one prospective offeror expressed

concern that the Pilot Study “contractors” had an unfair competitive advantage (Tab 9, AR 345),

the CO represented that “any advantage or perceived advantage” was mitigated by releasing the

Methodology, albeit seven days before final offers were due. Tab 27, AR 833; see also Tab 9, AR

345. The deficiency of this mitigation effort, however, was not immediately recognized, but

became apparent only when the proposals were examined and showed that every offeror, except

PwC, made identical “mistaken” assumptions in their technical proposals. Tab 11, AR 519; Tab

18, AR 737. As such, the bases for E&Y’s OCI claims were not “patent . . . prior to the close of

the bidding process.” See Blue & Gold Fleet, 492 F.3d at 1313.

For these reasons, the court has determined that E&Y did not waive any OCI claims alleged

in the November 30, 2017 Amended Complaint.

b. The Contracting Officer Violated FAR 9.504(a), By Failing To

Identify, Evaluate, And Mitigate A Significant Unequal Access

To Information Organizational Conflict Of Interest Prior To

Award Of The Market Area Health System Optimization

Contract.

Count III of E&Y’s November 30, 2017 Amended Complaint19 alleges that “PwC is

ineligible for award because of . . . OCI[s].” Am. Compl. ¶¶ 106–17. Specifically, the Amended

Complaint alleges that “PwC’s team had deep, unequal, and unfair access to non-public

information that the other [offerors] did not have. [And, this] non-public information provided

PwC with an unfair competitive advantage.” Am. Compl. ¶ 114. “Thus, PwC had [an] unequal

access to information . . . OCI[].” Am. Compl. ¶ 114; see also Pl. Br. at 46.

“An unequal access to information OCI may arise in situations where an offeror, by virtue

of [prior] performance on a government contract, obtains access to non-public information that

other offerors do not have, which provides it an unfair competitive advantage on a new

procurement.” Jacobs Tech. Inc. v. United States, 100 Fed. Cl. 198, 210 (Fed. Cl. 2011) (citing

Turner Constr. Co. v. United States, 94 Fed. Cl. 561, 569 (Fed. Cl. 2010), aff’d 645 F.3d 1377

(Fed. Cir. 2011)).

FAR 9.504(a) requires a contracting officer to “analyze planned acquisitions in order

to . . . [a]void, neutralize, or mitigate significant potential [OCIs] before contract award.” 48

C.F.R. § 9.504(a) (emphasis added). To that end, the “contracting officer must analyze each

procurement to determine if there are any potential or actual OCIs.” Jacobs Tech., 100 Fed. Cl.

at 210 (emphasis added). And, FAR 9.504(a) requires the contracting officer to “[i]dentify and

evaluate potential [OCIs] as early in the acquisition process as possible.” 48 C.F.R. § 9.504(a)

19

Regarding the merits of E&Y’s November 30, 2017 Amended Complaint, the court does

not address Counts I-V in order. Instead, the court’s analysis begins with Count III, because it is

relevant to each of the remaining Counts. Next, Counts II and IV are discussed, because the court

reads these Counts to allege violations of the same FAR provision. Then, the court analyzes Count

I, as it also encompasses elements of the court’s discussion of Counts II-IV. Finally, the court

analyzes Count V.

40

(emphasis added); see also PAI Corp., 614 F.3d at 1352; Jacobs Tech., 100 Fed. Cl. at 210. If a

potential or actual OCI is identified, the contracting officer must determine if it is “significant.”

48 C.F.R. § 9.504(a); see also Jacobs Tech., 100 Fed. Cl. at 210. “A significant . . . [OCI] is one

which provides the bidding party a substantial and unfair competitive advantage during the

procurement process on information or data not necessarily available to other bidders.” PAI

Corp., 614 F.3d at 1352 (emphasis added). “If the contracting officer decides that a particular

acquisition involves a significant potential [OCI],” the contracting officer must document the

analysis and submit a recommendation for corrective action to the head of the contracting agency.

See 48 C.F.R. § 9.506(b); see also Jacobs Tech., 100 Fed. Cl. at 210–11 (“The head of the

contracting agency will determine the appropriate action[,] based on the contracting officer’s

recommendation, FAR 9.506(c), and may decide to disqualify a government contractor[,] if

significant OCIs cannot be mitigated[.]”).

On or about May 17, 2017, the CO was informed that PwC would “likely bid” on the

MAHSO Solicitation. Tab 27, AR 831. At that time, the CO knew that the VA had provided

“proprietary” non-public government information, i.e., the Pilot Study Data, “directly” to

Craddock and PwC for use in developing the Methodology. Tab 27, AR 831, 835; see also Tab

27, AR 906 (PwC confirming that “much of [the information used during the Pilot Study] was

generated by the [VA]”). Initially, however, neither the Pilot Study Data nor the Methodology

were provided to the other prospective offerors, including E&Y. Tab 9, AR 337. Although several

offerors subsequently requested the Methodology (Tab 8, AR 298–300, 302), the CO refused,

stating that it would “be provided after award of the BPA.” Tab 8, AR 298. Seven days before

proposals were due, however, the CO changed course and provided the Methodology to all

prospective offerors “to minimize any OCI concerns[.]” Tab 27, AR 833. But, the underlying

Pilot Study Data was never provided. Tab 27, AR 833. That decision by the VA created a

“significant” unequal access to information OCI. And, although the CO admitted that the Pilot

Study Data may have provided PwC with a “minor competitive advantage,” the CO minimized

this advantage by describing the Pilot Study Data as “unique” only to the three Pilot Study Market

Areas, and concluded that the Pilot Study Data would not “benefit [PwC] in providing a quote for

the resulting solicitation as each market is independent.” Tab 27, AR 833. The Administrative

Record, however, evidences the contrary.

