Ian, Evan & Alexander Corporation v. United States

REDACTED OPINION

In the United States Court of Federal Claims

No. 18-1C

Filed: February 23, 2018

Redacted Version Issued for Publication: March 19, 2018 1

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

IAN, EVAN & ALEXANDER *

CORPORATION, * Bid Protest; Request for Injunctive

* Relief; Cross-Motions for

Protestor, * Judgment on the Administrative

v. * Record; Motion to Dismiss;

* Competition in Contracting Act;

UNITED STATES, * Out-of-Scope Modification

*

Defendant, *

*

v. *

*

XCELERATE SOLUTIONS, *

*

Defendant-Intervenor. *

*

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

John R. Prairie, Wiley Rein LLP, Washington, D.C., for protestor. Of counsel were

Brian G. Walsh, Kendra P. Norwood, and Cara L. Lasley, Wiley Rein LLP, Washington,

D.C.

Douglas T. Hoffman, Trial Attorney, Commercial Litigation Branch, Civil Division,

United States Department of Justice, Washington, D.C., for defendant. With him were

Franklin E. White, Jr., Assistant Director, Commercial Litigation Branch, Robert E.

Kirschman, Jr., Director, Commercial Litigation Branch, and Chad A, Readler, Acting

Assistant Attorney General, Civil Division, Department of Justice.

Michelle E. Litteken, PilieroMazza PLLC, Washington, D.C., for defendant-

intervenor. Of counsel were Jonathan T. Williams, Samuel Finnerty, Meghan F.

Leemon, PilieroMazza PLLC, Washington, D.C.

1 This opinion was issued under seal on February 23, 2018. The parties were asked to

propose redactions prior to public release of the opinion. This opinion is issued with some

of the redactions that the parties proposed in response to the court’s request. Words

which are redacted are reflected with the notation: “[redacted].” The court made additional

conforming redactions for consistency.

OPINION

HORN, J.

In the above-captioned bid protest, protestor Ian, Evan & Alexander Corporation

(IEA) asserts that the Defense Security Services (DSS) violated the Competition in

Contracting Act (CICA) when the DSS issued an allegedly out-of-scope modification to a

contract it held with Celerity Government Solutions LLC, doing business as Xcelerate

Solutions (Xcelerate Solutions).

FINDINGS OF FACT

On October 28, 2013, the Department of Defense (DoD) Washington Headquarter

Services (WHS), a separate organization within the DoD, had awarded IEA Contract No.

HQ0034-14-A-0004, which, according to the parties’ Joint Stipulation of Facts, was one

of five awards made under “a small business set-aside blanket purchase agreement

(‘BPA’) known as Technical, Analytical Administrative and Security (‘TAAS’).” The BPA

between the WHS and IEA had an ordering period of October 28, 2013 through August

14, 2018. The BPA stated that IEA “shall provide a variety of professional, technical,

analytical and administrative services to assist the Office of the Under Secretary of

Defense (Intelligence) (OUSD(I)) in the areas of world-wide counterintelligence, security,

intelligence, surveillance and reconnaissance (ISR) missions.” The “principal user of the

BPAs” was OUSD(I), although “other customers supported by Washington Headquarters

Services, Acquisition Directorate may use the BPA with the consent of the Contracting

Officer.” As discussed below, IEA was awarded a task order that expired on January 22,

2018 under its BPA with the WHS.

The parties state in their Joint Stipulation of Facts that, following the September

2013 shooting at the Washington Navy Yard, the Secretary of Defense directed

concurrent internal and independent reviews of the DoD’s programs, policies, and

procedures regarding the granting and renewing of security clearances for DoD personnel

and contractor personnel. In March 2014, based on the findings and recommendations of

the DoD’s internal and independent reviews, the Secretary of Defense identified “four key

recommendations,” one of which was to implement Continuous Evaluation (CE) of

personnel with access to DoD facilities or classified information. Additionally, DoD

Instruction No. 5200.02, which was also issued in March 2014, states that “[a]ll personnel

in national security positions shall be subject to continuous evaluation.” See Dep’t of Def.

Instruction, No. 5200.02, at 11 (Mar. 21, 2014). In their Joint Stipulation of Facts, the

parties state:

Continuous evaluation, or CE, is a vetting process to review the background

of an individual who has been determined to be eligible for access to

classified information or to hold a sensitive position at any time during the

period of eligibility. CE is intended to fill the gap that exists between periodic

reinvestigations in which issues relevant to an individual’s continued

eligibility for a security clearance may go unreported or unknown. For

example, while the Federal Investigative Standards have allowed for

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periodic reinvestigations to be conducted at any time following the

completion of the previous investigation or reinvestigation, agencies have

not been required to conduct them more frequently than every five years, at

most, depending on the clearance level and investigative standards in

effect. Like periodic reinvestigations, the purpose of CE is to assist agencies

in evaluating an individual’s continued eligibility for access to classified

information.

CE involves automated record checks conducted on a more frequent basis,

whereas periodic reinvestigations are conducted less frequently and may

include, among other things, subject and reference interviews. The types of

records checked as part of CE are the same as those checked for other

personnel security purposes. Security-relevant information discovered in

the course of CE is to be investigated and adjudicated under the existing

standards.

In October 2014, the DoD initiated a CE pilot program that was to be conducted in

a phased approach, with the number of individuals enrolled in the DoD’s CE pilot program

to increase over time. Initially, the DoD’s CE pilot program included approximately

[redacted] military, civilian, and contractor security clearance holders. DoD expanded the

number of security clearance holders enrolled in the CE pilot program to approximately

[redacted] in December 2015, approximately [redacted] in December 2016, and

approximately [redacted] in September 2017.

On September 22, 2015, WHS awarded IEA Order No. 08 under Contract No. HQ-

0034-14-A-0004 (IEA’s Task Order), which was titled “DoD Continuous Evaluation

Validation Cell.” IEA’s Task Order was a firm-fixed-price task order and had a total value

of approximately $16.8 million. 2 IEA’s Task Order had an initial period of performance

from September 23, 2015 to September 22, 2016, and contained four one-year option

periods. Under IEA’s Task Order, IEA was to

[o]btain a knowledge-based analytic capability to validate alerts generated

by the DoD Continuous Evaluation (CE) Program. The validation cell will

use supporting systems to receive and determine the CE results meet

established reporting criteria before forwarding adjudicatively-relevant and

actionable information to the DoD Consolidated Adjudication Facility (DoD

CAF) and DoD Component security officials, as appropriate.

IEA’s Task Order’s performance work statement stated that the DoD “is evolving

its CE program as directed by the Secretary of Defense’s February 21, 2014

memorandum,” and that IEA “shall provide the personnel necessary to support the

accurate and timely validation CE flags as the program scales.” IEA’s Task Order’s

performance work statement also provided that IEA’s “[e]fforts included, but are not

2IEA was awarded other orders under Contract No. HQ-0034-14-A-0004, however, Order

No. 08 is the one relevant to the above-captioned bid protest.

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limited to, developing processes and procedures, assessing and validating flags

generated by the DoD CE capability, developing business rules, drafting research reports,

collecting metrics, and developing future CE requirements.”

Additionally, Section C-2 of IEA’s Task Order, titled “PERFORMANCE

REQUIREMENTS (TASKS),” listed the following “Performance Objectives and

Performance Elements” for IEA’s Task Order:

• Receive, evaluate, and disseminate flags from the DoD CE capability in

accordance with DoD established policy, guidelines, and procedures.

• Assess and validate CE flags using available data sources to attribute the

information to a specific subject and determine if the information is relevant

and actionable, in accordance with DoD established guidelines and

procedures.

• Disseminate CE results and related correspondence to personnel security

specialists, CI, insider threat (InT), and/or law enforcement (LE) personnel,

as applicable, and within DoD established guidelines.

• Develop tracking tools, matrices, and templates to efficiently analyze data

and produce metrics which identify trends, referral status, and business

rules efficiency.

• Support the DoD CE Program as required, including policy development,

comment adjudication, formal coordination, and resource assessments.

Provide logistical, data gathering, and presentation support to meet

OUSD(I) and DoD CE Program requirements. Continually monitor and

review CE processes and procedures to inform the government where

efficiencies can be realized.

• Provide feedback to the DoD CE Program regarding the relevance and

validity of the business rules for flags. Policies, procedures and strategies

will be planned and integrated into the CE program as needed. Support the

development and delivery of CE-related reports, briefings, and training as

needed.

• Assist with the agenda setting and facilitation of the DoD Personnel Security

IT Governance Board, DoD CE Functional Working Group, and other CE-

related forums as required.

• Provide administrative support as necessary, to include planning meetings,

tracking action items, and preparing read-ahead briefing material, meeting

minutes, formal correspondence packages, activity reports, senior

leadership reports, and travel/training/personnel documents.

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• Complete online mandatory training modules, as identified by the COR

[Contracting Officer Representative], prior to rendering any alert

dispositions.

(capitalization in original). According to IEA’s motion for judgment on the Administrative

Record in the above-captioned bid protest, a “DoD CE Automated System” would

automatically flag records and send those records to IEA. IEA alleges that it would

evaluate and validate the records flagged by the DoD CE Automated System. IEA states

that it would then send the validated flagged records to the “PSMO-I [Personnel Security

Management Office for Industry] contractor,” who would assign the validated flagged

records a “risk priority.”

IEA’s Task Order estimated that IEA would need to provide twelve full-time

equivalent personnel security analysts during IEA’s Task Order’s base period of

performance and indicated that the number of full-time equivalent personnel security

analysts working under the Task Order would increase during the options periods as the

DoD CE program scaled. During the base period of performance of IEA’s Task Order, the

WHS paid IEA approximately $1.5 million for its performance.

On June 24, 2016, the DSS, not WHS, which had awarded IEA’s previous task

orders, issued Solicitation No. HS0021-16-R-0001 (the Solicitation), which was set-aside

for small businesses. The Solicitation was a negotiated procurement that sought

contractor support for the Personnel Security Management Office for Industry (PSMO-I)

within the DSS. Section 1.2 of the Solicitation, titled “Background,” provided the following

information regarding the procurement:

PSMO-I: On May 3, 2012, the Deputy Secretary of Defense directed

complete consolidation of the functions, resources, and assets of seven of

the Department’s distinct Component Central Adjudication Facilities

(CAFs), including DSS’ Defense Industrial Security Clearance Office for

Industry (DISCO), under the authority, direction and control of the Director

for Administration and Management effective October 21, 2012. Due to the

DSS responsibility for the administration and implementation of the National

Industrial Security Program (NISP) on behalf of the Secretary of Defense

and other government agencies, some DSS personnel were exempt from

CAF consolidation and remained with the DSS. The specific functions

performed by these personnel include personnel security management and

statistical analysis/planning for cleared Industry executed by the newly

established PSMO-I in October 2012.

Continuous Evaluation and Defense Insider Threat Management and

Analysis Center: On September 19, 2014, the Deputy Secretary of Defense

approved the Washington Navy Yard Implementation Plan to implement the

March 18, 2014 key recommendations following the tragic shooting at the

Washington Navy Yard on September 16, 2013. The Department of

Defense (DoD) was directed to: 1) Implement Continuous Evaluation (CE)

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of personnel with access to DoD facilities or classified information; and 2)

Establish the Defense Insider Threat Management and Analysis Center

(DITMAC) to assess, recommend intervention or mitigation, oversee case

action on threats that insiders may pose to their colleagues and/or DoD

missions and resources, and to fulfill certain requirements of the national

insider threat policy and minimum standards. Processing information

pertaining to cleared Industry from CE and DITMAC will be a new mission

for DSS and PSMO-I effective FY15.

Section 1.3 of the DSS Solicitation, titled “Objectives,” stated that the Solicitation’s

“PWS [performance work statement] provides continuous Personnel Security Operational

Support to review and process personnel security documentation as it relates to the NISP

[National Industrial Security Program].” Section 1.4 of the Solicitation, titled “Scope,”

provided that the awardee “shall be responsible for providing operational support to assist

in the personnel clearance oversight and management as prescribed by the DoD

Personnel Security Program, Industrial Security Program and National Industrial Security

Program Operating Manual (NISPOM) in support of National Security, DoD Readiness

and Military Operations.”

Part 5 of the DSS Solicitation identified the following “Specific Tasks” to be

performed under the resulting contract:

5.1. Basic Services: The Vendor shall support duties and processing

requests to include OPM [United States Office of Personnel Management

(OPM)] Unacceptable Notifications, OPM Discontinue Notifications, OPM

Separation/Transfer, OPM Catch‘em in CONUS [continental United States

(CONUS)], DOHA [Defense Office of Hearing and Appeals (DOHA)]

Reapplications, Personal Identification Data Changes, Record and Data

Management, Process SF-312s Non-Disclosure Agreements, Processing

of Incident Reports, e-QIP [electronic questionnaires for investigations

processing (e-QIP)] Review, Triage Outreach Program, Personnel

Clearance (PCL) Oversight Functions and other evolving initiatives as

related to Continuous Evaluation and the Defense Insider Threat

Management Analysis Center. Vendor support shall perform functions and

analysis to facilitate personnel security clearance tasks as described

throughout Section 5.

5.2 Unacceptable Notification: Unacceptable notifications are received from

the OPM when an investigation request is not complete or does meet [sic]

the timeline for submission. Once the case becomes Unacceptable, Vendor

personnel updates the subject’s eligibility in accordance with Standard

Operating Procedures.

5.3 Discontinue Notifications: Vendor personnel will receive Discontinued

Notifications from OPM via system notifications and in the mail. The Vendor

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shall process Discontinue Notices in accordance with Standard Operating

Procedures.

5.4 Separation/Transfer Notifications: Vendor personnel receive

Separation/Transfer notifications via system notifications from the

system(s) of record. The Vendor shall process Separation/Transfer

Notifications in accordance with Standard Operating Procedures.

5.5 Catch ‘em [sic] in CONUS: Vendor personnel shall process information

received from FSO’s [facility security officer (FSO)] regarding a subject’s

dates of availability for a CONUS interview with OPM. Once the information

is received, the Vendor personnel shall notify OPM’s Catch ‘em [sic] In

CONUS Team for scheduling of the subject interview.

5.6 Defense Office of Hearing and Appeals (DOHA) Reapplication: Vendor

personnel process the e-QIPs as received by government personnel for

individuals whose security clearance was Denied or Revoked by DOHA.

Vendor personnel prepare a package consisting of the e-QIP and signature

pages to PSMO-I management for further processing. Vendor personnel

notify DOHA of the subject’s reapplication and of the subject’s intent to

reapply for a security clearance.

5.7 Personal Identification Data Changes: Vendor personnel are

responsible for correcting Personal Identification Data (PID) changes upon

request from FSO’s or submitting a request for the correction, to the

appropriate database owner.

5.8 Record and Data Management: Vendor personnel create and modify

records in personnel security databases; add, delete, and create

documents for workflow process and assignment. Vendor personnel

receive, distribute and send mail.

5.9 Process Standard Form-312: Vendor personnel shall review all

submitted Classified Information Non-Disclosure Agreements (SF-312) for

completeness and separate forms as either acceptable or rejected in order

to process acceptable SF-312’s into designated database and process

rejected messages to FSO via the system(s) of record.

5.10 Incident Reports: Vendor personnel will review, analyze, and distribute

all Incident Reports sent to PSMO-I in accordance with DSS/DoD CAF

CONOPS [Consolidated Adjudications Facility Concept of Operations (CAF

CONOPS)]. The analysis will consist of ranking reports into three

categories: Low, Medium, and High. Vendor personnel will upload the

Incident Reports into CATS [Case Adjudication Tracking System (CATS)]

and determine the severity and risk of the Incident Report. Low Incident

Reports will be forwarded to PSMO-I government personnel to close in

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system(s) of record. Medium Incident Reports will be forwarded by Vendor

personnel to the DoD CAF [Department of Defense Consolidated

Adjudications Facility (DoD CAF)] for adjudicative action. High Incident

Reports will be forwarded to the PSMO-I Interim Suspension personnel and

the DoD CAF for immediate action.

5.11 Electronic Questionnaires for Investigations Processing (e-QIP)

Review: Vendor personnel shall review initial investigation submissions for

completeness and route to government personnel for final approval and

release to OPM.

5.12 Triage Outreach Program (TOP): Vendor personnel shall perform TOP

activities for approximately 5,000 NISP [National Industrial Security

Program (NISP)] facilities annually. TOP activities include: research of

security involvement in the NISP, company website information, JPAS

[Joint Personnel Adjudication System (JPAS)] activity and PCLs [personnel

security clearance (PCL)], federal and state business records, transmit and

suspense TOP survey to FSO via automated SharePoint workflow, evaluate

and document TOP survey responses against established NISPOM

[National Industrial Security Program Operating Manual (NIPSOM)] criteria,

conduct telephonic follow-up with the FSO to correct security relevant

issues and ambiguous TOP survey responses, and transmission of facility

security posture to assigned Industrial Security Representative via

automated SharePoint workflow.

5.13 Personnel Clearance (PCL) Oversight Functions: Vendor personnel

shall perform research on overdue periodic reinvestigation and aging

interim clearance population and take authorized actions as directed by

PSMO-I. This research includes but not limited to checking the status of the

open and closed investigations, submitting requests for information and

expanded focus investigations and enhanced subject interviews. Vendor

personnel will assist with additional pending adjudication actions as

required.