As the CO admitted, the Methodology included only “general” or “high level” information

(Tab 27, AR 833, 835 (emphasis added)) and would “require extensive input/customization” from

the successful offeror. Tab 8, AR 299. In contrast, the Pilot Study Data was “very robust.” Tab

27, AR 978 (explaining that PwC was “oriented to data conventions, data workbooks, automated

data tools and several very robust data sets”); see also Tab 27, AR 979–81 (“Data Distribution

Example”). Although it may be true that the Pilot Study Data consisted of information about only

the three Pilot Study Market Areas (Tab 27, AR 833, 979–81 (“Data Distribution Example”)), this

“robust” information, contained “proprietary” non-public government information that was

provided by the VA to Craddock and PwC, and then used to develop the Methodology, i.e., the

“general approach for analyzing each [VHA] market [area].” Tab 27, AR 833 (emphasis added);

see also Tab 27, AR 831, 835 (describing the Methodology, as a “step-by-step process that

outline[d] the high level approach, activities, and data that [would] be used for each [VHA] market

[area]” (emphasis added)). The competitive advantage to PwC in having access to the Pilot Study

Data prior to submitting its proposal was that the VA provided PwC with access to “proprietary”

non-public government information that was necessarily representative of every VHA market area.

41

Tab 9, AR 351 (The “[M]ethodology consist[s] of proven analytical tools and applications to assess

access, quality, and cost of available community care, conduct market assessments for all V[H]A

markets across the nation.” (emphasis added)).

The competitive significance of the Pilot Study Data is further evidenced by the fact that

every other offeror made “staffing level” assumptions that were to PwC’s, i.e.,

PwC’s proposed “staffing level” was than that of the other offerors.20

Tab 11, AR 519; Tab 18, AR 737. In fact, the “staffing level” assumptions by Deloitte, E&Y,

Huron, and McKinsey were determined by the SSEB and the CO to be mistaken, thereby

contributing to all of the aforementioned offerors being not eligible for an award. Tab 27, AR 737.

In contrast, the CO touted that PwC was able to properly estimate the “level of effort . . . to perform

the tasks identified in . . . [Task Order One.]” Tab 27, AR 835. But, the fact that every offeror,

except PwC, made identical “mistaken” “staffing level” assumptions, evidences a significant

unequal access to information OCI attributable to PwC’s access to the Pilot Study Data. The CO

even admitted that PwC’s access to the Pilot Study Data may have provided PwC with a better

understanding of the MAHSO Project’s technical requirements, including “staffing level.” Tab

27, AR 833 (“The developed evaluation factors listed in the [MAHSO S]olicitation and used

during the source selection process were general in nature and not unique regarding the pilot

contract other than the technical evaluation criteria that discussed understanding methods of

approach and how to staff those methods.” (emphasis added)). The CO, however, attributed

PwC’s better understanding of the appropriate “staffing level” primarily to PwC’s experience

as an “incumbent contractor.” Tab 27, AR 837. But, PwC explained that any “incumbent

advantage . . . from working on the [Pilot Study], . . . was neutralized/mitigated through the [VA]’s

sharing of the [M]ethodology.” Tab 27, AR 906. This statement refutes the CO’s conclusion and

supports the fact that something more than mere incumbency, i.e., the Pilot Study Data, was the

source of PwC’s better understanding.

The United States Court of Appeals for the Federal Circuit has held that “[t]he mere

existence of a prior or current contractual relationship between a contracting agency and a firm

does not create an unfair competitive advantage, and an agency is not required to compensate for

every competitive advantage gleaned by a potential offeror’s prior performance of a particular

requirement.” PAI Corp., 614 F.3d at 1353 (emphasis added). But, in that case, the protestor

“failed to introduce any evidence before the trial court showing . . . a substantial and unfair

competitive advantage through unequal access to information.” Id. (emphasis added). Therefore,

the protestor’s “bare allegation [of] . . . a prior contractual relationship . . . [was] insufficient to

show a significant potential conflict.” Id. (emphasis added). In this case, however, the

Administrative Record evidences more than E&Y’s “bare allegation[s of] . . . a prior contractual

relationship;” instead, it reflects that PwC had access to “proprietary” non-public government

information, not available to the other prospective offerors, that gave PwC a “substantial and unfair

competitive advantage during the procurement process.” Id. at 1352.

20

Deloitte, E&Y, Huron, and McKinsey proposed VISN teams of members each,

or VISN staff members; in contrast, PwC proposed VISN teams of members each, or

VISN staff members. Tab 11, AR 519; Tab 18, AR 737.

42

On October 9, 2017, the CO sent “an email . . . to PwC referencing several questions

concerning [PwC’s] . . . involvement with [the Pilot Study.]” Tab 27, AR 836; see also Tab 27,

AR 905–10. Therein, the CO offered “PwC the opportunity to explain why they did or did not

enjoy a competitive advantage by working . . . to develop the Methodology.” Tab 27, AR 836.

PwC responded that, “[t]hrough the provision of the . . . [M]ethodology, all [prospective offerors]

were privy to the same information PwC . . . w[as] prior to proposal submission.” Tab 27, AR 906

(emphasis added). PwC, however, did not address the Pilot Study Data. Tab 27, AR 833. Not

surprisingly, the CO agreed with PwC and concluded that “any . . . information gathered during

the [Pilot Study] . . . was included in the [M]ethodology . . . , [thereby] eliminating any OCI

concerns.” Tab 27, AR 836. The court, however, does not view this type of post hoc

rationalization to be either relevant or persuasive. See Citizens to Preserve Overton Park v. Volpe,

401 U.S. 402, 419 (1971) (“The lower courts based their review on the litigation affidavits that

were presented. These affidavits were merely ‘post hoc’ rationalizations, which have traditionally

been found to be an inadequate basis for review.” (internal citations omitted)); see also Al Ghanim

Combined Grp. Co. Gen. Trad. & Cont. W.L.L. v. United States, 56 Fed. Cl. 502, 508 (Fed. Cl.

2003) (“The Supreme Court has made clear that post hoc rationalizations offered by the agency

should be afforded limited importance in the court’s analysis.”).

Rather the Administrative Record evidences that, the CO failed to “identify and evaluate”

PwC’s access to the Pilot Study Data as a “significant” unequal access to information OCI prior

to awarding the MAHSO Contract. Tab 27, AR 833. The Administrative Record also evidences

that the CO failed to document or provide any analysis or submit any recommendations to his VA

superiors to mitigate this OCI. Consequently, no effort was made to mitigate PwC’s exclusive

access to “proprietary” non-public government information, i.e., the Pilot Study Data, prior to

awarding the MAHSO Contract. In sum, the CO failed to adequately “analyze [the] planned

acquisition[,]” i.e., the MAHSO procurement, “in order to . . . [i]dentify and evaluate potential

[OCIs] as early in the acquisition process as possible,” and “[a]void, neutralize, or mitigate

significant potential [OCIs] before contract award.” 48 C.F.R. § 9.504(a) (emphasis added).

For these reasons, the court has determined that PwC had a “significant” unequal access to

information OCI and the CO’s failure to identify, document, and mitigate this OCI prior to

awarding the MAHSO Contract violated FAR 9.504(a). See 48 C.F.R. § 9.504(a)(2); see also

Turner Const. Co., Inc. v. United States, 645 F.3d 1377, 1386 (Fed. Cir. 2011) (“If . . . the

[contracting officer’s] post-award evaluation shows that a significant potential OCI did exist and

went unmitigated in violation of [FAR] 9.504(a)(2), then serious remedial actions are

appropriate.).

c. A Biased Ground Rules Organizational Conflict Of Interest,

However, Did Not Exist.

Count III of E&Y’s November 30, 2017 Amended Complaint alleges that PwC’s “work in

developing the [M]ethodology meant that it drafted a key aspect of the [SOW]. Thus, PwC

had . . . [a] biased ground rules OCI[].” Am. Compl. ¶ 114; see also Pl. Br. at 46.

A “biased ground rules” OCI “may occur in situations where an offeror, as part of [prior]

performance of a government contract, has provided input to the statement of work or

specifications of a [solicitation] in such a way as to provide the firm a competitive advantage in

43

responding to the [solicitation].” Jacobs Tech., 100 Fed. Cl. at 210 (citing Turner Constr., 94 Fed.

Cl. at 569).

FAR 9.505-2(b)(1)21 provides that “[i]f a contractor prepares, or assists in preparing, a

work statement to be used in competitively acquiring . . . services—or provides material leading

directly, predictably, and without delay to such a work statement—that contractor may not

supply . . . the services.” 48 C.F.R. § 9.505-2(b)(1); see also Sys. Plus, Inc. v. United States, 69

Fed. Cl. 757, 773 (Fed. Cl. 2006) (“The [‘biased ground rules’] group consists of situations in

which a firm, as part of its performance of a government contract, has in some sense set the ground

rules for another government contract by, for example, writing the statement of work or the

specifications. In these ‘biased ground rules’ cases, the primary concern is that the firm could

skew the competition, whether intentionally or not, in favor of itself.” (emphasis added)).

FAR 9.505-2(b)(1)(ii),22 however, “excepts certain government contractors from the

prohibitions of FAR 9.505-2(b)(1)—specifically, contractors who have participated in the

development and design work of the contract under which the work statement was drafted.” United

States ex rel. Ervin & Assocs., Inc. v. Hamilton Sec. Grp., Inc., 370 F. Supp. 2d 18, 54 (D.D.C.

2005). The text of FAR 9.505-2(b)(1)(ii) “plainly contemplates the situation where a firm wishes

to compete for a contract for . . . services based on that firm’s earlier development and design

work.” Id. at 54. The rationale underlying FAR 9.505-2(b)(1)(ii)’s exception is set forth in FAR

9.505-2(a)(3):

In development work, it is normal to select firms that have done the most advanced

work in the field. These firms can be expected to design and develop around their

own prior knowledge. Development contractors can frequently start production

earlier and more knowledgeably than firms that did not participate in the

development, and this can affect the time and quality of production, both of which

are important to the [g]overnment. In many instances the [g]overnment may have

financed the development. Thus, while the development contractor has a

competitive advantage, it is an unavoidable one that is not considered unfair; hence

no prohibition should be imposed.