5.14 Customer Service Requests: Vendor personnel will review, process

and respond to customer service requests for issue resolution action. The

customer service request may be in the form of an e-mail, phone call, fax,

system(s) of record, or other mode of communication.

5.15 DSS Knowledge Center Support: Vendor personnel will answer phone

calls from security community and subjects of investigation, focusing on

issue resolution. Vendor personnel will utilize system(s) of record of record

to provide responses to inquiries involving the personnel security clearance

process. Vendor personnel will respond to inquiries on functional questions

of e-QIP, perform e-QIP account resets, and respond to any issues

involving the initiation/continuation of e-QIP investigation requests. In

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addition, Vendor personnel will answer questions from security

professionals regarding clearance(s). Vendor Task Lead will identify trends

to support the update of training, communication and knowledge

applications.

5.16 Continuous Evaluation (CE): Vendor personnel will support the DoD

CE mission. The records flagged by CE will be reviewed, analyzed, and

distributed into Low, Medium, High risk categories. Low, Medium and High

Risk Reports will be forwarded to appropriate government office(s) for

action and recorded in the system(s) of record.

5.17 Reports: The Vendor shall provide the required reports in accordance

with the deliverables schedule located in Technical Exhibit 2.

(emphasis in original).

Section 7.1 of the DSS Solicitation established a performance objective, a

standard for assessing whether contractor performance satisfied the objective, a

performance threshold, and a method of surveillance for each “Specific Task” contained

in Part of 5 the Solicitation. The performance objective for Section 5.16 of the Solicitation,

titled “Continuous Evaluation (CE),” was “[t]he Vendor shall process Continuous

Evaluation reports IAW [in accordance with] Section 5.16 of the PWS.” The standard for

assessing whether performance satisfied the objective for Section 5.16 of the Solicitation

was “[t]he Vendor processed reports accurately, using proper procedures in the

necessary timeframe,” and the performance threshold for Section 5.16 of the Solicitation

was “[p]rocessed data with a minimum of 95% accuracy.” Section 7.3 of the Solicitation

estimated that there would be 225,000 CE reports to process per year and estimated that

it would take four minutes to process a report. In accordance with a section of the

Solicitation titled “Evaluation Factors for Award,” proposals received by the DSS were to

be evaluated on the following three factors: (1) past performance; (2) technical capability;

and (3) price.

Prior to the DSS Solicitation’s closing time on July 8, 2016, the DSS received

proposals from Advanced Onion, Inc. (Advanced Onion), Sayres and Associates

Corporation, ANASEC, Inc., and Xcelerate Solutions. The DSS’ technical evaluation

team, contract specialist, and contracting officer began evaluating the four proposals on

July 12, 2016. On July 21, 2016, the contract specialist “sent discussions items” to

Advanced Onion, Sayres and Associates Corporation, ANASEC, Inc., and Xcelerate

Solutions and established a post-discussions proposal submission deadline on July 27,

2016. All four vendors timely submitted post-discussion proposal revisions.

Advanced Onion’s proposal listed IEA as a proposed subcontractor. In its post-

discussion proposal, Advanced Onion included the following discussion of Section 5.16

of the Solicitation and its CE efforts:

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[redacted]

(alterations and emphasis in original). Advanced Onion’s proposal did not appear to

provide how many full-time equivalents would be dedicated to performing the

requirements set forth in Section 5.16 of the Solicitation.

In its proposal, Xcelerate Solutions also addressed how it would execute the

specific task listed in Section 5.16 of the Solicitation. Xcelerate Solutions’ post-discussion

proposal included the following discussion regarding performance of Section 5.16 of the

Solicitation:

[redacted]

In the staffing plan contained in Xcelerate Solutions’ post-discussions proposal, Xcelerate

Solutions allocated [redacted] full-time equivalents to performing the requirements set

forth in Section 5.16 of the Solicitation.

On August 11, 2016, the DSS awarded Contract No. HS0021-16-C-0006 to

Xcelerate Solutions (the Xcelerate Solutions’ Contract). The Xcelerate Solutions’ Contract

was a firm-fixed-price contract with a base period of performance of four months, from

August 15, 2016 through December 14, 2016, and contained four one-year option

periods. As awarded, Xcelerate Solutions’ Contract had a total potential contract value of

approximately $15.3 million if all four option periods were exercised. Under the Xcelerate

Solutions’ Contract as awarded, the base period was valued at $1,040,377.60, the first

option period was valued at $3,121,132.80, the second option period was valued at

$3,152,544.00, the third option period was valued at $3,184,012.80, and the fourth option

period was valued at $3,216,096.00. Under the Xcelerate Solutions’ Contract, Xcelerate

Solutions was required “to provide operational Vendor support to the Personnel Security

Management Office for Industry (PSMO-I) with the Defense Security Service (DSS).”

Xcelerate Solutions’ Contract contained the same Background, Objectives, Scope, and

Specific Tasks sections as were provided for in the Solicitation. The Specific Task

relevant to CE, contained in Section 5.16 of the Xcelerate Solutions’ Contract, stated, as

it also did in the Solicitation, that “Vendor personnel will support the DoD CE mission. The

records flagged by CE will be reviewed, analyzed, and distributed into Low, Medium, High

risk categories. Low, Medium and High Risk Reports will be forwarded to appropriate

government office(s) for action and recorded in the system(s) of record.”

Approximately one month after the DSS awarded the Xcelerate Solutions’ Contract

to Xcelerate Solutions, on September 7, 2016, the WHS issued Modification No. 01 to

IEA’s Task Order, which, effective September 23, 2016, exercised the first option period

under IEA’s Task Order pursuant to Federal Acquisition Regulation (FAR) 52.217-9. 3

3The regulation at FAR 52.217-9, titled “Option To Extend the Term of the Contract,” as

modified in IEA’s Task Order, provides:

(a) The Government may extend the term of this contract by written notice

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Modification No. 01 of IEA’s Task Order stated that the period of performance for the first

option period of IEA’s Task Order was September 23, 2016 to September 22, 2017, and

provided that the “total cost of this contract was increased by $2,779,781.84 from

$1,506,694.36 (EST) to $4,286,476.20 (EST).” According to the parties’ Joint Stipulation

of Facts, although Modification No. 01 of IEA’s Task Order was issued by the WHS, the

DSS had begun to provide the funding for IEA’s Task Order “since at least September 23,

2016.”

In addition, as Xcelerate Solutions was nearing the end of the base period of

performance of the Xcelerate Solutions’ Contract with the DSS, on December 7, 2016,

the DSS issued Modification No. P00001 to the Xcelerate Solutions’ Contract, which

exercised the first option period under the Xcelerate Solutions’ Contract pursuant to FAR

52.217-9. Xcelerate Solutions’ Contract’s first option period began on December 15,

2016, and concluded on December 14, 2017.

Following the issuances of Modification No. 01 to IEA’s WHS Task Order on

September 7, 2016, and Modification No. P00001 to Xcelerate Solutions’ Contract on

December 7, 2016, on December 19, 2016, the DoD issued a memorandum regarding

the “Realignment of the Department of Defense Continuous Evaluation Mission and

Resources to the Defense Security Service.” In the December 19, 2016 memorandum,

the then-Director for Defense Intelligence (Intelligence & Security) stated:

I hereby realign the Department of Defense (DoD) Continuous Evaluation

(CE) mission and CE Validation Cell resources from the Security Policy and

Oversight Division (SPOD) to the Defense Security Service (DSS). Upon

this realignment, DoD’s CE efforts will be managed by the DSS Personnel

Security Management Office for Industry (PSMO-I). The Director, DSS, will

prepare the Department to meet its goal of implementing CE on one million

cleared personnel by the end of calendar year 2017.

The Security Policy and Oversight Division will support DSS in the

establishment of a CE Program of Record. Additionally, SPOD will update

relevant DoD policies to outline the associated responsibilities, functions,

relationships, and authorities.

to the Contractor within before the end of the period of performance;

provided that the Government gives the Contractor a preliminary written

notice of its intent to extend any time before the contract expires. The

preliminary notice does not commit the Government to an extension.

(b) If the Government exercises this option, the extended contract shall be

considered to include this option clause.

(c) The total duration of this contract, including the exercise of any options

under this clause, shall not exceed 60 months.

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DSS will provide quarterly progress updates to me or my designee until

further notice. In accordance with the Office of the Secretary of Defense

core functions, the Office of the Under Secretary of Defense for Intelligence

will retain all policy oversight and training authorities.

By letter dated August 30, 2017, the WHS informed IEA of its intention to extend

the term of IEA’s WHS Task Order by four months in accordance with FAR 52.217-8. 4

The August 30, 2017 letter also stated that “[t]his task order is no longer a requirement of

the Office of the Under Secretary of Defense for Intelligence and Washington

Headquarters Services.” Thereafter, IEA sent several email messages to a contracting

officer for the DSS requesting an opportunity to discuss the transfer of the CE “Validation

Cell” from the WHS to the DSS, which does not appear to have happened.

On September 14, 2017, the WHS issued Modification No. 03 to IEA’s Task Order

pursuant to FAR 52.217-8 (2017). 5 Modification No. 03 to IEA’s Task Order, which had

an effective date of September 22, 2017, stated that its purpose was “to incorporate CLIN

[Contract Line Item Number] 1003 to extend the task order for four months. All other terms

and conditions remain the same.” Modification No. 03, therefore, extended IEA’s

performance under IEA’s Task Order with the WHS until January 22, 2018. Modification

No. 03 also provided that the “total cost of this contract was increased by $925,427.28

from $4,286,476.20 (EST) to $5,211,903.48 (EST).” The parties’ Joint Stipulation of

Facts, which was submitted to the court on January 9, 2018, states, “[a]t this time, the

[IEA’s] contract is staffed with [redacted] FTEs [full-time equivalents] under the task

order.”

Three days later, on September 17, 2017, the “Chief, CE Cell” within the DSS

submitted a document containing the subject “Recommendation to Modify Contract:

HS0021-16-C0006” (Recommendation to Modify), which recommended that the DSS

modify Xcelerate Solutions’ Contract. The Recommendation to Modify Xcelerate

Solutions’ Contract stated:

PSMO-I is requesting to increase the resources within the scope of the

4The regulation at FAR 52.217-8, titled “Option To Extend Services,” as modified in IEA’s

Task Order, provides:

The Government may require continued performance of any services within

the limits and at the rates specified in the contract. These rates may be

adjusted only as a result of revisions to prevailing labor rates provided by

the Secretary of Labor. The option provision may be exercised more than

once, but the total extension of performance hereunder shall not exceed 6

months. The Contracting Officer may exercise the option by written notice

to the Contractor at any time prior to the expiration of the order.

5Modification No. 02 of IEA’s Task Order was issued to “correct the lines of accounting

on CLIN [Contract Line Item Number] 1001 and 1002 via SLINs 100101 and 100201.”

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PSMO-I Support Services Contract. We are not adding scope to the

contract, but clarifying activities that are in support of an existing task area.

Per contract HS0021-16-C-0006, Item 5.16, Continuous Evaluation (CE),

“Vendor personnel will support the DoD CE mission.”

The Recommendation to Modify Xcelerate Solutions’ Contract with DSS also included the

following background information:

• At the time the contract was awarded, the full CE mission had not yet

been moved to DSS PSMO-I (per USD/I memo signed 16DEC16) and

the vendor’s role was anticipated to be primarily flagging and

categorizing the records for industry personnel. With PSMO- I assuming

the full CE mission, the CE activities the vendor personnel will perform

extend to the end-to-end processing of the CE alerts for the entire DoD

enterprise population.

• Moving the work from the WHS contract to the PSMO-I contract will

provide efficiencies by combining the two efforts into a single effort with

no hand-off required. The current PSMO-I contract includes 4 minutes

for flagging and categorizing each CE record (based on a quantity of

225,000 records), for a total of approximately 8 FTE. There is also an

Analytic Cell contract that takes over 20+ minutes (depending on alert)

to process each CE record; resulting in an estimated 32 FTE to process

225,000 records for a total of 41 FTE to support the end-to-end CE

mission. The goal within DoD is to enroll over 3M personnel into CE

based on risk and position with an estimated alert volume resulting in

~20% for action.

• The current period of performance (HS0021-16-C-0006) ends 14 Dec

2017 and provides the opportunity to modify before exercising Option

Year 2.

Included in the Recommendation to Modify Xcelerate Solutions’ Contract was a proposed

modified performance work statement, which was red-lined from the existing Xcelerate

Solutions’ Contract, a justification and approval, market research analysis, independent

government cost estimate market research, and independent government cost estimate

historic data.

On October 23, 2017, a contracting officer for DSS sent an email message to

Xcelerate Solutions regarding the Xcelerate Solutions’ Contract. In her email, the

contracting officer for the DSS requested a quote from Xcelerate Solutions for the

attached “additional support services requirement under the PSMO-I Support Services

contract HS0021-16-C-0006. DSS has updated the HS0021-16-C-0006 PWS to include

the CE Cell effort and all changes are red-lined in the attached PWS for ease of review.”

In response, Xcelerate Solutions submitted its initial proposal for the proposed additional

work on November 9, 2017, a second, revised proposal on December 5, 2017, and a

13

third, revised proposal on December 6, 2017. In its third, revised proposal, Xcelerate

proposed adding [redacted] full-time equivalents for additional PSMO-I support and

[redacted] equivalents for CE support during the second option period of the Xcelerate

Solutions’ Contract. Prior to the modification of the Xcelerate Solutions’ Contract,

Xcelerate Solutions had been providing “[redacted] FTEs [full-time equivalents], with

[redacted] providing CE support.”

On December 14, 2017, the contracting officer for Xcelerate Solutions’ Contract

with the DSS issued a Memorandum for Record regarding “PSMO-I Option Year II

Exercise & In-scope Increase for CE Cell Mission.” The Memorandum for Record stated

the

purpose of this modification is twofold: 1) Exercise Option Period II as

requested by the Personnel Security Management Office for Industry

(PSMO-I) Directorate of Defense Security Service (DSS) in the Purchase

Request Memo received on 9 November 2017 and 2) execute an inscope

[sic] increase to accommodate a growing Continuous Evaluation (CE)

Mission and an increased budgetary authority and need for Personnel

Security Investigations for Industry.

Additionally, the Memorandum for Record provided:

At the time of contract award, the full CE mission had not come to fruition

and pieces of the effort were still owned by Washington Headquarters

Services (WHS). Per the Under Secretary of Defense for Intelligence’s

memo signed 16 December 2016, these efforts needed to come together

and be unified under one contract and the full CE mission materialized in

the HS0021-16-C-0006 PWS. At the time, the Contractor’s role was

anticipated to be primarily flagging and categorizing records for industry

personnel without the full understanding of the entire mission. With

PSMO-I now assuming the full CE mission, the CE activities the Contractor

personnel will perform will now encompass the end-to-end processing of

the CE alerts for the entire DoD enterprise population. Looking closer at the

different contracts, the current PSMO-I contract provides four (4) minutes

for flagging and categorizing of each CE record (based on a quantity of

225,000 records), for approximately eight Full Time Equivalents (FTE). The

WHS Analytic Cell contract includes over 20 minutes (depending on alert)

of processing for each CE record; resulting in an estimated 32 FTEs to

process 225,000 records. Transferring the work from the WHS contract to

the PSMO-I contract will provide efficiencies through consolidation of

previously-separately-managed pieces of a singular effort.

According to the Memorandum for Record, “combining the two Government efforts

into one complete CE effort” would not impact offerors who submitted proposals in

response to the Solicitation “because the work is not different from what was initially

solicited but now better defined or just increased.” The contracting officer reasoned that

14

“[c]ontractors could have anticipated that as we gained a better understanding of this new

CE mission that we might need to further define our requirement in order to support the

greatest performance and success of the winning Contractor.” Additionally, the

contracting officer stated in her Memorandum for Record that “[a]n increase to the PSMO-

I support is also only an increase not a change in the type of work being done,” and that

“[c]ontractors could also have anticipated that the Government might have an increased

need for Personnel Security Investigations for Industry support over time as well.”

That same day, December 14, 2017, the DSS issued Modification No. P00002 to

Xcelerate Solutions’ Contract (the Xcelerate Solutions’ Modified Contract), which

exercised the second option period of Xcelerate Solutions’ Contract pursuant to FAR

52.217-9 and issued what was described in Modification No. P00002 as “an inscope [sic]

change to the PWS” pursuant to FAR 52.212-4(c). 6 Section 5.1 of Xcelerate Solutions’

Modified Contract, titled “Basic Services,” was modified to provide that “[t]he vendor

support shall perform functions, as directed by the government lead to facilitate Personnel

Security Clearance / Continuous Evaluation tasks as described throughout Section 5.”

Section 5.16 of Xcelerate Solutions’ Contract, titled “Continuous Evaluation (CE),” was

renumbered to become Section 5.12 in Xcelerate Solutions’ Modified Contract. Section

5.12 of Xcelerate Solutions’ Modified Contract provided:

Vendor personnel will receive, evaluate, and disseminate flags from the

DoD CE capability in accordance with DoD established policy, guidelines,

and procedures. Assess and validate CE flags using available data sources

to attribute the information to a specific subject and determine if the

information is relevant and actionable, in accordance with DoD established

guidelines and procedures. Disseminate CE results and related

correspondence to personnel security specialists, CI, insider threat (InT),

and/or law enforcement (LE) personnel, as applicable, and within DoD

established guidelines. Develop tracking tools, matrices, and templates to

efficiently analyze data and produce metrics which identify trends, referral

status, and business rules efficiency. Support the DoD CE Program as

required, including policy development, comment adjudication, formal

coordination, and resource assessments. Provide logistical, data gathering,

and presentation support to meet DoD CE Program requirements.