48 C.F.R. § 9.505-2(a)(3). As such, “the competitive advantages afforded the contractor in such

situations are not prohibited as unfair[,] because they are both unavoidable and advantageous to

the government.” Ervin & Assocs., Inc., 370 F. Supp. 2d at 55.

21

E&Y’s citation to FAR 9.505-1 as governing biased ground rules OCIs is in error, as that

provision concerns “systems engineering and technical direction,” neither of which are relevant to

PwC’s work on the Pilot Study. See 48 C.F.R. § 9.505-1.

22

FAR 9.505-2(b)(1)(ii) excludes contractors that have “participated in the development

and design work” from the prohibitions of FAR 9.505-2(b)(1)). 48 C.F.R. § 9.505-2(b)(1)(ii); see

also 48 C.F.R. § 9.505-2(b)(3) (“For the reasons given in 9.505-2(a)(3), no prohibitions are

imposed on development and design contractors.”).

44

In this case, the Administrative Record reflects that PwC served as a development and

design contractor for the MAHSO Project. Under the Pilot Study Contract, Craddock and PwC

were required to “[d]efine the ideal healthcare delivery system design processes and outputs.” Tab

27, AR 934. In doing so, Craddock and PwC were “to evaluate feasibility, time, costs, adverse

events, strengths, and weakness of the proposed [MAHSO Project] to improve upon the study

design.” Tab 1, AR 5. In short, they advised the VA how best to “establish high performing health

care networks for VHA services and facilities.” Tab 1, AR 4. After months of “extensive market

analysis activities,” Craddock and PwC developed an “ideal” method, i.e., the Methodology, and

provided it to the VA for use during performance of the MAHSO Project. Tab 27, AR 830–31,

934. Accordingly, PwC’s work on the Pilot Study was “development and design work” under

FAR 9.505-2(b)(1)(ii).

In addition, PwC was not directly involved in drafting the MAHSO Solicitation. Tab 27,

AR 831, 834. And, although the Solicitation required offerors to comply with the Methodology

(Tab 9, AR 339, 341–42), because the Methodology is “generic” in nature, it does not present the

“primary concern” underlying biased ground rules OCIs, i.e., that PwC could skew the competition

in favor of itself. See Sys. Made Simple, Inc., B-412948.2, 2016 WL 4158119 (Comp. Gen. July

20, 2016) (explaining that a contractor “did not have the ability to shape the playing field of later

procurements on behalf of [itself], because [the contractor] had prepared a generic assessment”).

Instead, the Methodology describes only a “general approach for analyzing each [VHA] market

[area].” Tab 27, AR 833. The Methodology does not require the use of proprietary products or

services and the Administrative Record does not reflect that the Methodology was written such

that only PwC could comply with the requirements.

For these reasons, the court has determined that, because PwC’s work on the Pilot Study

was “development and design work,” and since the VA drafted the MAHSO Solicitation without

direct involvement from PwC, the VA did not violate FAR 9.505-2(b)(1).

d. The Source Selection Evaluation Board Violated FAR 8.405-

3(b)(2), By Failing To Evaluate Proposals, Pursuant To The

Requirements Of The Solicitation.

FAR 8.405-3(b)(2) provides, when “establish[ing] . . . a BPA . . . [t]he . . . contracting

officer shall ensure all quotes received are fairly considered and award is made in accordance with

the basis for selection in the [solicitation].” 48 C.F.R. § 8.405-3(b)(2)(vi) (emphasis added); see

also Elec. Data Sys., LLC v. United States, 93 Fed. Cl. 416, 430 (Fed. Cl. 2010) (“[A]n agency

shall evaluate proposals and assess their qualities solely based on the factors and subfactors

specified in the solicitation.”); AshBritt, Inc. v. United States, 87 Fed. Cl. 344, 374 (Fed. Cl. 2009)

(“It is a fundamental tenet of procurement law that proposals must be evaluated in accordance with

the terms of the solicitation.”); Hunt Building Co., Ltd. v. United States, 61 Fed. Cl. 243, 273 (Fed.

Cl. 2004) (An “agency’s failure to follow its own selection process embodied in the [s]olicitation

is . . . a prejudicial violation of a procurement procedure established for the benefit of offerors.”).

i. As To Ernst & Young, LLP’s Technical Proposal.

Count II of E&Y’s November 30, 2017 Amended Complaint alleges that the VA’s

“deci[s]ion to issue the award to PwC involved [the] application of . . . unstated evaluation

45

criteri[a].” Am. Compl. ¶¶ 95–105. Specifically, the Solicitation’s SOWs required VISN teams

of five members. Am. Compl. ¶ 102. The SSEB, however, assigned E&Y a weakness for

. Am. Compl. ¶ 102. The Amended Complaint also alleges that,

despite complying with the requirements of the Solicitation, the SSEB improperly assigned

weaknesses to E&Y, .” Am. Compl. ¶¶ 98–

105. The court reads Count II as challenging the SSEB’s evaluation of E&Y’s technical proposal

as a violation of FAR 8.405-3(b)(2), for failing to evaluate E&Y’s proposal, pursuant to the

requirements of the MAHSO Solicitation.