Continually monitor and review CE processes and procedures to inform the

government where efficiencies can be realized. Provide feedback to the DoD

CE Program regarding the relevance and validity of the business rules for

flags. Policies, procedures and strategies will be planned and integrated into

the CE program as needed. Support the development and delivery of CE-

related reports, briefings, and training as needed. Assist with the agenda

setting and facilitation of DoD CE Working Groups, and other CE-related

forums as required. Provide administrative support as necessary, to include

6 The regulation at FAR 52.212-4, titled “Contract Terms and Conditions Commercial

Items,” states, in part, that “[c]hanges in the terms and conditions of this contract may be

made only by written agreement of the parties.” See FAR 52.212-4(c) (2017).

15

planning meetings, tracking action items, and preparing read-ahead briefing

material, meeting minutes, formal correspondence packages, activity

reports, senior leadership reports, and travel/training/personnel documents. 7

Section 7.3 of Xcelerate Solutions’ Modified Contract with DSS estimated that Xcelerate

Solutions would process 80,000 CE reports per year, with each CE report taking

approximately thirty-six minutes to process.

Modification No. P00002 to Xcelerate Solutions’ Contract further stated that the

“total cost of this contract was increased by $7,100,371.20 from $4,161,510.40 to

$11,261,881.60.” Of the $7,100,371.20, the exercise of the second option period originally

contained in Xcelerate Solutions’ Contract, which was contained in Contract Line Item

Numbers 2001, 2002, and 2003, increased the total cost of Xcelerate Solutions’ Modified

Contract by $3,152,544.00. 8 The additional work added to the Xcelerate Solutions’

Modified Contract for “DoD Continuous Evaluation Mission support increase/further

definition in accordance with the updated Performance Work Statement Part 5, executed

in P00002,” which was contained in Contract Line Item Number 2005, increased the total

cost of the Xcelerate Solutions’ Modified Contract by [redacted]. The additional work for

“[i]ncreased Personnel Security Operational support in accordance with the updated

Performance Work Statement Part 5, executed in P00002,” which was contained in

Contract Line Item Number 2004, increased the total cost of the Xcelerate Solutions’

Modified Contract by [redacted]. Additionally, Modification No. P00002 contained two

individually-priced option periods totaling [redacted] for “DoD Continuous Evaluation

Mission support increase/further definition,” as reflected in Contract Line Item Numbers

3005 and 4005, and two individually-priced option periods totaling [redacted] for

“[i]ncreased Personnel Security Operational support,” as reflected in Contract Line Item

Numbers 3004 and 4004. 9 Cumulatively, the total potential value of Modification No.

7The majority of the specific tasks listed in Section 5.12 of Xcelerate Solutions’ Modified

Contract are identical to the performance requirements contained in Section C-2 of IEA’s

Task Order described above.

8 Contract Line Item Number 2001 was an option for “PSMO-I: Personnel Security

Operational support to review and process personnel security documentation as it relates

to the NISP in accordance with PWS Part 5.” Contract Line Item Number 2002 was an

option for “Contract Manpower Reporting In Accordance With PWS Section 1.6.12.”

Contract Line Item Number 2003 was an option for work “[i]n accordance with the

attached CDRLs [contract data requirements lists] in Section J of the Contract.”

9 The parties, in their Joint Stipulation of Facts, state that “[s]imilar CLINs [Contract Line

Item Numbers] were included for the third and fourth option years. The CLINs for all option

years, when combined, equaled $7,100,731.” (internal reference omitted). The prices for

the four Contract Line Item Numbers which represent the option periods established for

the newly established third and fourth option periods in Contract Line Item Numbers 3004,

3005, 4004, and 4005 under Xcelerate Solutions’ Modified Contract, however, are

[redacted]; [redacted]; [redacted]; and [redacted]. When added together, the new Contract

Item Line Numbers “for the third and fourth option years” total [redacted].

16

P00002 of Xcelerate Solutions’ Contract, excluding the previously existing option period

contained in Contract Line Item Numbers 2001, 2002, and 2003 under Xcelerate

Solutions’ Contract, was [redacted].

Also on December 14, 2017, the DoD issued an online press release regarding

Xcelerate Solutions’ Modified Contract, which provided:

Celerity Government Solutions, LLC dba Xcelerate Solutions in McLean,

VA, was awarded a $7,100,731.20 contract modification (P00002) to

previously awarded contract HS0021-16-C-0006 for the Defense Security

Service Personnel Security Management Office for Industry (PSMO-I)

Support Services effort. The modification increases the total cumulative

face value of the contract by $7,100,371.20 from $4,161,510.40 to

$11,261,881.60. This modification exercised the next option, increases the

definition of the Continuous Evaluation Mission and increases the already

existing PSMO-I support for continued Personnel Security Operational

Support to review and process personnel security documentation. Work will

be performed at the Government’s facility located in Hanover, Maryland with

an expected completion date for this option period of December 14, 2018

or a potential ultimate contract completion date of June 14, 2021. This

option will be fully funded. The Defense Security Service Office of

Acquisitions, Quantico, Virginia is the contracting activity (HS0021-16-C-

0006).

Xcelerate Solutions issued its own online press release regarding the Xcelerate Solutions’

Modified Contract on December 14, 2017, which stated:

Xcelerate Solutions has been awarded a $7,100,731 contract modification

to their Defense Security Service (DSS) Personnel Security Management

Office for Industry (PSMO-I) support services effort. Along with exercising

the second option year of the contract, this modification increases the

current PSMO-I support for continued personnel security operational

support in reviewing and processing documentation for Department of

Defense (DoD) contractors’ personnel security clearances. This

modification also significantly expanded the contract’s Continuous

Evaluation (CE) mission, incorporating the work previously performed by

the CE Analytical Cell. Xcelerate will develop CE processes, procedures,

and business rules; draft research reports; collect metrics; and assess and

validate CE flags.

IEA filed a single-count complaint in the above-captioned bid protest on January

2, 2018. In its complaint, IEA alleges that, because the DSS’ modification of “the Xcelerate

PSMO-I Contract to have Xcelerate perform analytical and policy development support

for the DoD CE Program exceeds the scope of the contract as solicited, Defendant’s use

of the PSMO-I Contract to obtain those services is unlawful and contrary to CICA’s

17

statutory mandate for full and open competition.” 10 IEA argues that the Solicitation did not

contemplate the awardee providing “any direct support” for the DoD CE program, and the

specific tasks listed in the performance work statement of Xcelerate Solutions’ Contract

“makes clear that CE is an entirely separate function.” (emphasis in original). IEA’s

complaint seeks a “preliminary and permanent injunctions enjoining Defendant from

procuring analytical and policy development support services for the DoD CE Program

under Xcelerate’s PMSO-I contract, or any other non-competitively-awarded task order

or contract, pending adjudication of this protest . . . .” Additionally, IEA requests this court

“enter an order directing Defendant to acquire analytical and policy development support

for the DoD CE Program through the previously competed and competitively awarded

task order held by IEA until such time as Defendant makes another competitive award of

a contract for such services . . . .” IEA also filed an application for an emergency temporary

restraining order and preliminary injunction on January 2, 2018, which the court denied

at an in-person hearing on January 3, 2018.

On January 12, 2018, IEA, defendant, and defendant-intervenor filed simultaneous

motions for judgment on the Administrative Record pursuant to Rule 52.1(c) (2017) of the

Rules of the United States Court of Federal Claims (RCFC), and the defendant filed a

motion to dismiss for lack of subject matter jurisdiction pursuant to RCFC 12(b)(1) (2017).

IEA asserts in its motion for judgment on the Administrative Record that its protest must

be sustained because the DSS acted contrary to law when it allegedly failed to comply

with CICA by issuing a modification that was not within the scope of Xcelerate Solutions’

Contract. In its motion to dismiss and cross-motion for judgment on the Administrative

Record, the defendant argues that Modification No. P00002 was within the scope of

Xcelerate Solutions’ Contract, and, “[b]ecause the base PSMO-I Contract was properly

modified, this Court lacks jurisdiction over IEA’s claim.” Defendant-intervenor argues that

“Xcelerate has been providing CE support since the PSMO-I Contract was awarded, and

the Modification did not change the type of services that Xcelerate is providing. Rather,

the Modification increased the amount of work.” The protestor, defendant, and defendant-

intervenor filed simultaneous replies to their motions for judgment on the Administrative

Record on January 16, 2018. On January 18, 2018, the court held an oral argument in

the above-captioned bid protest. On January 19, 2018, in order to provide the parties with

a resolution of the above-captioned bid protest prior to the expiration of IEA’s Task Order

with the WHS on January 22, 2018, the court issued an oral decision in a hearing with the

parties. This decision incorporates and memorializes the January 19, 2018 oral decision.

DISCUSSION

RCFC 52.1(c) governs motions for judgment on the Administrative Record. The

court’s inquiry is directed to “‘whether, given all the disputed and undisputed facts, a party

has met its burden of proof based on the evidence in the record.’” Mgmt. & Training Corp.

10 IEA did not challenge Modification No. P00002’s exercise of the previously existing

second option period under Xcelerate Solutions’ Contract, as reflected in Contract Line

Item Numbers 2001, 2002, and 2003, or the requirement of “[i]ncreased Personnel

Security Operational support,” as reflected in Contract Line Item Number 2004.

18

v. United States, 115 Fed. Cl. 26, 40 (2014) (quoting A & D Fire Prot., Inc. v. United

States, 72 Fed. Cl. 126, 131 (2006) (citing Bannum, Inc. v. United States, 404 F.3d 1346,

1356-57 (Fed. Cir. 2005))); see also Informatics Applications Grp., Inc. v. United States,

132 Fed. Cl. 519, 524 (2017) (citation omitted); Strategic Bus. Sols., Inc. v. United States,

129 Fed. Cl. 621, 627 (2016); Rotech Healthcare Inc. v. United States, 118 Fed. Cl. 408,

413 (2014); Eco Tour Adventures, Inc. v. United States, 114 Fed. Cl. 6, 21 (2013); DMS

All-Star Joint Venture v. United States, 90 Fed. Cl. 653, 661 (2010). Pursuant to RCFC

52.1, in a bid protest, the court reviews the agency’s procurement decision to determine

whether it is supported by the administrative record. See CW Gov’t Travel, Inc. v. United

States, 110 Fed. Cl. 462, 481 (2013).

The Administrative Dispute Resolution Act of 1996 (ADRA), Pub. L. No. 104-320,

§§ 12(a), 12(b), 110 Stat. 3870, 3874 (1996) (codified at 28 U.S.C. § 1491(b)(1)–(4)

(2012)), amended the Tucker Act to establish a statutory basis for bid protests in the

United States Court of Federal Claims. See Impresa Construzioni Geom. Domenico

Garufi v. United States, 238 F.3d 1324, 1330-32 (Fed. Cir. 2001); see also Sys.

Application & Techs., Inc. v. United States, 691 F.3d 1374, 1380 (Fed. Cir. 2012)

(explaining that the Tucker Act expressly waives sovereign immunity for claims against

the United States in bid protests). The statute provides that protests of agency

procurement decisions are to be reviewed under Administrative Procedure Act (APA)

standards, making applicable the standards outlined in Scanwell Labs., Inc. v. Shaffer,

424 F.2d 859 (D.C. Cir. 1970), and the line of cases following that decision. See, e.g., Per

Aarsleff A/S v. United States, 829 F.3d 1303, 1309 (Fed. Cir. 2016) (quoting NVT Techs.,

Inc. v. United States, 370 F.3d 1153, 1159 (Fed. Cir. 2004)) (“Protests of agency

procurement decisions are reviewed under the standards set forth in the Administrative

Procedure Act (‘APA’), see 28 U.S.C. § 1491(b)(4) (citing 5 U.S.C. § 706), ‘by which an

agency's decision is to be set aside only if it is arbitrary, capricious, an abuse of discretion,

or otherwise not in accordance with law[.]’”); Impresa Construzioni Geom. Domenico

Garufi v. United States, 238 F.3d at 1332); Res. Conservation Grp., LLC v. United States,

597 F.3d 1238, 1242 (Fed. Cir. 2010) (“Following passage of the APA in 1946, the District

of Columbia Circuit in Scanwell Labs., Inc. v. Shaffer, 424 F.2d 859 (D.C. Cir. 1970), held

that challenges to awards of government contracts were reviewable in federal district

courts pursuant to the judicial review provisions of the APA.”); Galen Med. Assocs., Inc.

v. United States, 369 F.3d 1324, 1329 (Fed. Cir. 2004) (citing Scanwell Labs., Inc. v.

Shaffer, 424 F.2d at 864, 868, for its “reasoning that suits challenging the award process

are in the public interest and disappointed bidders are the parties with an incentive to

enforce the law”); Banknote Corp. of Am., Inc. v. United States, 365 F.3d 1345, 1351

(Fed. Cir. 2004) (“Under the APA standard as applied in the Scanwell line of cases, and

now in ADRA cases, ‘a bid award may be set aside if either (1) the procurement official’s

decision lacked a rational basis; or (2) the procurement procedure involved a violation of

regulation or procedure.’” (quoting Impresa Construzioni Geom. Domenico Garufi v.

United States, 238 F.3d at 1332)); Info. Tech. & Applications Corp. v. United States, 316

F.3d 1312, 1319 (Fed. Cir. 2003).

When discussing the appropriate standard of review for bid protest cases, the

United States Court of Appeals for the Federal Circuit addressed subsections (2)(A) and

19

(2)(D) of 5 U.S.C. § 706, see Impresa Construzioni Geom. Domenico Garufi v. United

States, 238 F.3d at 1332 n.5, but focused its attention primarily on subsection (2)(A). See

Croman Corp. v. United States, 724 F.3d 1357, 1363 (Fed. Cir.) (“‘[T]he proper standard

to be applied [to the merits of] bid protest cases is provided by 5 U.S.C. § 706(2)(A)

[(2006)]: 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.”’” (quoting Banknote

Corp. of Am. v. United States, 365 F.3d at 1350-51 (citing Advanced Data Concepts, Inc.

v. United States, 216 F.3d 1054, 1057-58 (Fed. Cir.), reh’g and reh’g en banc denied

(Fed. Cir. 2000)), reh’g and reh’g en banc denied (Fed. Cir. 2013) (alterations in original).

The statute says that agency procurement actions should be set aside when they are

“arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,” or

“without observance of procedure required by law.” 5 U.S.C. § 706(2)(A), (D) (2012); 11

11 The language of 5 U.S.C. § 706 provides in full:

To the extent necessary to decision and when presented, the reviewing

court shall decide all relevant questions of law, interpret constitutional and

statutory provisions, and determine the meaning or applicability of the terms

of an agency action. The reviewing court shall—

(1) compel agency action unlawfully withheld or unreasonably delayed;

and

(2) hold unlawful and set aside agency action, findings, and conclusions

found to be—

(A) arbitrary, capricious, an abuse of discretion, or otherwise not in

accordance with law;

(B) contrary to constitutional right, power, privilege, or immunity;

(C) in excess of statutory jurisdiction, authority, or limitations, or short

of statutory right;

(D) without observance of procedure required by law;

(E) unsupported by substantial evidence in a case subject to sections

556 and 557 of this title or otherwise reviewed on the record of

an agency hearing provided by statute; or

(F) unwarranted by the facts to the extent that the facts are subject

to trial de novo by the reviewing court.

In making the foregoing determinations, the court shall review the whole

record or those parts of it cited by a party, and due account shall be taken

of the rule of prejudicial error.

20

see also Tinton Falls Lodging Realty, LLC v. United States, 800 F.3d 1353, 1358 (Fed.

Cir. 2015); Orion Tech., Inc. v. United States, 704 F.3d 1344, 1347 (Fed. Cir. 2013);

COMINT Sys. Corp. v. United States, 700 F.3d 1377, 1381 (Fed. Cir. 2012) (“We evaluate

agency actions according to the standards set forth in the Administrative Procedure Act;

namely, for whether they are ‘arbitrary, capricious, an abuse of discretion, or otherwise

not in accordance with law.’” (quoting 5 U.S.C. § 706(2)(A); Bannum, Inc. v. United

States, 404 F.3d at 1351)); Savantage Fin. Servs. Inc., v. United States, 595 F.3d 1282,

1285-86 (Fed. Cir. 2010); Weeks Marine, Inc. v. United States, 575 F.3d 1352, 1358 (Fed.

Cir. 2009); Axiom Res. Mgmt., Inc. v. United States, 564 F.3d 1374, 1381 (Fed. Cir. 2009)

(noting arbitrary and capricious standard set forth in 5 U.S.C. § 706(2)(A), and reaffirming

the analysis of Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d

at 1332); Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308, 1312 (Fed. Cir. 2007)

(“‘[T]he inquiry is whether the [government]’s procurement decision was “arbitrary,

capricious, an abuse of discretion, or otherwise not in accordance with law.”’” (quoting

Bannum, Inc. v. United States, 404 F.3d at 1351 (quoting 5 U.S.C. § 706(2)(A) (2000)));

NVT Techs., Inc. v. United States, 370 F.3d at 1159 (“Bid protest actions are subject to

the standard of review established under section 706 of title 5 of the Administrative

Procedure Act (‘APA’), 28 U.S.C. § 1491(b)(4) (2000), by which an agency’s decision is

to be set aside only if it is ‘arbitrary, capricious, an abuse of discretion, or otherwise not

in accordance with law,’ 5 U.S.C. § 706(2)(A) (2000).”) (internal citations omitted); Info.

Tech. & Applications Corp. v. United States, 316 F.3d at 1319 (“Consequently, our inquiry

is whether the Air Force’s procurement decision was ‘arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law.’ 5 U.S.C. § 706(2)(A) (2000).”);

Synergy Sols., Inc. v. United States, 133 Fed. Cl. 716, 734 (2017) (citing Banknote Corp.

of Am. v. United States, 365 F.3d at 1350); Eco Tour Adventures, Inc. v. United States,

114 Fed. Cl. at 22; Contracting, Consulting, Eng’g LLC v. United States, 104 Fed. Cl. 334,

340 (2012). “In a bid protest case, the agency’s award must be upheld unless it is

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

Turner Constr. Co. v. United States, 645 F.3d 1377, 1383 (Fed. Cir.) (quoting PAI Corp.

v. United States, 614 F.3d 1347, 1351 (Fed. Cir. 2010)), reh’g and reh’g en banc denied

(Fed. Cir. 2011); see also Tinton Falls Lodging Realty, LLC v. United States, 800 F.3d at

1358 (“In applying this [arbitrary and capricious] standard to bid protests, our task is to

determine whether the procurement official’s decision lacked a rational basis or the

procurement procedure involved a violation of a regulation or procedure.”) (citing

Savantage Fin. Servs., Inc. v. United States, 595 F.3d at 1285–86); Glenn Def. Marine

(ASIA), PTE Ltd. v. United States, 720 F.3d 901, 907 (Fed. Cir.), reh’g en banc denied

(Fed. Cir. 2013); McVey Co., Inc. v. United States, 111 Fed. Cl. 387, 402 (2013) (“The

first step is to demonstrate error, that is, to show that the agency acted in an arbitrary and

capricious manner, without a rational basis or contrary to law.”); PlanetSpace, Inc. v.

United States, 92 Fed. Cl. 520, 531-32 (2010) (“Stated another way, a plaintiff must show

that the agency’s decision either lacked a rational basis or was contrary to law.” (citing

Weeks Marine, Inc. v. United States, 575 F.3d at 1358)).

5 U.S.C. § 706.

21

The United States Supreme Court has identified sample grounds which can

constitute arbitrary or capricious agency action:

[W]e will not vacate an agency’s decision unless it “has relied on factors

which Congress has not intended it to consider, entirely failed to consider

an important aspect of the problem, offered an explanation for its decision

that runs counter to the evidence before the agency, or is so implausible

that it could not be ascribed to a difference in view or the product of agency

expertise.”

Nat’l Ass’n of Home Builders v. Defenders of Wildlife, 551 U.S. 644, 658 (2007) (quoting

Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)); see

also Tinton Falls Lodging Realty, LLC v. United States, 800 F.3d at 1358; F.C.C. v. Fox

Television Stations, Inc., 556 U.S. 502, 552 (2009); Ala. Aircraft Indus., Inc.-Birmingham

v. United States, 586 F.3d 1372, 1375 (Fed. Cir. 2009), reh’g and reh’g en banc denied

(Fed. Cir. 2010); In re Sang Su Lee, 277 F.3d 1338, 1342 (Fed. Cir. 2002) (“[T]he agency

tribunal must present a full and reasoned explanation of its decision. . . . The reviewing

court is thus enabled to perform meaningful review . . . .”); Textron, Inc. v. United States,

74 Fed. Cl. 277, 285-86 (2006), appeal dismissed sub nom. Textron, Inc. v. Ocean

Technical Servs., Inc., 223 F. App’x 974 (Fed. Cir. 2007). The United States Supreme

Court also has cautioned, however, that “courts are not free to impose upon agencies

specific procedural requirements that have no basis in the APA.” Pension Benefit Guar.

Corp. v. LTV Corp., 496 U.S. 633, 654 (1990).

Under an arbitrary or capricious standard, the reviewing court should not substitute

its judgment for that of the agency, but should review the basis for the agency decision to

determine if it was legally permissible, reasonable, and supported by the facts. See Motor

Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. at 43 (“The scope of

review under the ‘arbitrary and capricious’ standard is narrow and a court is not to

substitute its judgment for that of the agency.”); see also Turner Constr. Co., Inc. v. United

States, 645 F.3d at 1383; R & W Flammann GmbH v. United States, 339 F.3d 1320, 1322

(Fed. Cir. 2003) (citing Ray v. Lehman, 55 F.3d 606, 608 (Fed. Cir.), cert. denied, 516

U.S. 916 (1995)); Synergy Sols., Inc. v. United States, 133 Fed. Cl. at 735 (citing Impresa

Construzioni Geom. Domenico Garufi v. United States, 238 F.3d at 1332-33). “‘“If the

court finds a reasonable basis for the agency’s action, the court should stay its hand even

though it might, as an original proposition, have reached a different conclusion as to the

proper administration and application of the procurement regulations.”’” Weeks Marine,

Inc. v. United States, 575 F.3d at 1371 (quoting Honeywell, Inc. v. United States, 870

F.2d 644, 648 (Fed. Cir. 1989) (quoting M. Steinthal & Co. v. Seamans, 455 F.2d 1289,

1301 (D.C. Cir. 1971))); Limco Airepair, Inc. v. United States, 130 Fed. Cl. 544, 550 (2017)

(citation omitted); Jordan Pond Co., LLC v. United States, 115 Fed. Cl. 623, 631 (2014);

Davis Boat Works, Inc. v. United States, 111 Fed. Cl. 342, 349 (2013); Norsat Int’l

[America], Inc. v. United States, 111 Fed. Cl. 483, 493 (2013); HP Enter. Servs., LLC v.

United States, 104 Fed. Cl. 230, 238 (2012); Vanguard Recovery Assistance v. United

States, 101 Fed. Cl. 765, 780 (2011).

22

Stated otherwise by the United States Supreme Court:

Section 706(2)(A) requires a finding that the actual choice made was not

“arbitrary, capricious, an abuse of discretion, or otherwise not in accordance

with law.” To make this finding the court must consider whether the decision

was based on a consideration of the relevant factors and whether there has

been a clear error of judgment. Although this inquiry into the facts is to be

searching and careful, the ultimate standard of review is a narrow one. The

court is not empowered to substitute its judgment for that of the agency.

Citizens to Pres. Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971), abrogated on

other grounds by Califano v. Sanders, 430 U.S. 99 (1977) (internal citations omitted); see

also U.S. Postal Serv. v. Gregory, 534 U.S. 1, 6-7 (2001); Bowman Transp., Inc. v.

Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 285 (1974), reh’g denied, 420 U.S. 956

(1975); Co-Steel Raritan, Inc. v. Int’l Trade Comm’n, 357 F.3d 1294, 1309 (Fed. Cir. 2004)

(In discussing the “arbitrary, capricious, and abuse of discretion, or otherwise not in

accordance with the law” standard, the Federal Circuit stated: “the ultimate standard of

review is a narrow one. The court is not empowered to substitute its judgment for that of

the agency.”); In re Sang Su Lee, 277 F.3d at 1342; Advanced Data Concepts, Inc. v.

United States, 216 F.3d at 1058 (“The arbitrary and capricious standard applicable here

is highly deferential. This standard requires a reviewing court to sustain an agency action

evincing rational reasoning and consideration of relevant factors.” (citing Bowman

Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. at 285)); Lockheed Missiles &

Space Co. v. Bentsen, 4 F.3d 955, 959 (Fed. Cir. 1993); By Light Prof’l IT Servs., Inc. v.

United States, 131 Fed. Cl. 358, 366 (2017); BCPeabody Constr. Servs., Inc. v. United

States, 112 Fed. Cl. 502, 508 (2013) (“The court ‘is not empowered to substitute its

judgment for that of the agency,’ and it must uphold an agency’s decision against a

challenge if the ‘contracting agency provided a coherent and reasonable explanation of

its exercise of discretion.’” (quoting Keeton Corrs., Inc. v. United States, 59 Fed. Cl. 753,

755, recons. denied, 60 Fed. Cl. 251 (2004); Axiom Res. Mgmt., Inc. v. United States,

564 F.3d at 1381)), appeal withdrawn, 559 F. App’x 1033 (Fed. Cir. 2014) (internal

citations omitted); Supreme Foodservice GmbH v. United States, 109 Fed. Cl. 369, 382

(2013); Alamo Travel Grp., LP v. United States, 108 Fed. Cl. 224, 231 (2012); ManTech

Telecomms. & Info. Sys. Corp. v. United States, 49 Fed. Cl. 57, 63 (2001), aff’d, 30 F.

App’x 995 (Fed. Cir. 2002); Ellsworth Assocs., Inc. v. United States, 45 Fed. Cl. 388, 392

(1999) (“Courts must give great deference to agency procurement decisions and will not

lightly overturn them.” (citing Fla. Power & Light Co. v. Lorion, 470 U.S. 729, 743–44

(1985))), appeal dismissed, 6 F. App’x 867 (Fed. Cir. 2001), and superseded by regulation

as recognized in MVS USA, Inc. v. United States, 111 Fed. Cl. 639 (2013).

According to the United States Court of Appeals for the Federal Circuit:

Effective contracting demands broad discretion. Burroughs Corp. v. United

States, 223 Ct. Cl. 53, 617 F.2d 590, 598 (1980); Sperry Flight Sys. Div. v.

United States, 548 F.2d 915, 921, 212 Ct. Cl. 329 (1977); see NKF Eng’g,

Inc. v. United States, 805 F.2d 372, 377 (Fed. Cir. 1986); Tidewater

23

Management Servs., Inc. v. United States, 573 F.2d 65, 73, 216 Ct. Cl. 69

(1978); RADVA Corp. v. United States, 17 Cl. Ct. 812, 819 (1989), aff’d, 914

F.2d 271 (Fed. Cir. 1990). Accordingly, agencies “are entrusted with a good

deal of discretion in determining which bid is the most advantageous to the

Government.” Tidewater Management Servs., 573 F.2d at 73, 216 Ct. Cl.

69.

Lockheed Missiles & Space Co. v. Bentsen, 4 F.3d at 958-59; see also Res-Care, Inc. v.

United States, 735 F.3d 1384, 1390 (Fed. Cir.) (“DOL [Department of Labor], as a federal

procurement entity, has ‘broad discretion to determine what particular method of

procurement will be in the best interests of the United States in a particular situation.’”

(quoting Tyler Constr. Grp. v. United States, 570 F.3d 1329, 1334 (Fed. Cir. 2009))), reh’g

en banc denied (Fed. Cir. 2014); Grumman Data Sys. Corp. v. Dalton, 88 F.3d 990, 995

(Fed. Cir. 1996); Geo-Med, LLC v. United States, 126 Fed. Cl. 440, 449 (2016); Cybertech

Grp., Inc. v. United States, 48 Fed. Cl. 638, 646 (2001) (“The court recognizes that the

agency possesses wide discretion in the application of procurement regulations.”);

Furthermore, according to the Federal Circuit:

Contracting officers “are entitled to exercise discretion upon a broad range

of issues confronting them in the procurement process.” Impresa

Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324,

1332 (Fed. Cir. 2001) (internal quotation marks omitted). Accordingly,

procurement decisions are subject to a “highly deferential rational basis

review.” CHE Consulting, Inc. v. United States, 552 F.3d 1351, 1354 (Fed.

Cir. 2008) (internal quotation marks omitted).

PAI Corp. v. United States, 614 F.3d at 1351; see also Weeks Marine, Inc. v. United

States, 575 F.3d at 1368-69 (“We have stated that procurement decisions ‘invoke[ ]

“highly deferential” rational basis review.’ Under that standard, we sustain an agency

action ‘evincing rational reasoning and consideration of relevant factors.’” (quoting CHE

Consulting, Inc. v. United States, 552 F.3d at 1354 (quoting Advanced Data Concepts,

Inc. v. United States, 216 F.3d at 1058))).

On a motion for judgment on the administrative record, a disappointed bidder has

the burden of demonstrating the arbitrary and capricious nature of the agency decision

by a preponderance of the evidence. See Tinton Fall Lodging Realty, LLC v. United Sates,

800 F.3d at 1364; see also Grumman Data Sys. Corp. v. Dalton, 88 F.3d at 995-96;

Enhanced Veterans Sols., Inc. v. United States, 131 Fed. Cl. 565, 578 (2017); Davis Boat

Works, Inc. v. United States, 111 Fed. Cl. at 349; Contracting, Consulting, Eng’g LLC v.

United States, 104 Fed. Cl. at 340. The Federal Circuit has indicated that “[t]his court will

not overturn a contracting officer’s determination unless it is arbitrary, capricious, or

otherwise contrary to law. To demonstrate that such a determination is arbitrary or

capricious, a protester must identify ‘hard facts’; a mere inference or suspicion . . . is not

enough.” PAI Corp. v. United States, 614 F.3d at 1352 (citing John C. Grimberg Co. v.

United States, 185 F.3d 1297, 1300 (Fed. Cir. 1999)); see also Turner Constr. Co., Inc.

v. United States, 645 F.3d at 1387; Sierra Nevada Corp. v. United States, 107 Fed. Cl.

24

735, 759 (2012); Filtration Dev. Co., LLC v. United States, 60 Fed. Cl. 371, 380 (2004).

A bid protest proceeds in two steps. First . . . the trial court determines

whether the government acted without rational basis or contrary to law when

evaluating the bids and awarding the contract. Second . . . if the trial court

finds that the government’s conduct fails the APA review under 5 U.S.C.

§ 706(2)(A), then it proceeds to determine, as a factual matter, if the bid

protester was prejudiced by that conduct.

Bannum, Inc. v. United States, 404 F.3d at 1351; T Square Logistics Servs. Corp. v.

United States, Fed. Cl. 550, 555 (2017); FirstLine Transp. Sec., Inc. v. United States, 119

Fed. Cl. 116, 126 (2014); Eco Tour Adventures, Inc. v. United States, 114 Fed. Cl. at 22;

Archura LLC v. United States, 112 Fed. Cl. 487, 496 (2013). To prevail in a bid protest

case, the protestor not only must show that the government’s actions were arbitrary,

capricious, or otherwise not in accordance with the law, but the protestor also must show

that it was prejudiced by the government’s actions. See 5 U.S.C. § 706 (“[D]ue account

shall be taken of the rule of prejudicial error.”); see also Glenn Def. Marine (ASIA), PTE

Ltd. v. United States, 720 F.3d at 907 (“In a bid protest case, the inquiry is whether the

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

accordance with law and, if so, whether the error is prejudicial.”); IT Enter. Sols. JV, LLC

v. United States, 132 Fed. Cl. 158, 173 (2017) (citing Bannum v. United States, 404 F.3d

at 1357-58); Linc Gov’t Servs., LLC v. United States, 96 Fed. Cl. 672, 694-96 (2010). In

describing the prejudice requirement, the Federal Circuit also has held that:

To prevail in a bid protest, a protester must show a significant, prejudicial

error in the procurement process. See Statistica, Inc. v. Christopher, 102

F.3d 1577, 1581 (Fed. Cir. 1996); Data Gen. Corp. v. Johnson, 78 F.3d

1556, 1562 (Fed. Cir. 1996). “To establish prejudice, a protester is not

required to show that but for the alleged error, the protester would have

been awarded the contract.” Data General, 78 F.3d at 1562 (citation

omitted). Rather, the protester must show “that there was a substantial

chance it would have received the contract award but for that error.”

Statistica, 102 F.3d at 1582; see CACI, Inc.-Fed. v. United States, 719 F.2d

1567, 1574-75 (Fed. Cir. 1983) (to establish competitive prejudice, protester

must demonstrate that but for the alleged error, “‘there was a substantial

chance that [it] would receive an award--that it was within the zone of active

consideration.’”) (citation omitted).

Alfa Laval Separation, Inc. v. United States, 175 F.3d 1365, 1367 (Fed. Cir.), reh’g denied

(Fed. Cir. 1999); see also Glenn Def. Marine (ASIA), PTE Ltd. v. United States, 720 F.3d

at 912; Allied Tech. Grp., Inc. v. United States, 649 F.3d 1320, 1326 (Fed. Cir.), reh’g en

banc denied (Fed. Cir. 2011); Info. Tech. & Applications Corp. v. United States, 316 F.3d

at 1319; Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d at

1332-33; OMV Med., Inc. v. United States, 219 F.3d 1337, 1342 (Fed. Cir. 2000);

Advanced Data Concepts, Inc. v. United States, 216 F.3d at 1057; Stratos Mobile

Networks USA, LLC v. United States, 213 F.3d 1375, 1380 (Fed. Cir. 2000).