The Task Order One SOW required that the successful offeror develop Phase I of the

National Realignment Strategy for 32 VHA market areas across six VISNs. Tab 9, AR 339. In

turn, the Solicitation stated that the VA would evaluate the feasibility of each offeror’s technical

approach, by considering the “labor mix,” “management,” and “staffing level.” Tab 8, AR 272

(“Additionally, . . . the evaluation will consider the level o[f] effort and mix of labor proposed to

perform the tasks identified in [Task Order One].”); Tab 8, AR 282 (explaining that offerors were

to propose a “staffing/management plan tailored to [Task Order One]”).

Regarding the “labor mix,” the Task Order One SOW provided only that “[t]eams shall be

supported by . . . disciplines and specialists[,] as needed.” Tab 9, AR 344. It did not, however,

provide any other information about the composition of the “labor mix.” Tab 9, AR 344. The

Task Order One SOW also required that “[c]ore team leads include a Senior Medical Facility

Planner (Architect) and a Senior Medical Services Planner (Healthcare Planner).” Tab 9, AR 344.

But, it did not indicate whether each VISN team was to be led by an Architect, a Healthcare

Planner, or both. Tab 9, AR 344. In the absence of a definition or more specific information, the

SSEB was afforded substantial latitude in its evaluation of E&Y’s proposed “labor mix” and “team

leads.” See E.W. Bliss Co. v. United States, 77 F.3d 445, 449 (Fed. Cir. 1996) (explaining that “a

court will not second guess . . . discretionary determinations of procurement officials); see also ST

Net, Inc. v. United States, 112 Fed. Cl. 99, 108 (Fed. Cl. 2013) (“This deferential standard reflects

the substantial latitude afforded to agency officials to determine which proposal represents the best

value for the government.” (internal quotations omitted)).

In contrast, as to “staffing level,” the Task Order One SOW required each offeror to “have

one team per VISN,” or six VISN teams. Tab 9, AR 339; see also Tab 9, AR 344 (“The number

of teams shall be determined by the number of Markets and VAMCs.”). In addition, as a “General

Requirement,” the Task Order One SOW stated that “[t]ravel is required for at least six teams of

five healthcare planners and data analysts to assess . . . [market areas] within each of the six (6)

VISNs[.]” Tab 9, AR 344 (emphasis added). Therefore, the Task Order One SOW specified the

minimum “staffing level” requirement, i.e., “at least” six VISN teams of five members each23 (Tab

23

Although the Government argues that the qualifier “at least” modifies the phrase “five

health care planners and data analysts,” this is inconsistent with the plain meaning of the Task

Order One SOW. Cf. Barron Bancshares, Inc. v. United States, 366 F.3d 1360, 1375 (Fed. Cir.

2004) (“If the terms of a contract are clear and unambiguous, they must be given their plain

meaning.”). The Task Order One SOW states that there should be “at least six [VISN] teams” with

“five healthcare planners and data analysts” each. If the VA intended to construe the Task Order

46

9, AR 339, 344), and the SSEB was required to evaluate proposals in accordance with this

requirement. See 48 C.F.R. § 8.405-3(b)(2)(vi).

Although Deloitte’s, E&Y’s, Huron’s, and McKinsey’s proposals complied with the Task

Order One SOW’s minimum “staffing level” requirement, they were assessed weaknesses by the

SSEB, because of “ ” Tab 18, AR 699, 701,

704, 706 (emphasis added). Regarding E&Y’s proposal in particular, the SSEB stated that,

“

.” Tab 18, AR 700 (emphasis added). In contrast, PwC’s proposal of -member

VISN teams was lauded by the CO as “superb” and touted by the SSEB as “demonstrat[ing] a

thorough understanding of the complexity and size of the task at hand.” Tab 18, AR 707, 737.

PwC’s proposed “staffing level,” however, was almost that required by the Task Order

One SOW. Tab 9, AR 339, 344. Although the SSEB’s positive evaluation of PwC’s proposed

“staffing level” was not inconsistent with the Solicitation, the SSEB’s assignment of a weakness

for E&Y’s proposed “staffing level” was, because E&Y’s proposed “staffing level”

. Accordingly, the SSEB did not “fairly

consider” E&Y’s technical proposal “in accordance with the basis for selection in the

[Solicitation].” See 48 C.F.R. § 8.405-3(b)(2)(vi).

For these reasons, the court has determined that the SSEB’s evaluation of E&Y’s technical

proposal violated FAR 8.405-3(b)(2)(vi). See 48 C.F.R. § 8.405-3(b)(2)(vi).

ii. As To PricewaterhouseCoopers Public Sector, LLP’s

Past Performance Examples.

Count IV of E&Y’s November 30, 2017 Amended Complaint alleges that the SSEB’s

evaluation of PwC’s proposal was “unreasonable.” Am. Compl. ¶¶ 118–27. Specifically, the

SSEB “unreasonably credited PwC with the . . . [p]ast [p]erformance of its affiliate [

]” and improperly “assign[ed] PwC a strong evaluation rating despite that PwC lacks

experience providing federal health market assessments.” Am. Compl. ¶¶ 120, 123. The court

reads these portions of Count IV as challenging the SSEB’s evaluation of PwC’s past performance

examples as a violation of FAR 8.405-3(b)(2), for failing to evaluate E&Y’s proposal, pursuant to

the requirements of the MAHSO Solicitation.