25

In Data General Corp. v. Johnson, the United States Court of Appeals for the

Federal Circuit wrote:

We think that the appropriate standard is that, to establish prejudice, a

protester must show that, had it not been for the alleged error in the

procurement process, there was a reasonable likelihood that the protester

would have been awarded the contract . . . . The standard reflects a

reasonable balance between the importance of (1) averting unwarranted

interruptions of and interferences with the procurement process and (2)

ensuring that protesters who have been adversely affected by allegedly

significant error in the procurement process have a forum available to vent

their grievances. This is a refinement and clarification of the “substantial

chance” language of CACI, Inc.-Fed. [v. United States], 719 F.2d at 1574.

Data Gen. Corp. v. Johnson, 78 F.3d 1556, 1562 (Fed. Cir.), reh’g denied, en banc

suggestion declined (Fed. Cir. 1996); see also Glenn Def. Marine (ASIA), PTE Ltd. v.

United States, 720 F.3d at 912; Bannum, Inc. v. United States, 404 F.3d at 1353, 1358

(“The trial court was required to determine whether these errors in the procurement

process significantly prejudiced Bannum . . . . To establish ‘significant prejudice’ Bannum

must show that there was a ‘substantial chance’ it would have received the contract award

but for the [government’s] errors” in the bid process. (citing Info. Tech. & Applications

Corp. v. United States, 316 F.3d at 1319; Alfa Laval Separation, Inc. v. United States,

175 F.3d at 1367; Statistica, Inc. v. Christopher, 102 F.3d at 1581; and Data Gen. Corp.

v. Johnson, 78 F.3d at 1562); see also Todd Constr., L.P. v. United States, 656 F.3d

1306, 1315 (Fed. Cir. 2011); Advanced Data Concepts, Inc. v. United States, 216 F.3d at

1057 (using a “reasonable likelihood” rule); Vintage Autoworks, Inc. v. United States, 132

Fed. Cl. 143, 149 (2017) (using a “substantial chance” test); Active Network, LLC v. United

States, 130 Fed. Cl. 421, 427 (2017) (using a “substantial chance” test); Stratos Mobile

Networks USA, LLC v. United States, 213 F.3d at 1380 (using a “substantial chance”

test); Archura LLC v. United States, 112 Fed. Cl. at 496 (using a “substantial chance”

test); Info. Scis. Corp. v. United States, 73 Fed. Cl. 70, 96 (2006) (using a “substantial

chance” test), recons. in part, 75 Fed. Cl. 406 (2007).

As described above, IEA asserts that the DSS’ issuance of Modification No.

P00002 to Xcelerate Solutions’ Contract was contrary to law because Modification No.

P00002 to Xcelerate Solutions’ Contract violated “CICA’s requirements for full and open

competition.” CICA generally directs executive agencies, “in conducting a procurement

for property or services” to “obtain full and open competition though the use of competitive

procedures.” 41 U.S.C. § 3301(a)(1) (2012). As stated by the United States Court of

Appeals for the Federal Circuit:

CICA, however, does not prevent modification[ 12] of a contract by requiring

a new bid procedure for every change. Rather only modifications outside

12 According to FAR 2.101(b), “[c]ontract modification means any written change in the

terms of a contract (see [FAR] 43.103).” FAR 2.101(b) (2017). FAR 43.103 further

26

the scope of the original competed contract fall under the statutory

competition requirement. CICA sets forth no standard for determining when

modification of an existing contract requires a new competition or falls within

the scope of the original competitive procurement.

AT & T Commc’ns, Inc. v. Wiltel, Inc., 1 F.3d 1201, 1204-05 (Fed. Cir.) (footnote

removed), reh’g denied, en banc suggestion declined (Fed. Cir.), suggestion for reh’g

declined (Fed. Cir. 1993). Contract modification for changes beyond the scope of the

original procurement, however, should not be utilized as a way to avoid competition. See

Tetra Tech, Inc. v. United States, 131 Fed. Cl. 653, 661 (2017); HDM Corp. v. United

States, 69 Fed. Cl. 243, 253 (2005) (citation omitted); CESC Plaza Ltd. P’ship v. United

States, 52 Fed. Cl. 91, 93 (2002). Modifying an existing contract so that it materially

departs from the scope of the original procurement violates CICA by preventing potential

provides that:

[c]ontract modifications are of the following types:

(a) Bilateral. A bilateral modification (supplemental agreement) is a contract

modification that is signed by the contractor and the contracting officer.

Bilateral modifications are used to—

(1) Make negotiated equitable adjustments resulting from the

issuance of a change order;

(2) Definitize letter contracts; and

(3) Reflect other agreements of the parties modifying the terms of

contracts.

(b) Unilateral. A unilateral modification is a contract modification that is

signed only by the contracting officer. Unilateral modifications are used, for

example, to--

(1) Make administrative changes;

(2) Issue change orders;

(3) Make changes authorized by clauses other than a changes

clause (e.g., Property clause, Options clause, or Suspension of

Work clause); and

(4) Issue termination notices.

FAR 43.103 (2017).

27

bidders from participating in or competing for what should be a new procurement. See

Tetra Tech, Inc. v. United States, 131 Fed. Cl. at 661; Portfolio Disposition Mgmt. Grp.

LLC v. United States, 64 Fed. Cl. 1, 12 (2005) (“This Court has recognized the well-

established principle that the ‘contract awarded must be the one for which the offerors

have competed.’” (citation omitted)); HDM Corp. v. United States, 69 Fed. Cl. at 253; see

also AT & T Commc’ns, Inc. v. Wiltel, Inc., 1 F.3d at 1205; VMC Behavioral Healthcare

Servs. v. United States, 50 Fed. Cl. 328, 332 (2001). A modification that is within the

scope of the original procurement “does not raise a viable protest under [28 U.S.C.]

§ 1491(b)(1).” See Distrib. Solutions, Inc. v. United States, 539 F.3d 1340, 1346 (Fed.

Cir. 2008); see also Ceradyne, Inc. v. United States, 103 Fed. Cl. 1, 12-13 (2012) (citing

AT & T Commc’ns, Inc. v. Wiltel, Inc., 1 F.3d at 1204-05) (“If the modification materially

departs from the scope, then a new competition may be required and jurisdiction will

stand. . . . If the modification was, however, within the scope of the solicitation, the protest

must be dismissed.”); RhinoCorps Ltd. Co. v. United States, 87 Fed. Cl. 481, 489 (2009)

(citing AT & T Commc’ns, Inc. v. Wiltel, Inc., 1 F.3d at 1205) (“[T]o sustain a bid protest

stemming from a change or modification to a contract, the protestor must allege facts that

establish that the modification falls outside the scope of the original contract, thereby

triggering the statutory competition requirement. If any change made to a procurement is

within the scope of work originally contemplated, no competition is required, and

jurisdiction is not present.”). 13

The United States Court of Appeals for the Federal Circuit, specifically, has

recognized that modifications of an existing contract are permissible to procure products

or services, as long as the modification is “within the scope of the original competitive

procurement.” AT & T Commc’ns, Inc. v. Wiltel, Inc., 1 F.3d at 1205; see also Krygoski

13 The defendant argues that this court lacks jurisdiction over IEA’s claim because

Modification No. P00002 of Xcelerate Solutions’ Contract was within the scope of

Xcelerate Solutions’ Contract. Although a number of decisions in the United States Court

of Federal Claims indicate that this court lacks jurisdiction over a protest challenging a

modification to a contract that is within the scope of the original procurement, one judge

has argued in a footnote that these decisions “have elided the distinction between

jurisdiction and merits, on the grounds that a modification within the scope of the contract

does not involve a procurement and, therefore, does not trigger jurisdiction under [28

U.S.C. §] 1491(b)(1).” Int’l Genomics Consortium v. United States, 104 Fed. Cl. 669, 675

n.7 (2012). Given that a court’s analysis of whether a modification to a contract is within

the scope of the original procurement requires the court to consider the merits of a

protestor’s complaint, and considering the Federal Circuit’s guidance that the meaning of

“procurement” under Section 1491(b)(1) extends to “‘all stages of the process of acquiring

property or services, beginning with the process for determining a need for property or

services and ending with contract completion and closeout,’” Sys. Application & Techs.,

Inc. v. United States, 691 F.3d at 1381 (emphasis in original) (citation removed), a protest

that challenges a modification to a contract that is within the scope of the original

procurement may be more appropriately dismissed under RCFC 12(b)(6) (2017) for

failure to state a claim upon which relief may be granted, rather than under RCFC 12(b)(1)

for lack of subject matter jurisdiction.

28

Constr. Co. v. United States, 94 F.3d 1537, 1543 (Fed. Cir.) (relying on AT & T

Communications, Inc. v. Wiltel, Inc. in its analysis of a necessary change to a contract’s

scope), reh’g denied, en banc suggestion declined (Fed. Cir. 1996), cert. denied, 520

U.S. 1210 (1997); Tetra Tech, Inc. v. United States, 131 Fed. Cl. at 661 (“To determine

whether a modification is within the scope of the original solicitation, the court must

compare the contract, as modified, with the scope of the competition conducted to

achieve the original contract.” (citing AT & T Commc’ns, Inc. v. Wiltel, Inc., 1 F.3d at

1205)); Aircraft Charter Sols., Inc. v. United States, 109 Fed. Cl. 398, 410-11 (2013)

(utilizing AT & T Communications, Inc. v. Wiltel, Inc. to determine whether a modification

was within the scope of a contract); Golden Mfg. Co., Inc. v. United States, 107 Fed. Cl.

264, 274 (2012) (relying on AT & T Communications, Inc. v. Wiltel, Inc. when discussing

an amendment to a contract solicitation); Solute Consulting v. United States, 103 Fed. Cl.

783, 792 (2012) (applying AT & T Communications, Inc. v. Wiltel, Inc. to the issue of the

in-scope contract modification); Ceradyne, Inc. v. United States, 103 Fed. Cl. at 12

(analyzing AT & T Communications, Inc. v. Wiltel, Inc. to determine whether the contract

modification was within the scope of the original procurement); RN Expertise, Inc. v.

United States, 97 Fed. Cl. 460, 473 (using AT & T Communications, Inc. v. Wiltel, Inc. as

a basis for the court’s analysis of the contract modification), recons. denied (2011).

Because CICA does not define whether a modification of an existing contract is

beyond or within the scope of the original competitive procurement, the Federal Circuit

has at times analogized to the cardinal change doctrine as the test to ascertain whether

the modification is in-scope or violates the competition requirements of CICA. See AT & T

Commc’ns, Inc. v. Wiltel, Inc., 1 F.3d at 1205 (“The cardinal change doctrine asks whether

a modification exceeds the scope of the contract’s changes clause; this case asks

whether the modification is within the scope of the competition conducted to achieve the

original contract. In application, these questions overlap.”); see also Ceradyne, Inc. v.

United States, 103 Fed. Cl. at 12 n.9; Cardinal Maint. Serv., Inc. v. United States, 63 Fed.

Cl. 98, 106 (2004); GraphicData, LLC v. United States, 37 Fed. Cl. 771, 781 (1997). “‘[A]

cardinal change . . . occurs when the government effects an alteration in the work so

drastic that it effectively requires the contractor to perform duties materially different from

those originally bargained for.’” AT & T Commc’ns, Inc. v. Wiltel, Inc., 1 F.3d at 1205

(quoting Allied Materials & Equip. Co. v. United States, 215 Ct. Cl. 406, 409, 569 F.2d

562, 563-64 (1978)); see also Krygoski Constr. Co. v. United States, 94 F.3d at 1543.

“Just as the cardinal change doctrine prohibits an agency from compelling a contractor to

perform contract terms that are not within the scope of the original bargain, the CICA

prevents an agency from modifying a contract to such an extent that the modified contract

is ‘materially different’ from the contract for which a competition was held.” GraphicData,

LLC v. United States, 37 Fed. Cl. at 781 (citing AT & T Commc’ns, Inc. v. Wiltel, Inc., 1

F.3d at 1205); see also Mgmt. Solutions & Sys., Inc. v. United States, 75 Fed. Cl. 820,

830 (2007); cf. Solute Consulting v. United States 103 Fed. Cl. at 793 (discussing the

merits of the GAO’s application of the “material difference standard” to multiple-award

contracts and its conclusion that “‘[t]he analysis of whether a task order is outside the

scope of a multiple-award contract is the same as the analysis of whether a contract

modification is outside the scope of a single-award contract’” (alteration in original)

(quoting DynCorp Int’l LLC, B-402349, 2010 CPD ¶ 59 (Comp. Gen. Mar. 15, 2010))).

29

When determining whether a modification “materially departs” from the scope of

the original procurement, a court should consider: “(1) whether the modification is of a

nature which potential offerors would reasonably have anticipated; and (2) whether the

modification substantially changes the type of work, performance period, and costs as

between the original contract and the modified contract.” Portfolio Disposition Mgmt. Grp.

LLC v. United States, 64 Fed. Cl. at 12 (citation omitted); see RN Expertise, Inc. v. United

States, 97 Fed. Cl. at 473-74 (citing AT & T Commc’ns, Inc. v. Wiltel, Inc., 1 F.3d at 1205,

1207); see also Aircraft Charter Sols., Inc. v. United States, 109 Fed. Cl. at 411 (citation

omitted). The analysis of whether a contract modification “materially departs” from the

scope of the original procurement “focuses on the scope of the entire original procurement

in comparison to the scope of the contract as modified.” AT & T Commc’ns, Inc. v. Wiltel,

Inc., 1 F.3d at 1205. “Thus a broad original competition may validate a broader range of

later modifications without further bid procedures.” Id.; see also Cal. Indus. Facilities Res.,

Inc. v. United States, 104 Fed. Cl. 589, 598 (2012). To determine whether a modification

is within the scope of the original procurement, a court should consider whether the

modification “substantially changes ‘the type of work, performance period, and costs as

between the original contract and the modified contract.’” CESC Plaza Ltd. P’ship v.

United States, 52 Fed. Cl. at 93 (quoting CCL, Inc. v. United States, 39 Fed. Cl. 780, 791

(1997)); see also Portfolio Disposition Mgmt. Grp. LLC v. United States, 64 Fed. Cl. at 12

(citing Cardinal Maint. Serv., Inc. v. United States, 63 Fed. Cl. at 106); Cardinal Maint.

Serv., Inc. v. United States, 63 Fed. Cl. at 106 (noting that the question of whether “the

contract, as modified, is materially different from the contract that was originally competed

. . . turns on whether the original contract, as modified, calls for ‘essentially the same

performance’” (quoting Exec. Bus. Media, Inc. v. United States Dep’t of Defense, 3 F.3d

759, 763 n.3 (4th Cir. 1993))); Northrop Grumman Corp. v. United States, 50 Fed. Cl.

443, 466 (2001) (describing factors that courts have considered under the cardinal

change doctrine, including “[c]hanges in the type of product or service that were not

anticipated due to their lack of resemblance to the original procurement,” “[s]ignificant

addition or subtraction of the quantity of work,” and “[a]dditional time spent on

performance of a contract . . . when such time is extended in order to add significantly

more quantity or new requirements to the contract”).

“Because every situation in which parties enter into a contractual relationship is

unique, there is no definitive test for determining whether a change is beyond the scope

of a particular contract.” Keeter Trading Co. v. United States, 79 Fed. Cl. 243, 260 (2007)

(citation omitted); see also Rumsfeld v. Freedom NY, Inc., 329 F.3d 1320, 1332 (Fed.

Cir.), reh’g and reh’g en banc denied, 346 F.3d 1359 (Fed. Cir. 2003), cert. denied, 541

U.S. 987 (2004) (“The finding of a cardinal change is ‘principally a question of fact’”

(quoting Allied Materials & Equip. Co. v. United States, 215 Ct. Cl. at 411, 569 F.2d at

565)); Golden Mfg. Co., Inc. v. United States, 107 Fed. Cl. at 274 (“In emphasizing that

there is no mechanical or arithmetical answer, we have repeated that (t)he number of

changes is not, in and of itself, the test[.]” (alterations in original) (quoting Air-A-Plane

Corp. v. United States, 187 Ct. Cl. 269, 276, 408 F.2d 1030, 1033 (1969))); ThermoCor,

Inc. v. United States, 35 Fed. Cl. 480, 490 (1996) (“‘Each case must be analyzed on its

own facts and in light of its own circumstances, giving just consideration to the magnitude

and quality of the changes ordered and their cumulative effect upon the project as a

30

whole.’” (quoting Wunderlich Contracting Co. v. United States, 173 Ct. Cl. 180, 194, 351

F.2d 956, 966 (1965))).

In addition, as indicated by the United States Court of Appeals for the Federal

Circuit, a factor to consider when determining the scope of the original competition is

“‘whether the solicitation for the original contract adequately advised offerors of the

potential for the type of changes during the course of the contract that in fact occurred, or

whether the modification is of a nature which potential offerors would reasonably have

anticipated.’” AT & T Commc’ns, Inc. v. Wiltel, Inc., 1 F.3d at 1207 (quoting Neil R. Gross

& Co., Inc., B-237434, 90-1 CPD ¶ 212 (Comp. Gen. Feb. 23, 1990) (citation omitted));

see also Tetra Tech, Inc. v. United States, 131 Fed. Cl. at 661; RN Expertise, Inc. v.

United States, 97 Fed. Cl. at 474; Chapman Law Firm Co. v. United States, 81 Fed. Cl.

323, 327 (2008). “A modification generally falls within the scope of the original

procurement if potential bidders would have expected it to fall within the contract’s

changes clause.” AT & T Commc’ns, Inc. v. Wiltel, Inc., 1 F.3d at 1205; see also Aircraft

Charter Sols., Inc. v. United States, 109 Fed. Cl. at 410 (quoting AT & T Commc’ns, Inc.

v. Wiltel, Inc., 1 F.3d at 1205). Whether potential bidders would have anticipated a

particular modification is judged under an objective standard, see Global Computer

Enters., Inc. v. United States, 88 Fed. Cl. 52, 56 (2009); CESC Plaza Ltd. P’ship v. United

States, 52 Fed. Cl. at 93 (citing CCL, Inc. v. United States, 39 Fed. Cl. at 791), and

“depends heavily on the language of the solicitation.” See Northrop Grumman Corp. v.

United States, 50 Fed. Cl. at 466 (citing JOHN CIBINIC, JR. & RALPH C. NASH, JR.,

ADMINISTRATION OF GOVERNMENT CONTRACTS 389 (3d ed. 1995)). If a court ultimately finds

a modification “to be outside the reasonable expectations of the bidders, the government

must show that it adequately advised the bidders that such a change might occur.”

Northrop Grumman Corp. v. United States, 50 Fed. Cl. at 465 (citation omitted).

In the above-captioned bid protest, IEA “agree[s]” that the “DoD can reorganize

and transfer responsibility for the Continuous Evaluation program to DSS. The parties

also agree that DoD is not obligated to extend IEA’s contract.” IEA, however, challenges

the aspect of Modification No. P00002 “that includes the Validation Cell work, and which

is referred to in the modification documents as ‘Continuous Evaluation services.’” 14 During

oral argument on January 18, 2018 and the hearing on January 19, 2018, IEA identified

the portion of Modification No. P00002 of Xcelerate Solutions’ Contract that IEA was

challenging as the work contained in Contract Line Item Numbers 2005, 3005, and 4005

in Modification No. P00002. IEA asserts that the terms of the Solicitation and Xcelerate

Solutions’ Contract are not broad enough to include Modification No. P00002 because

“[i]t does not include any language about validating the flagged records once they are

received, or providing any other analytical or policy support to the Continuous Evaluation

program.” IEA also alleges that “no offeror could have anticipated that the PSMO-I

contract would be required to provide support in the form of validation and analytical and

policy support.” According to IEA, that no offeror could have anticipated such a change is

confirmed by the fact that none of the proposals submitted to the DSS in response to the

14The court notes that the documents for Modification No. P00002 do not include the

words “Continuous Evaluation services.”

31

Solicitation “discussed validating flags, providing feedback to DoD on potential

efficiencies, or advising DoD on policies for the Continuous Evaluation program . . . .”

Additionally, IEA contends that the increase in the dollar value of Xcelerate Solutions’

Contract and the number of full-time equivalents Xcelerate Solutions needed to provide

under Xcelerate Solutions’ Modified Contract demonstrates that Modification No. P00002

of Xcelerate Solutions’ Contract is an out-of-scope modification. IEA alleges that

Modification No. P00002 “nearly doubles the price of the contract as awarded,” caused

Xcelerate Solutions to add “almost four times the amount of staff to support the work,”

and that the CE-related work “under the PSMO-I contract takes only four minutes per

record, while the Validation Cell work takes more than twenty minutes per record.”

(emphasis in original). Moreover, IEA asserts that the terms of the Solicitation and

Xcelerate Solutions’ Contract are clear, and, to the extent the word “support” in the

Solicitation and Xcelerate Solutions’ Contract is ambiguous, that “the principle of noscitur

a sociis confirms that the support sought is the specific support tasks elucidated in the

same PWS task,” which IEA contends only involves categorizing and distributing flagged

CE records. 15 (emphasis in original).

Conversely, the defendant asserts that offerors to the Solicitation could have

anticipated the issuance of Modification No. P00002 to Xcelerate Solutions’ Contract

because “the solicitation’s background advised offerors that ‘[p]rocessing information

pertaining to cleared Industry from CE and DITMAC will be a new mission for DSS and

PSMO-I effective FY 15,’” and “[a]ny reasonable offeror would expect that a ‘new mission’

has more variability . . . .” (emphasis and alterations in original). The defendant also

argues that the “Objectives” section, “Scope” section, and the performance work

statement of the Solicitation contemplated a broad array of tasks to be performed under

the resulting contract. According to the defendant, Advanced Onion’s proposal, which

listed IEA as a potential subcontractor, demonstrates that offerors could have anticipated

the issuance of Modification No. P00002 because Advanced Onion’s proposal “described

the entire Continuous Evaluation process . . . .” (emphasis in original). Moreover, the

defendant alleges that Modification No. P00002 does not materially depart from the

Xcelerate Solutions’ Contract because Xcelerate Solutions’ Contract’s period of

performance is unchanged, the type of services being provided under Xcelerate

Solutions’ Modified Contract are akin to those performed under Xcelerate Solutions’

Contract, the quantity of the service being provided is not materially changed, and the

cost of performance has not substantially changed. Similarly, defendant-intervenor

asserts that Modification No. P00002 did not materially change Xcelerate Solutions’

Contract because “the Modification has not changed the nature of the services provided

under the PSMO-I Contract,” as, under Xcelerate Solutions’ Contract, Xcelerate Solutions

“has been reviewing flagged reports, validating the reports and incidents, and sending the

reports to DoD for adjudication.”

15 In its motion for judgment on the Administrative Record, IEA states that the “‘doctrine

of noscitur a sociis permits the Court to ascertain the meaning of ambiguous terms by

reference to the terms with which they are associated.’ Auto-Ordnance Corp. v. United

States, 822 F.2d 1566, 1571 (Fed. Cir. 1987).” (emphasis in original).

32

Both the Recommendation to Modify and the Memorandum for Record noted that,

when the Xcelerate Solutions’ Contract was awarded to Xcelerate Solutions by DSS, the

full CE program had not yet been moved to the DSS, and that the WHS was managing

part of the CE program. The Recommendation to Modify and the Memorandum for

Record also both state that, at the time of contract award, “the vendor’s role was

anticipated to be primarily flagging and categorizing the records for industry personnel,”

which, as stated in the Memorandum for Record, did not “encompass the end-to-end

processing of the CE alerts for the entire DoD enterprise population.” The Memorandum

for Record also states that “[p]er the Under Secretary of Defense for Intelligence’s memo

signed 16 December 2016, these efforts needed to come together and be unified under

one contract and the full CE mission materialized in the HS002-16-C-0006 PWS.”

According to the Recommendation to Modify, as well as the Memorandum for Record,

transferring the work under the “WHS contract” to Xcelerate Solutions’ Contract would be

within the scope of Xcelerate Solutions’ Contract because Section 5.16 of the Xcelerate

Solutions’ Contract provides that “Vendor personnel will support the DoD CE mission.”

Both government documents concluded that assigning the responsibility of administering

the DoD CE program to Xcelerate Solutions, as stated in the Memorandum for Record,

was not “an ‘addition of different work’ to the current PWS but clarification of activities that

are in support of an existing task area and increase in resources of the same nature

already under contract . . . .” The Memorandum for Record also noted that “[t]ransferring

the work from the WHS contract to the PSMO-I contract will provide efficiencies through

consolidation of previously separately-managed pieces of a singular effort.” The

Recommendation to Modify reached a substantially similar conclusion.

The court reviews Modification No. P00002 to Xcelerate Solutions’ Contract in the

context of the Solicitation as a whole. See Aircraft Charter Sols., Inc. v. United States,

109 Fed. Cl. at 415 (“It is the Solicitation as a whole, and especially the comparison of

the context of the Solicitation with the contract modification challenged here, that must be

weighed by the court.” (citing AT & T Commc’ns v. Wiltel, Inc., 1 F.3d at 1207)). Section

1.2 of the Solicitation, as did Section 1.2 of Xcelerate Solutions’ Contract, stated that

“[p]rocessing information pertaining to cleared Industry from CE and DITMAC [Defense

Insider Threat Management and Analysis Center] will be a new mission for DSS and

PSMO-I effective FY15.” According to Section 1.3 of the Solicitation and Section 1.3 of

Xcelerate Solutions’ Contract, titled “Objectives,” the performance work statement

indicates that the contractor “provides continuous Personnel Security Operational

Support to review and process personnel security documentation as it relates to the

NISP.” Additionally, Section 1.4 of the Solicitation and also Section 1.4 of Xcelerate

Solutions’ Contract, titled “Scope,” provided that the “Vendor shall be responsible for

providing operational support to assist in the personnel clearance oversight and

management . . . .” Section 5.1, titled “Basic Services,” which was located in the

performance work statement of the Solicitation as well as in Section 5.1 of Xcelerate

Solutions’ Contract, stated that the “Vendor shall support duties and processing requests

to include . . . other evolving initiatives as related to Continuous Evaluation and the

Defense Insider Threat Management Analysis Center.” Section 5.16, titled “Continuous

Evaluation (CE),” which was also located in the performance work statement, stated that

“Vendor personnel will support the DoD CE mission. The records flagged by CE will be

33

reviewed, analyzed, and distributed into Low, Medium, High risk categories. Low, Medium

and High Risk Reports will be forwarded to appropriate government office(s) for action

and recorded in the system(s) of record.” (emphasis added). Section 7.3 of the

Solicitation, titled “Technical Exhibit 3: Estimated Workload Data,” 16 estimated that the

awardee would be required to process 225,000 CE reports per year, with each report

taking approximately four minutes to process. 17

As noted in the Recommendation to Modify and Memorandum for Record,

Xcelerate Solutions’ Contract required Xcelerate Solutions to “support the DoD CE

mission.” Immediately following that sentence, however, was the requirement that

“records flagged by CE will be reviewed, analyzed, and distributed into Low, Medium,

High risk categories,” which were to be “forwarded to appropriate government office(s)

for action and recorded in the system(s) of record.” Read in the context of the Solicitation

and Xcelerate Solutions’ Contract as a whole, including the objectives stated in Section

1.3 of the Solicitation and Section 1.3 of Xcelerate Solutions’ Contract, which were to

provide “continuous Personnel Security Operational Support to review and process

personnel security documentation as it relates to the NISP,” and the scope articulated in

Section 1.4 of the Solicitation and Section 1.4 of Xcelerate Solutions’ Contract, which was

to provide “operational support to assist in the personnel clearance oversight and

16 Although the parties state in their Joint Stipulation of Facts that Xcelerate Solutions’

“contract included the same background, objectives, scope, tasks, applicable

publications, technical exhibits, and deliverables as were provided for in the Solicitation,”

the technical exhibit in Section 7.3 of the Solicitation does not appear to be in Xcelerate

Solutions’ Contract.

17 The defendant-intervenor asserts that the “Solicitation also included deliverables

directly related to CE, such as task status/progress reports and trend analyses.” To

support its assertion, the defendant-intervenor cites to Section 7.2 of the Solicitation, titled

“Technical Exhibit 2: Deliverables Schedule,” which states that the awardee will provide

a “Task Status/Progress Report in accordance with Section 5.16.6 of the PWS” and

“Trend Analysis in accordance with Section 5.16.6 of the PWS” on a weekly basis. Section

7.2 of Xcelerate Solutions’ Contract contains identical language to Section 7.2 of the

Solicitation. Neither the Solicitation nor Xcelerate Solutions’ Contract contain a “Section

5.16.6.” In Xcelerate Solutions’ Modified Contract, however, Section 7.3, titled “Technical

Exhibit 3: Deliverables Schedule,” stated that Xcelerate Solutions was to provide a task

status/progress report and trend analysis on a weekly basis in accordance with Section

5.14, titled “Reports” of the Xcelerate Solutions’ Modified Contract, which provides “[t]he

Vendor shall complete Government provided performance tracking on a weekly basis for

each full time contracting employee and provide the required reports in accordance with

the deliverables schedule located in Technical Exhibit 2 and 3.” The Solicitation and

Xcelerate Solutions’ Contract also contained a section titled “Reports,” which provides

“[t]he Vendor shall provide the required reports in accordance with the deliverables

schedule located in Technical Exhibit 2.” Thus, it is unclear whether the “task

status/progress report and trend analyses” required under Section 7.2 of the Solicitation

were “directly related to CE . . . .”

34

management,” Xcelerate Solutions was to support the DoD CE program by reviewing,

analyzing, and distributing records flagged by the DoD CE program into Low, Medium,

and High risk categories, and forwarding reports of the flagged records to the appropriate

government offices.

Modification No. P00002 modified Xcelerate Solutions’ Contract in several ways.

First, as reflected in Contract Line Item Numbers 2001, 2002, and 2003, Modification No.

P00002 exercised the second one-year option period of Xcelerate Solutions’ Contract

with the DSS. As reflected in Contract Line Item Number 2004, Modification No. P00002

“[i]ncreased Personnel Security Operational support in accordance with the updated

Performance Work Statement Part 5, executed in P00002.” Modification No. P00002 also

created Contract Line Item Numbers 3004 and 4004, which were two consecutive one-

year option periods for “[i]ncreased Personnel Security Operational support . . . .”18

Additionally, Modification No. P00002 of Xcelerate Solutions’ Contract provided for “DoD

Continuous Evaluation Mission support increase/further definition in accordance with the

updated Performance Work Statement Part 5, executed in P00002” during the second

option period of Xcelerate Solutions’ Contract. Modification No. P00002 of Xcelerate

Solutions’ Contract also created two consecutive one-year option periods under the

Contract for “DoD Continuous Evaluation Mission support increase/further definition,” as

reflected in Contract Line Item Numbers 3005 and 4005.

Modification No. P00002 of Xcelerate Solutions’ Contract also altered the

objectives and scope sections in Xcelerate Solutions’ Contract. Modification No. P00002

added language to Section 1.3 of Xcelerate Solutions’ Modified Contract, titled

“Objectives,” that indicated the objective of the Xcelerate Solutions’ Modified Contract

now included obtaining

a knowledge-based analytic capability to validate alerts generated by the

DoD Continuous Evaluation (CE) Program. The validation cell will use

supporting systems to receive and determine the CE results meet

established reporting criteria before forwarding adjudicative-relevant and

actionable information to the DoD Consolidated Adjudication Facility (DoD

CAF) and DoD Component security officials, as appropriate.

The following sentences were also added to Section 1.4, titled “Scope,” of Xcelerate

Solutions’ Modified Contract:

DoD is evolving its CE program as directed by the Secretary of Defense’s

February 21, 2014 memorandum and in accordance with the Office of

Management and Budget, “Report to the President, Suitability and Security

Processes Review.” To support DoD CE Program implementation, the

Contractor shall provide the personnel necessary to support the accurate

and timely validation CE flags as the program scales. Efforts include, but

18As noted, IEA is not challenging the modifications contained in Contract Line Item

Numbers 2001, 2002, 2003, 2004, 3004, and 4004.

35

are not limited to, developing processes and procedures, assessing and

validating flags generated by the DoD CE capability, developing business

rules, drafting research reports, collecting metrics, and developing future

CE requirements.

Additionally, Modification No. P00002 expanded the specific tasks prescribed by

Section 5.16 of Xcelerate Solutions’ Contract, titled “Continuous Evaluation (CE),” which

was renumbered to become Section 5.12 of Xcelerate Solutions’ Modified Contract.

Section 5.12 of Xcelerate Solutions’ Modified Contract, also titled “Continuous Evaluation

(CE),” provided that Xcelerate Solutions:

[W]ill receive, evaluate, and disseminate flags from the DoD CE capability

in accordance with DoD established policy, guidelines, and procedures.

Assess and validate CE flags using available data sources to attribute the

information to a specific subject and determine if the information is relevant

and actionable, in accordance with DoD established guidelines and

procedures. Disseminate CE results and related correspondence to

personnel security specialists, CI, insider threat (InT), and/or law

enforcement (LE) personnel, as applicable, and within DoD established

guidelines. Develop tracking tools, matrices, and templates to efficiently

analyze data and produce metrics which identify trends, referral status, and

business rules efficiency. Support the DoD CE Program as required,

including policy development, comment adjudication, formal coordination,

and resource assessments. Provide logistical, data gathering, and

presentation support to meet DoD CE Program requirements. Continually

monitor and review CE processes and procedures to inform the government

where efficiencies can be realized. Provide feedback to the DoD CE

Program regarding the relevance and validity of the business rules for flags.

Policies, procedures and strategies will be planned and integrated into the

CE program as needed. Support the development and delivery of CE-

related reports, briefings, and training as needed. Assist with the agenda

setting and facilitation of DoD CE Working Groups, and other CE-related

forums as required. Provide administrative support as necessary, to include

planning meetings, tracking action items, and preparing read-ahead briefing

material, meeting minutes, formal correspondence packages, activity

reports, senior leadership reports, and travel/training/personnel documents.

Although “receiv[ing], evaluat[ing], and disseminat[ing] flags from the DoD CE

capability” and providing “administrative support” may have been within the scope of the

Solicitation and Xcelerate Solutions’ Contract, the additional requirements related to CE

in Modification No. P00002 exceeded the scope of the CE work contemplated in the

Solicitation and Xcelerate Solutions’ Contract. The Solicitation and Xcelerate Solutions’

Contract did not contemplate that Xcelerate Solutions would be providing “a knowledge-

based analytic capability” for assessing and validating records flagged by the DoD’s

automated system. Rather, under Xcelerate Solutions’ Contract with the DSS, Xcelerate

Solutions was to review the records flagged by CE, which had been validated by “a

36

knowledge-based analytic capability” prior to being sent to Xcelerate Solutions, and

distribute the flagged CE records into risk categories. Contrary to defendant’s arguments,

using available data sources to determine whether specific information is attributable to

a specific clearance holder and determining whether the information is relevant and

actionable differs from the review and distribution of flagged, validated CE records

because, under the unmodified Xcelerate Solutions’ Contract, Xcelerate Solutions’ role

was limited to the review and distribution of flagged, validated CE records into risk

categories before forwarding the records to the relevant government officials.