The Solicitation allowed offerors to submit “a narrative detailing up to three (3) contracts

(prime contracts, task/delivery orders, and/or major subcontracts) in performance during the past

three (3) years from the date of issuance of the . . . [S]olicitation, which are relevant to the efforts

required by the [Solicitation].” Tab 8, AR 284. In evaluating each offeror’s past performance, the

SSEB was to “assess the relative risks associated with a quoter’s likelihood of success in fulfilling

the [S]olicitation’s requirements as indicated by that quoter’s record of past performance.” Tab 8,

AR 274. The Solicitation stated, however, that “[i]n this context, ‘quoter’ refers to the prime

One SOW as the Government suggests, it would have required: “six teams of at least five

healthcare planners and data analysts.”

47

[c]ontractor and all proposed major subcontractor(s).” Tab 8, AR 274 (emphasis added). Each

offeror was responsible for “identify[ing] their major subcontractors.” Tab 8, AR 303.

On PwC’s “Standard Form (SF 1449),” PwC identified “PricewaterhouseCoopers Public

Sector LLP,” i.e., PwC, as the “prime contractor.” Tab 11, AR 584; see also Tab 11, AR 571

(PwC identifying the “[p]rime” contractor to be associated with CAGE Code 783T6 and DUNS

Number 079529872); Tab 2, AR 53 (associating “PricewaterhouseCoopers Public Sector LLP”

with CAGE Code 783T6 and DUNS Number 079529872). PwC also identified

, and

as “[m]ajor subcontractors.” Tab 11, AR 571. PwC, however,

did not list as a “major subcontractor.” Tab 11, AR 571. Therefore, pursuant to

the terms of the Solicitation, the VA could consider past performance examples of PwC, as the

“prime contractor,” and , and , as PwC’s “major

subcontractors.” The VA, however, could not consider past performance examples of

.

PwC submitted three examples of past performance:

; and . Tab 11, AR 564–66. Each

of these projects, however, was performed by , not PwC or the “major

subcontractors” identified in PwC’s proposal.24 Tab 11, AR 564–66. Nevertheless, the SSEB

credited PwC with “past performance” for each of these projects. Tab 18, AR 721–22. And, the

SSEB concluded that, based on the projects, PwC “[d]emonstrated past performance to meet[] the

needs of the BPA and experience in area’s relevant to the [SOW]” and rated PwC as “Low Risk.”

Tab 18, AR 721–22. The CO also determined that “PwC’s past performance was relevant with

high quality, and resulted in low past performance risk.” Tab 18, AR 738. The SSEB’s

consideration of projects, however, was contrary to the Solicitation’s instructions,

because was neither the “prime contractor” nor one of PwC’s “major

subcontractors.” Accordingly, the SSEB did not “fairly consider” PwC’s past performance

examples “in accordance with the basis for selection in the [Solicitation].” See 48 C.F.R. § 8.405-

3(b)(2)(vi).

PwC’s proposal, however, stated that

PwC will . . . draw on the staff and expertise of its teaming partners and the

experience, resources, and capabilities of its affiliate, . . . [.] Both

24

E&Y argues that the same is true for at least some of PwC’s “Corporate Experience

Examples.” Pl. Br. at 36 (“Similarly, the Corporate Experience examples offered in PwC’s

proposal include clients of , not PwC[.]”). It is unclear

from the Administrative Record, however, which entity performed these projects, because PwC’s

proposal does not include any information other than PwC’s representations. Tab 11, AR 553–59.

Therefore, it is not clear how the VA was able to verify that PwC’s “Corporate Experience

Examples” were performed by PwC or its “major subcontractors,” as required by the Solicitation.

Tab 8, AR 273; see also Tab 19, AR 739 (admitting that the “[Past Performance Information

Retrieval System] was not reviewed because none of the previous federal contracts were reported

to [Contractor Performance Assessment Reporting System]”).

48

PwC and . . . are partners in their common parent [PwC US] . . .

and report ultimately to PwC US management. resources will be

directly and meaningfully involved in this effort.

Tab 11, AR 519 (emphasis added).

The Government and PwC argue that this discussion was sufficient to satisfy the MAHSO

Solicitation, citing Am. Auto Logistics, LP v. United States, 117 Fed. Cl. 137 (Fed. Cl. 2014), and

Femme Comp Inc. v. United States, 83 Fed. Cl. 704 (Fed. Cl. 2008). Gov’t Br. at 32–33; Int. Br.

at 30–34. Reliance on these non-precedential opinions, however, is misplaced.

In this case, the Solicitation defined “quoter” as: “the prime [c]ontractor and all proposed

major subcontractor(s).” Tab 8, AR 274. In addition, the CO instructed prospective offerors that,

“[i]t [was] up to [each offeror] to identify their major subcontractors.” Tab 8, AR 303. In Am.

Auto Logistics and Femme Comp, the court determined that “there is no requirement that an offeror

must designate its affiliated corporations as subcontractors.” Am. Auto Logistics, 117 Fed. Cl. at

188; Femme Comp, 83 Fed. Cl. at 747. In both cases, however, the court relied on FAR

15.305(a)(2)(iii), which provides that “[t]he evaluation should take into account past performance

information regarding predecessor companies, key personnel who have relevant experience, or

subcontractors that will perform major or critical aspects of the requirement when such information

is relevant to the instant acquisition.” 48 C.F.R. § 15.305(a)(2)(iii) (emphasis added). FAR

15.305(a)(2)(iii), however, does not mandate consideration of an offeror’s past performance;

instead, it suggests that such information should be considered, not that it “must” or “shall.” See

Res Rei Dev., Inc. v. United States, 126 Fed. Cl. 535, 555–56 (Fed. Cl. 2016) (explaining that the

court has consistently interpreted FAR 15.305(a)(2)(iii) “as permissive, giving an agency

discretion to decide whether to consider such information”). In this case, the VA required that

each offeror identify “major subcontractors” and specified that only past performance of the

“prime contractor” and “major subcontractors” would be considered.25 As such, the text of the

Solicitation governs how the proposals are to be evaluated.