The Solicitation and Xcelerate Solutions’ Contract also were silent as to the

development of “tracking tools, matrices, and templates to efficiently analyze data and

produce metrics which identify trends, referral status, and business rules efficiency” and

the provision of “logistical, data gathering, and presentation support to meet DoD CE

Program requirements.” Xcelerate Solutions’ role in reviewing, analyzing, distributing, and

forwarding flagged, validated CE records did not include developing tools to capture and

analyze data in an effort to identify trends related to the efficiency of the entire DoD CE

program or determining the efficiency of the DoD’s CE program’s business rules. Nor was

Xcelerate Solutions’ original role in the CE program under the unmodified Xcelerate

Solutions’ Contract with the DSS broad enough to encompass the following: “monitor[ing]

and review[ing] CE processes and procedures to inform the government where

efficiencies can be realized. Provide feedback to the DoD CE Program regarding the

relevance and validity of the business rules for flags. Policies, procedures and strategies

will be planned and integrated into the CE program as needed.” Monitoring the DoD’s CE

program’s processes, procedures, and business rules and informing DSS how the DoD

CE program can realize efficiencies cannot be squared with Xcelerate Solutions’ more

limited role in the CE program under the unmodified Xcelerate Solutions’ Contract

because the analysis under Xcelerate Solutions’ Modified Contract entails tracking and

examining the DoD CE program as a whole and differs in substance from the analysis

Xcelerate Solutions provided when reviewing, analyzing, and distributing a flagged record

into a risk category.

Furthermore, supporting the DoD CE program with “policy development, comment

adjudication, formal coordination, and resource assessments,” “the development and

delivery of CE-related reports, briefings, and training,” and “agenda setting and facilitation

of DoD CE Working Groups, and other CE-related forums” is outside of the scope of the

Solicitation and the unmodified Xcelerate Solutions’ Contract with DSS. Xcelerate

Solutions’ limited role in the DoD CE program under the unmodified Xcelerate Solutions’

Contract did not include developing the policy and agenda, formal coordination, or

assessing the resources of the entire DoD CE program. The work required in designing

and implementing training programs for the DoD CE program and facilitating DoD CE

working groups and other related forums also substantively differs from the work

Xcelerate Solutions was undertaking pursuant to the unmodified Xcelerate Solutions’

Contract, as Xcelerate Solutions was not responsible for creating and assisting with DoD

CE program-wide activities unrelated to reviewing, analyzing, distributing, and forwarding

flagged records. Moreover, the objective of the Solicitation and the unmodified Xcelerate

Solutions’ Contract was “to review and process personnel security documentation” and

37

the scope of the Solicitation and the unmodified Xcelerate Solutions’ Contract was to

provide “operational support to assist in the personnel clearance oversight and

management . . . .” The additional tasks Modification No. P00002 assigned to Xcelerate

Solutions were far more policy driven and were much broader, with additional focus on

the DoD CE program in its entirety, than the more limited review and processing of

personnel security documentation and provision of operational support which were

contemplated in the objectives sections and scope sections in the Solicitation and

unmodified Xcelerate Solutions’ Contract. Indeed, both the objectives section and scope

section in Xcelerate Solutions’ Modified Contract were altered to include the new CE-

related requirements prescribed by Contract Line Item Number 2005 in Modification No.

P00002.

IEA also asserts that “the magnitude of the modification” is reflected in the

increased amount of time and number of full-time equivalents the DSS anticipates that it

will take Xcelerate Solutions to process CE reports under the Xcelerate Solutions’

Modified Contract. The defendant contends that, as a result of the DSS’ issuance of

Modification No. P00002 to Xcelerate Solutions’ Contract, the “actual change in the

quantity of service is about 51.5 percent for option year two.” The defendant calculates

its “actual change in the quantity of service” by dividing the “[i]ncreased Continuous

Evaluation minutes in modification P00002 ((2,880,000-900,000)” by the “Original PSMO-

I Solicitation minutes (3,844,300)) . . . .” After acknowledging that an increase of 51.5

percent is “non-trivial,” the defendant asserts that such an increase is not substantial

enough to demonstrate an out-of-scope modification without a corresponding change in

the nature and purpose of Xcelerate Solutions’ Contract. The increase, however, in the

“quantity of service” related to the DoD CE program being provided under Xcelerate

Solutions’ Modified Contract is much greater than approximately 51.5 percent when

compared to the “quantity of service” related to the DoD CE program under the Solicitation

and the unmodified Xcelerate Solutions’ Contract. Section 7.3 of the Solicitation estimated

that the awardee would “COMPLETE” 225,000 CE reports annually at an estimated rate of

four minutes per CE report, which produces a total estimate of 900,000 minutes per year

dedicated to completing CE reports. (capitalization in original). Under the unmodified

Xcelerate Solutions’ Contract, Xcelerate Solutions was providing “[redacted] FTEs [full-

time equivalents], with [redacted] providing CE support.” Xcelerate Solutions’ Modified

Contract, however, estimated that Xcelerate Solutions would “COMPLETE” 80,000 CE

reports annually at an average rate of thirty-six minutes per CE report, which produces a

total estimate of 2,880,000 minutes per year dedicated to completing CE reports.

(capitalization in original). Despite the DSS decreasing the estimated number of CE

reports per year by 155,000 CE reports, to meet the requirements of its Modified Contract,

Xcelerate Solutions would be required to increase its existing staffing with [redacted] full-

time equivalents to support the increase in CE-related work. Thus, under Xcelerate

Solutions’ Modified Contract, the DSS estimated that it would take Xcelerate Solutions

approximately nine times longer to complete a single CE report, and Xcelerate Solutions

needed to provide more than [redacted] times the amount of full-time equivalents

dedicated to performing CE-related work to complete approximately 155,000 fewer CE

reports per year. Such a significant increase in time per CE report and personnel indicates

that the CE-related work Xcelerate Solutions was to provide pursuant to the Xcelerate

38

Solutions’ Modified Contract was much more extensive than the CE work Xcelerate

Solutions had performed under the unmodified Xcelerate Solutions’ Contract.

Additionally, IEA argues that Modification No. P00002 “nearly doubles the price of

the contract as awarded, which is strong evidence that the work is outside the scope of

the original contract.” Taking a concept from the principles applicable to evaluating

cardinal changes, although a court “‘must look beyond simple arithmetic when assessing

a cardinal change claim,’” Golden Mfg. Co. v. United States, 107 Fed. Cl. at 279 (quoting

PCL Const. Servs., Inc. v. United States, 47 Fed. Cl. 745, 806 (2000)), “[a]nother factor

is whether the modification substantially changes . . . ‘costs as between the original

contract and modified contract.’” CESC Plaza Ltd. P’ship v. United States, 52 Fed. Cl. at

93 (quoting CCL, Inc. v. United States, 39 Fed. Cl. at 792 (citations omitted); see also

Cardinal Maint. Serv., Inc. v. United States, 63 Fed. Cl. at 109 (“Where, as here, the

amount of additional work nearly doubles the price of the contract that was awarded, and

the nature of the work was so substantially increased that the change provision of the

contract had to be deleted to accomplish the modifications, the originally awarded

contract has been materially changed.” (citation omitted)). The total potential value of the

unmodified Xcelerate Solutions’ Contract as awarded was $15,322,211.20. Under the

second option period of Xcelerate Solutions’ Contract, the DSS was to pay Xcelerate

Solutions $3,152,544.00. Modification No. P00002 increased the amount the DSS was to

compensate Xcelerate Solutions during the second option period by $3,947,827.20 to

$7,100,371.20. The increase of $3,947,827.20 was comprised of [redacted] in Contract

Line Item Number 2004 for “[i]ncreased Personnel Security Operational support,” which

IEA is not challenging as being out-of-scope, and [redacted] in Contract Line Item Number

2005 for “DoD Continuous Evaluation Mission support increase/further definition,” which

IEA is challenging as being out-of-scope. 19 Therefore, the total increase in price that is

attributable to the alleged out-of-scope CE work prescribed by Modification No. P00002

during second option period of Xcelerate Solutions’ Contract was [redacted]. An increase

of [redacted] attributable to the alleged out-of-scope work added by Modification No.

P00002 during the second option period of Xcelerate Solutions’ Contract, which, as

awarded, had a value of $3,152,544.00, represents a price increase of approximately

[redacted] percent in the amount the DSS was to compensate Xcelerate Solutions during

the second option period of Xcelerate Solutions’ Contract. 20 Although the price increase

19 Modification No. P00002 also included individually-priced option periods for

“[i]ncreased Personnel Security Operational support” and “DoD Continuous Evaluation

Mission support increase/further definition . . . .” Under Xcelerate Solutions’ Modified

Contract, the DSS could exercise an option period for “[i]ncreased Personnel Security

Operational support” during the third option period in Contract Line Item Number 3004 for

[redacted] and during the fourth option period in Contract Line Item Number 4004 for

[redacted]. The DSS could exercise an option in Contract Line Item Number 3005 for

“DoD Continuous Evaluation Mission support increase/further definition” during the third

option period for [redacted], as well as an option in Contract Line Item Number 4005

during the fourth option period for [redacted].

20 The increase of [redacted] percent represents the value of the alleged out-of-scope

39

of [redacted] percent alone may not be sufficient to demonstrate an out-of-scope

modification, in this case, when considered in conjunction with the difference in the type

of services Xcelerate Solutions was providing under the Xcelerate Solutions’ Modified

Contract, the [redacted] percent increase in the price of the second option period is a

significant indication that Modification No. P00002 was outside of the scope of Xcelerate

Solutions’ Contract. See Cardinal Maint. Serv., Inc. v. United States, 63 Fed. Cl. at 109.

Moreover, potential offerors could not have anticipated from the terms of the

Solicitation that the resulting contract would be modified to include the administration of

the DoD CE program. The Memorandum for Record provides that

[t]his change would not have effected [sic] Contractors at time of quote

because the work is not different from what was initially solicited but now

better defined or just increased. Contractors could have anticipated that as

we gained a better understanding of this new CE mission that we might

need to further define our requirement in order to support the greatest

performance and success of the winning Contractor.

Section 5.1, titled “Basic Services,” in the performance work statement in Part 5 of the

Solicitation and Xcelerate Solutions’ Contract, stated that the “Vendor shall support duties

and processing requests to include . . . other evolving initiatives as related to Continuous

Evaluation and the Defense Insider Threat Management Analysis Center.” From the

language in the Memorandum for Record, however, it is by no means clear, reading the

terms of the Solicitation, that an offeror could have anticipated a modification requiring

the awardee to assess and validate flagged records, develop the policies, agenda,

procedures, strategies, and training programs of the DoD CE program, and develop

tracking tools to capture and analyze data related to the efficiency of the DoD CE program

as a whole.

IEA further argues that offerors could not have anticipated the issuance of

Modification No. P00002 because, at the time the Solicitation was issued, the DSS was

not responsible for “the Validation Cell efforts,” and there was already a contractor

performing “that exact work” under the supervision of another DoD component. The

defendant contends that offerors could “have reasonably expected the issuance of

Modification P00002” because the Solicitation “advised offerors” that CE was a new

mission for the DSS, and Section 5.1 of the Solicitation provided that the awardee would

“‘support duties and processing requests to include . . . other evolving initiatives as related

to Continuous Evaluation and the Defense Insider Threat Management Analysis

Center . . . .’” (emphasis in original). As the DoD CE program scaled and more

government and contractor personnel were enrolled in the DoD CE program, offerors

could have anticipated an increase in the number of records flagged by the DoD CE

program on an annual basis, which would need to be reviewed and distributed into a risk

category. The Solicitation, however, did not indicate to offerors that the awardee’s role in

work added in Contract Line Item Number 2005 under Modification No. P00002 divided

by the value of the second option period as awarded under Xcelerate Solutions’ Contract.

40

the CE program of reviewing, analyzing, distributing, and forwarding flagged records

could expand into providing a “knowledge-based analytic capability” for assessing and

validating flagged records, the development of the DoD CE program’s tracking tools,

policies, agendas, procedures, strategies, and training programs, or the gathering and

analysis of data related to the efficiency of the entire DoD CE program. Moreover, nothing

in the Administrative Record indicates that offerors could have reasonably anticipated that

the DoD would realign its CE program, that the work IEA was providing under its Task

Order with the WHS would be reassigned to the DSS, and that the work IEA had been

providing under IEA’s Task Order would be inserted by modification into the contract

awarded under the Solicitation. See CW Gov’t Travel, Inc. v. United States, 61 Fed. Cl.

559, 574 (2004) (concluding that it was “especially true” that potential bidders would not

have anticipated a contract modification involving “traditional travel services” when “at the

time of contract formation there were already contracts in place for traditional travel

services”), recons. denied, 63 Fed. Cl. 459, aff’d, 163 F. App’x 853 (Fed. Cir. 2005).

Although whether potential bidders could have anticipated a modification is judged

under an objective standard, see Global Computer Enters., Inc. v. United States, 88 Fed.

Cl. at 56, the court notes that, contrary to the defendant’s and defendant-intervenor’s

arguments, the four offerors who responded to the Solicitation did not include in their

proposals proposed methods for the “end-to-end processing of the CE alerts for the entire

DoD enterprise population.” In this regard, defendant argues that Advanced Onion’s

proposal described “the entire Continuous Evaluation mission . . . .” (emphasis in original).

In the paragraphs preceding that description, however, Advanced Onion stated:

[redacted]

(emphasis in original). When responding to the terms of the Solicitation which resulted in

the unmodified Xcelerate Solutions’ Contract, Advanced Onion appears to have

discussed IEA’s experience with the entire DoD CE program to support its assertion that

IEA’s “relevant work experience” would permit Advanced Onion to rapidly execute and

sort “CE alerts,” as required by Section 5.16 of the Solicitation. In the past performance

section of its proposal, Advanced Onion also included IEA’s Task Order to support its

position that it had a capable subcontractor lined up and that it was capable of performing

the specific tasks in sections 5.2, 5.3, 5.4, 5.8, 5.10, 5.11, 5.13, 5.14, 5.16, and 5.17 of

the Solicitation. Advanced Onion’s description of IEA’s performance under IEA’s Task

Order with the WHS, however, does not indicate that Advanced Onion anticipated that

the contract awarded under the Solicitation would or could be modified to entail

performing end-to-end processing of DoD’s CE program, as was contemplated in

Modification No. P00002.

Additionally, the proposals of Xcelerate Solutions, Sayres and Associates

Corporation, and ANASEC, Inc. did not address “end-to-end processing of CE Alerts for

entire DoD enterprise population.” Xcelerate Solutions’ proposal primarily addressed the

[redacted]. Sayres and Associates Corporation’s proposal discussed its performance

under [redacted], although it did not include a proposed plan addressing how Sayres and

Associates Corporation might administer the entire DoD CE program under Section 5.16

41

of the Solicitation. ANASEC, Inc.’s proposal did note that the DoD CE program was

evolving, but its proposal only stated that it [redacted]. (emphasis added). Additionally,

none of the four proposals mentioned developing tracking tools to analyze data, policies,

agenda, procedures, strategies, and training programs of the DoD CE program. The

court, therefore, disagrees with the defendant’s position that the offerors’ proposals

indicated that the offerors anticipated that the contract awarded under the Solicitation

could or would be modified to include the end-to-end operation of the DoD CE program.

Thus, by issuing an out-of-scope modification to Xcelerate Solutions’ Contract, the

DSS violated CICA’s requirement of “full and open competition through the use of

competitive procedures . . . .” 10 U.S.C. § 2304(a)(1)(A); see, e.g., AT& T Commc’ns, Inc.

v. Wiltel, Inc., 1 F.3d at 1205; CCL, Inc. v. United States, 39 Fed. Cl. at 791. Accordingly,

the DSS’ actions were not in accordance with the law. See 5 U.S.C. § 706(2)(A); see also

Cardinal Maint. Serv., Inc. v. United States, 63 Fed. Cl. at 110; CCL, Inc. v. United States,

39 Fed. Cl. at 791. Having found that the DSS violated CICA, the court considers whether

IEA is entitled to the relief that it seeks.

Initially, IEA requested that this court enter preliminary and permanent injunctions

“enjoining Defendant from procuring analytical and policy development support services

for the DoD CE Program under Xcelerate’s PMSO-I contract, or any other non-

competitively-awarded task order or contract . . . until such time as an appropriate

competitive procurement is conducted under applicable federal law and regulation and

an award made pursuant thereto . . . .” After denying the temporary restraining order on

January 3, 2018, the court turns to protestor’s request for a permanent injunction.

As discussed above, this court has jurisdiction to award injunctive relief pursuant

to 28 U.S.C. § 1491(b)(2). In Centech Group, Inc. v. United States, the Federal Circuit set

out the test for a permanent injunction, stating:

To determine if a permanent injunction is warranted, the court must

consider whether (1) the plaintiff has succeeded on the merits of the

case; (2) the plaintiff will suffer irreparable harm if the court withholds

injunctive relief; (3) the balance of hardships to the respective parties

favors the grant of injunctive relief; and (4) the public interest is served

by a grant of injunctive relief.