For these reasons, the court has determined that the SSEB’s evaluation of PwC’s past

performance examples violated FAR 8.405-3(b)(2)(vi). See 48 C.F.R. § 8.405-3(b)(2)(vi).

25

In Am. Auto Logistics and PricewaterhouseCoopers the “affiliates” were required to

work with the “prime contractor” through agreements. See Am. Auto Logistics, 117 Fed. Cl. at

187 (explaining that the two companies “had entered into a teaming agreement”); see also

PricewaterhouseCoopers, 126 Fed. Cl. at 353 (“Protestor argues that ‘there should be no doubt

that PwC was utilizing the resources of its parent’ because the task order was being issued against

a . . . contract that had previously been novated from the parent entity, PwC US, to PwC Public

Sector. Protestor argues that the ‘transfer of resources and assets from the parent to PwC is the

bedrock of a novation, which is why these resources of PwC US were appropriate[ly] evaluated

by DHA.’” (internal alterations omitted)). In this case, however, had no contractual

duty to assist PwC; instead, the two companies were simply described as “partners in their common

parent [PwC US].” Tab 11, AR 519.

49

e. The Contracting Officer Violated FAR 1.102-2(c)(3), By Failing

To Conduct Discussions Prior To Award Of The Market Area

Health System Optimization Contract.

Count I of E&Y’s November 30, 2017 Amended Complaint alleges that the CO’s

evaluation of E&Y’s proposal was “arbitrary, capricious, and lacked reason.” Am. Compl. ¶¶ 75–

94. Specifically, the CO “failed to conduct discussions with E[&]Y despite that the [Solicitation]

clearly confused the offerors.” Am. Compl. ¶ 92.

“[U]nder FAR Part 8, [an agency is] under no obligation to hold discussions.” Distributed

Sols., Inc. v. United States, 106 Fed. Cl. 1, 15 (Fed. Cl. 2012). And, “it is clear that . . . a contracting

agency retains discretion in determining whether or not to hold discussions in a particular

procurement.” Day & Zimmermann Servs., 38 Fed. Cl. at 604. The decision whether to conduct

discussions, however, cannot be “arbitrary, capricious, [or] an abuse of discretion.” See Banknote,

365 F.3d at 1350. In addition, the court must ensure that a procuring agency’s actions “comply

with [the] FAR’s requirement of fundamental fairness in the procurement process.” Distributed

Sols., 106 Fed. Cl. at 16 n.9 (“Although FAR Part 15 does not apply, the Court will review [the

agency’s] actions to ensure they comply with FAR’s requirement of fundamental fairness in the

procurement process.”). This requires that “[a]ll contractors and prospective contractors . . . be

treated fairly and impartially[.]” 48 C.F.R. § 1.102-2(c)(3).26 Therefore, an agency’s discretion

in deciding whether to conduct discussions is “not unfettered.” Day & Zimmermann Servs., 38

Fed. Cl. at 604.

Although the Solicitation notified offerors of the VA’s intent to award the MAHSO

Contract without discussions, it also “reserve[d] the [VA’s] right to communicate with any or all

[c]ontractors submitting a quote, if it [was] determined advantageous to the [VA] to do so.” Tab

8, AR 269. Explaining the decision not to conduct discussions, the CO stated:

The [VA] provided in the solicitation that it “intends to establish a BPA and award

[Task Order One] without further communicating with [c]ontractors.” Based on

the evaluations of each quote against all evaluation criteria, the [CO] has

determined that award can be made on the basis of the initial quotes to PwC and

that it is in the best interest of the [VA] to do so. Although, four of the five quoters

presented problems within their technical [proposals] and [Task Order One] pricing

quotes that raised concerns, it was determined by the [CO] that discussions would

only allow the unsuccessful quoters to better their technical quotes and pricing to

become more competitive with PwC and not actually provide any real benefit to the

[VA]. Several quoters provided

based on the scope and methodology provided.

Enough detailed information was provided to the quoters throughout the

solicitation for them to understand the importance of staffing and the level of

26

FAR 1.102-2(c)(3) provides that, “[t]he [g]overnment shall exercise discretion, use

sound business judgment, and comply with applicable laws and regulations in dealing with

contractors and prospective contractors. All contractors and prospective contractors shall be

treated fairly and impartially but need not be treated the same.” 48 C.F.R. § 1.102-2(c)(3).

50

effort/methodology needed to accomplish the stated tasks and it would be unfair to

PwC for properly following the [S]olicitation[’s] requirements, by opening

discussions and allowing quoters a second chance. In addition, since every quoter

other than PwC received a less than satisfactory rating for corporate experience,

they would not have been eligible for award if discussions for technical and price

were opened.

Tab 18, AR 737.

The CO’s reasoning, however, is problematic for several reasons. First, the CO’s decision

not to conduct discussions was based on several mistaken conclusions. For example, the CO found

that “[e]nough detailed information was provided to the quoters throughout the [S]olicitation for

them to understand the importance of staffing and the level of effort/methodology needed to

accomplish the stated tasks.” Tab 18, AR 737. As previously discussed, however, there was a

significant unequal access to information OCI. The CO also mistakenly concluded that Deloitte,

E&Y, Huron, and McKinsey were not eligible for an award based, in part, on the SSEB’s

evaluation of their technical proposals. As previously discussed, however, the SSEB’s technical

evaluation violated FAR 8.405-3(b)(2)(vi), as it was not consistent with the requirements outlined

in the MAHSO Solicitation.

Second, the Solicitation required the CO to use “the best value trade-off process to

select . . . the most beneficial quote, price and other factors considered.” Tab 8, AR 269. The

nature of the “trade-off process” allowed the VA to award a contract to an offeror that proposes a

higher price than other offerors, if the technical benefits offset the additional cost. See 48 C.F.R.

§ 15.101-1(c) (“Th[e trade-off] process permits trade[-]offs among cost or price and non-cost

factors and allows the [g]overnment to accept other than the lowest priced proposal. The perceived

benefits of the higher priced proposal shall merit the additional cost, and the rationale for trade[-

]offs must be documented[.]”). And, the “primary objective of discussions is to maximize the

[g]overnment’s ability to obtain [the] best value[.]” 48 C.F.R. § 15.306(d)(2). In this case, the

CO determined that conducting discussions “would only allow the unsuccessful quoters to better

their technical quotes and pricing to become more competitive with PwC and not actually provide

any real benefit to the [VA].” Tab 18, AR 737 (emphasis added). These benefits, i.e.,

“better . . . technical quotes and pricing,” however, are the exact benefits to be obtained by the

trade-off process.

Third, the need to conduct discussions in this case became apparent early in the evaluation

process, because every offeror, except PwC, made identical “mistaken” assumptions regarding

“staffing level” and “level of effort.” Tab 11, AR 519; Tab 18, AR 737. To a reasonable

contracting officer, this should have suggested a problem with the Solicitation, the evaluation

process, or both. Discussions would have afforded the CO an opportunity to clarify the

Solicitation’s requirements and correct mistaken assumptions; possibly leading to more technically

beneficial proposals. The advantage of conducting discussions is also evidenced by the fact that

PwC’s proposed price of $11,981,646.00 for Task Order One was more than the next highest

price of $ . Tab 18, AR 736. Given this significant discrepancy, discussions would

have benefitted the VA. See Lockheed Martin Info. Sys., B-292836 et al., 2003 WL 23104713

(Comp. Gen. Dec. 18, 2003) (directing the agency to “engage in discussions [and] obtain revised

proposals” where the agency had evaluated proposals inconsistently); see also 48 C.F.R. §

51

15.306(d) (“[Discussions] are exchanges, in either a competitive or sole source environment,

between the [g]overnment and offerors, that are undertaken with the intent of allowing the offeror

to revise its proposal. These [discussions] may include bargaining. Bargaining includes

persuasion, alteration of assumptions and positions, give-and-take, and may apply to price,

schedule, technical requirements, type of contract, or other terms of a proposed contract.”).

Finally, the CO’s justification for not conducting discussions, because doing so “would be

unfair to PwC,” certainly does not evidence fair and equal treatment. Tab 18, AR 737. FAR 1.102-

2(c)(3) requires that all prospective offerors be treated fairly. See 48 C.F.R. § 1.102-2(c)(3). The

CO’s concern only for PwC conflicts with FAR 1.102-2(c)(3), as well as the purpose of the “trade-

off process,” which is to determine the “best value” for the agency.

For these reasons, the court has determined that the CO’s decision not to conduct

discussions under the circumstances in this case, violated FAR 1.102-2(c)(3)’s requirement that

“[a]ll contractors and prospective contractors shall be treated fairly and impartially.” 48 C.F.R. §

1.102-2(c)(3).

f. The Administrative Record Does Not Evidence That The

Contracting Officer’s Decision Not To Award The Market Area

Health System Optimization Contract To Ernst & Young, LLP

Was Arbitrary And Capricious, Or Lacked A Rational Basis.

Count V of E&Y’s November 30, 2017 Amended Complaint alleges that the CO’s “best

value trade-off” determination was “arbitrary, capricious, and lack[ed] a rational basis.” Am.

Compl. ¶¶ 128–132. Specifically, the Amended Complaint alleges that, but for, the SSEB’s

“arbitrary and capricious evaluation, E[&]Y would have received the contract award.” Am.

Compl. ¶ 132.

Although the SSEB’s evaluation of E&Y’s and PwC’s proposals violated FAR 8.405-

3(b)(2)(vi), the Administrative Record does not reflect that E&Y would have been awarded the

MAHSO Contract, but for these violations. This is because, even if PwC were to be excluded

from submitting a proposal, the remaining offerors, Deloitte, E&Y, Huron, and McKinsey, each

received identical ratings from the SSEB. Tab 18, AR 736. In addition, the CO did not

differentiate between the proposals from these offerors, because each was determined not be

eligible for an award, based on the SSEB’s evaluation. As such, there is no indication from the

SSEB or the CO as to which offeror’s proposal was viewed as the next best after PwC’

This text is long and has been trimmed here. Open the source document for the complete record.