Centech Grp., Inc. v. United States, 554 F.3d at 1037 (citing PGBA, LLC v. United States,

389 F.3d 1219, 1228-29 (Fed. Cir. 2004) (citing Amoco Prod. Co. v. Vill. of Gambell,

Alaska, 480 U.S. 531, 546 n.12 (1987))); see also Nat’l Steel Car, Ltd. v. Canadian Pacific

Ry., Ltd., 357 F.3d 1319, 1325 (Fed. Cir.) (finding that a plaintiff who cannot demonstrate

actual success on the merits cannot prevail on its motion for permanent injunctive relief),

reh’g and reh’g en banc denied (Fed. Cir. 2004); Iron Bow Techs., LLC v. United States,

132 Fed. Cl. 346, 355 (2017); Remington Arms Co., LLC v. United States, 126 Fed. Cl.

218, 232 (2016); MVS USA, Inc. v. United States, 111 Fed. Cl. 639, 649 (2013); CW Gov’t

Travel, Inc. v. United States, 110 Fed. Cl. at 494; Contracting, Consulting, Eng’g LLC v.

United States, 104 Fed. Cl. at 34 (citing Centech Grp., Inc. v. United States, 554 F.3d at

42

1037) (citation omitted). Success on the merits has been said to be “the most important

factor for a court to consider when deciding whether to issue injunctive relief.” Dellew

Corp. v. United States, 108 Fed. Cl. 357, 369 (2012) (citing Blue & Gold Fleet, L.P. v.

United States, 492 F.3d at 1312). While success on the merits is necessary, it is not

sufficient for plaintiff to establish that it is entitled to injunctive relief. See Limco Airepair,

Inc. v. United States, 130 Fed. Cl. at 550-51 (“However, while success upon the merits is

necessary, it is not sufficient alone for a plaintiff to establish that it is entitled to injunctive

relief.” (citation omitted)); Contracting, Consulting, Eng’g LLC v. United States, 104 Fed.

Cl. at 353 (“Although plaintiff’s entitlement to injunctive relief depends on its succeeding

on the merits, it is not determinative because the three equitable factors must be

considered, as well.”) (citing PGBA, LLC v. United States, 389 F.3d at 1228-29). The four

factors are to be considered collectively, rather than individually, such that

“[n]o one factor, taken individually, is necessarily dispositive. . . . [T]he

weakness of the showing regarding one factor may be overborne by the

strength of the others.” FMC Corp. [v. United States], 3 F.3d [424] at 427

[(Fed. Cir. 1993)]. Conversely, “the absence of an adequate showing with

regard to any one factor may be sufficient” to deny injunctive relief. Id.

Sheridan Corp. v. United States, 94 Fed. Cl. 663, 668 (2010); see also Wallace Asset

Mgmt., LLC v. United States, 125 Fed. Cl. 718, 727 (2016); Amidon, Inc. v. United States,

124 Fed. Cl. 517, 522 (2015).

In the above-captioned bid protest, IEA has established success on the merits by

demonstrating that the DSS acted contrary to law when the DSS issued an out-of-scope

modification to Xcelerate Solutions’ Contract. Regarding the second factor, whether or

not the protestor will suffer irreparable harm if injunctive relief is not granted, “[w]hen

assessing irreparable injury, ‘[t]he relevant inquiry in weighing this factor is whether

plaintiff has an adequate remedy in the absence of an injunction.’” Insight Sys. Corp. v.

United States, 110 Fed. Cl. 564, 582 (2013) (quoting Magellan Corp. v. United States, 27

Fed. Cl. 446, 447 (1993)); see also Iron Bow Techs., LLC v. United States, 132 Fed. Cl.

at 358 (citing Heritage of Am., LLC v. United States, 77 Fed. Cl. 66, 78, recons. denied,

77 Fed. Cl. 81 (2007); Rush Constr., Inc. v. United States, 117 Fed. Cl. 85, 101 (2014);

CW Gov’t Travel, Inc. v. United States, 110 Fed. Cl. at 494; Overstreet Elec. Co. v. United

States, 47 Fed. Cl. 728, 743 (2000). “The Court of Federal Claims has repeatedly held

that a protester suffers irreparable harm if it is deprived of the opportunity to compete

fairly for a contract.” CW Gov’t Travel, Inc. v. United States, 110 Fed. Cl. at 494 (citing

CRAssociates, Inc. v. United States, 95 Fed. Cl. 357, 390-91 (2010); Serco, Inc. v. United

States, 81 Fed. Cl. at 501-02; and Impresa Construzioni Geom. Domenico Garufi v.

United States, 52 Fed. Cl. 826, 828 (2002)); see also Veterans Contracting Grp., Inc. v.

United States, 133 Fed. Cl. 613, 623 (2017) (“The ‘[d]enial of the opportunity to compete

for a contract can constitute irreparable harm.’” (alteration in original) (quoting Miles

Constr., LLC v. United States, 108 Fed. Cl. 792, 806 (2013) (citing Elec. On–Ramp, Inc.

v. United States, 104 Fed. Cl. 151, 169 (2012); NetStar–1 Gov’t Consulting, Inc. v. United

States, 101 Fed. Cl. 511, 530 (2011), aff’d, 473 F. App’x 902 (Fed. Cir. 2012)));

Remington Arms Co., LLC v. United States, 126 Fed. Cl. at 232 (explaining that the loss

43

of potential work and profits from a government contract constitutes irreparable harm);

BINL, Inc. v. United States, 106 Fed. Cl. 26, 48 (2012) (“Irreparable harm is established

by a lost opportunity to fairly compete.”); HP Enter. Servs., LLC v. United States, 104 Fed.

Cl. at 245 (citing several cases); Magnum Opus Techs., Inc. v. United States, 94 Fed. Cl.

512, 544 (2010) (“‘A lost opportunity to compete in a fair competitive bidding process for

a contract is sufficient to demonstrate irreparable harm.’” (citations omitted)), motion to

amend denied, 94 Fed. Cl. 553 (2010). The loss of a valuable business opportunity

“deriving from a lost opportunity to compete in a fair competitive bidding process for a

contract,” can be sufficient to constitute irreparable harm. See Overstreet Elec. Co. v.

United States, 47 Fed. Cl. at 744 (citing United Int’l Investigative Servs., Inc. v. United

States, 41 Fed. Cl. 312, 323 (1998) (“[T]he opportunity to compete for a contract and

secure any resulting profits has been recognized to constitute significant harm.”)); see

also KWR Constr., Inc. v. United States, 124 Fed. Cl. 345, 363 (2015) (agreeing with

protestor that the lost opportunity to compete for a future contract will cause irreparable

harm); Impresa Construzioni Geom. Domenico Garufi v. United States, 52 Fed. Cl. at

828. According to a judge of this court, “[t]he court has repeatedly held that ‘the loss of

potential profits’ from a government contract constitutes irreparable harm.” BINL, Inc. v.

United States, 106 Fed. Cl. at 49 (quoting Furniture by Thurston v. United States, 103

Fed. Cl. 505, 520 (2012) (citing BayFirst Sols., LLC v. United States, 102 Fed. Cl. 677,

696 (2012))); see also MORI Assocs., Inc. v. United States, 102 Fed. Cl. 503, 552-53

(2011).

IEA argues that its lost opportunity to compete and continued loss of its “existing

team of experienced Personnel Security Analysts” constitutes irreparable harm. The

defendant, however, contends that IEA’s loss of employees is not irreparable because

IEA does not assert its lost employees are “irreplaceable,” but only that the lost employees

cannot be replaced within a reasonable period of time. The defendant also asserts that

IEA’s loss “is purely monetary and thereby not irreparable.” (emphasis in original).

Nevertheless, if performance of Contract Line Item Numbers 2005, 3005, and 4005 in

Modification No. P00002 of Xcelerate Solutions’ Modified Contract is not enjoined, IEA

will suffer irreparable harm because IEA will have lost an opportunity to compete for the

DoD CE program work contained in Contract Item Line Numbers 2005, 3005, and 4005

in Modification No. P00002. See Cardinal Maint. Serv., Inc. v. United States, 63 Fed. Cl.

at 110 (“In this case, Cardinal lost the opportunity to compete on a level playing field for

the contracts awarded to Navales and Choe. In addition, it was excluded from this bidding

process because of the government’s violation of CICA. As a consequence, Cardinal has

shown irreparable injury sufficient to satisfy the requirement for a permanent injunction.”).

According to IEA, the balance of hardships weighs in its favor because “there

would be no hardship to the Agency if it were unable to authorize (and/or continue)

performance” of Contract Line Item Numbers 2005, 3005, and 4005 in Modification No.

P00002 of Xcelerate Solutions’ Modified Contract because “the Government could

continue obtaining the services under IEA’s existing task order at approximately the same

price” and “the Government could compete the work,” which “would result in the best

value for the Government.” The defendant contends that “[e]ven assuming DSS could

purchase the services” under IEA’s Task Order with the WHS, which is a “point we [the

44

defendant] do not concede,” the “DSS should not have to move backwards by using a

contract vehicle (the WHS Contract) that DSS [a different organization within the DoD]

contract personnel cannot administer.” The defendant also asserts that obtaining the DoD

CE program services under IEA’s Task Order would “defy” the DoD’s realignment of its

CE program. Therefore, if enjoined, the defendant alleges that the government will have

to either “(1) go without certain Continuous Evaluation services (while an expedited ‘final’

procurement is performed), or (2) execute an expedited short-term procurement.”

According to the defendant, the “DSS’s first option (forego services) is an obvious national

security issue—failure to perform Continuous Evaluation tasks could result in personnel

maintaining their clearance despite derogatory information having been identified.” The

defendant also claims its second option of conducting “an expedited competition for a

short-term ‘bridge’ contract would result in some gap in Continuous Evaluation

services . . . .”

The declaration which the defendant relies upon to support its claim that forgoing

CE services for any period of time would be an “obvious national security issue” is a

declaration signed by Ashley D. Maddox, who states in her declaration that she is

employed by the DSS “as a Supervisory Contract Specialist, serving as a Contracting

Officer.” 21 In her declaration, Ms. Maddox states:

DSS’s first option (forego services) would be a tremendous hardship

because it would cause a national security issue in that the failure to timely

complete Continuous Evaluation tasks could result in personnel maintaining

their clearance despite derogatory information having been identified.

21 In its motion for judgment on the Administrative Record and in its reply, the defendant

did not cite to the Administrative Record when discussing the “obvious national security

issue” the DSS would be presented with if this court were to enjoin performance of

Contract Line Item Numbers 2005, 3005, and 4005 in Modification No. P00002 of

Xcelerate Solutions’ Contract. Although APA review is to be applied to an agency’s

decision based on the record the agency presents to the court, the court may supplement

the administrative record when omission of the supplemental material precludes effective

judicial review. See AugustaWestland N. Am., Inc. v. United States, 880 F.3d 1326, 1331-

32 (Fed. Cir. 2018); see also Axiom Res. Mgmt., Inc. v. United States, 564 F.3d at 1380.

In this case, the defendant submitted the declaration signed by Ms. Maddox to the court

as an attachment to its reply to its motion for judgment on the Administrative Record. The

declaration signed by Ms. Maddox is the only document presented by the defendant

which suggests that enjoining the DoD CE program for any period of time could be a

national security issue. Because the Administrative Record did not contain any

information regarding the impact an injunction would have on national security, omission

of the declaration signed by Ms. Maddox would have precluded the court from effectively

considering whether a permanent injunction is warranted in the above-captioned protest.

Therefore, the court permitted the declaration signed by Ms. Maddox to be considered by

the parties and the court.

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DSS’s second option (conduct a short-term procurement, or “bridge”

contract) would be a tremendous hardship because it would also cause a

gap (albeit, likely shorter) in Continuous Evaluation tasks that could result

in personnel maintaining their clearance despite derogatory information

having been identified. DSS’s second option has the additional negative

result that DSS will have to perform three contract actions for one set of

services (modification P00002, interim contract, final contract).

The declaration signed by Ms. Maddox states only that the first option would be a

tremendous hardship, and without much by the way of specifics, not a national security

impact, and that if the second option of a bridge contract or a short-term procurement is

to be used would be a tremendous hardship and “could result in personnel maintaining

their clearance despite derogatory information having been identified,” again with not

much by way of specifics. In this instance, the defendant, although expressing concern,

did not invoke a national security claim or argue very forcefully that dire consequences

would occur if an injunction was issued or as to a national security impact. IEA’s counsel

of record, however, indicated at the January 18, 2018 oral argument, IEA would be willing

to perform a bridge contract while the DSS competed the out-of-scope work contained in

Modification No. P00002 of Xcelerate Solutions’ Contract with the DSS. Consequently,

the balance of the hardships incurred if Contract Line Item Number 2005, 3005, and 4005

in Modification No. P00002 of Xcelerate Solutions’ Contract were enjoined weighs in favor

of IEA.

Regarding the public interest factor, “‘[t]he public interest in honest, open, and fair

competition in the procurement process is compromised whenever an agency abuses its

discretion.’” CW Gov’t Travel, Inc. v. United States, 110 Fed. Cl. at 495 (quoting PGBA,

LLC v. United States, 57 Fed. Cl. 655, 663 (2003)); see also Torres Advanced Enter.

Sols., LLC v. United States, 133 Fed. Cl. 496, 534 (2017); Cohen Fin. Servs., Inc. v.

United States, 110 Fed. Cl. 267, 289 (2013); United Int’l Investigative Servs., Inc. v. United

States, 41 Fed. Cl. at 323 (“[T]he public has a strong interest in preserving the integrity of

the procurement process.”) (citing Parcel 49C Ltd. P’ship v. United States, 31 F.3d 1147,

1153 (Fed. Cir. 1994)); Am. Safety Council, Inc. v. United States, 122 Fed. Cl. 426, 444

(2015) (holding that “the public interest will be served by an injunction by preserving the

integrity of the procurement process”); Applied Bus. Mgmt. Sol., Inc., LLC v. United

States, 117 Fed. Cl. 589, 608 (2014); BINL, Inc. v. United States, 106 Fed. Cl. at 49 (“With

regard to the public interest, it is well-settled that there is a public interest in remedying

violations of law.”). An important public interest is served through conducting “honest,

open, and fair competition” under the FAR, because such competition improves the

overall value delivered to the government in the long term. See CW Gov’t Travel, Inc. v.

United States, 110 Fed. Cl. at 495. “[T]he public interest is served by injunctive relief

where the court has concluded that the government violated an applicable regulation and

related provisions in the solicitation, and ‘maintenance of the integrity of the procurement

process weighs heavily in favor of granting a permanent injunction.’” Q Integrated Cos.

LLC v. United States, 126 Fed. Cl. 124, 147 (quoting Springfield Parcel C, LLC v. United

States, 124 Fed. Cl. 163, 193 (2015)), appeal dismissed, 691 F. App’x 906 (Fed. Cir.

2016).

46

IEA contends that awarding a permanent injunction serves the public interest

because the integrity of the federal procurement process will be preserved if the DSS is

not permitted to continue obtaining work related to the DoD CE program under

Modification No. P00002. Additionally, according to IEA, “an injunction that requires re-

solicitation may result in a lower cost to taxpayers for the work.” Conversely, the

defendant asserts that the public interest would be furthered if the court did not issue an

injunction because even temporarily halting the DoD CE program would allow reported

derogatory information to go unaddressed. Even though Advanced Onion was not

awarded the contract issued under the Solicitation, the defendant also alleges that the

integrity of the procurement process would not be harmed because “IEA, through the

prime contractor Advanced Onion, had the opportunity to compete for the PSMO-I

Contract that DSS later modified.”

In this protest, the integrity of the federal procurement process is served by

enjoining the DSS’ out-of-scope modification. Enjoining Contract Line Item Numbers

2005, 3005, and 4005 in Modification No. P00002 requires the DSS to satisfy CICA’s full

and open requirements, as the DSS should have and could have done when it originally

sought to obtain the out-of-scope work prescribed by Contract Line Item Numbers 2005,

3005, and 4005 from Xcelerate Solutions. In this instance, an injunction will promote the

integrity of the procurement process by holding the government accountable when it takes

actions that are contrary to law and may result in cost-savings for the government. As

discussed above, Ms. Maddox’s declaration is insufficient in the case of this modification

to outweigh the public’s interest in favor of a fair and open competition. Consequently, the

four factors for injunctive relief weigh in favor of granting a permanent injunction enjoining

the performance of Contract Line Item Numbers 2005, 3005, and 4005 in Modification

No. P00002 to the Xcelerate Solutions’ Contract.

Finally, IEA requested in its complaint that this court “enter an order directing

Defendant to acquire analytical and policy development support for the DoD CE Program

through the previously competed and competitively awarded task order held by IEA until

such time as Defendant makes another competitive award of a contract for such services

as required under applicable federal law and regulation . . . .” IEA does not address its

request in its motion for judgment on the Administrative Record. Defendant argues that,

while the court may enjoin Modification No. P00002, the court may not “enjoin the agency

from taking lawful actions in the future.” Although the court has enjoined performance of

the out-of-scope work in Modification No. P00002, the court does not instruct DSS to

extend IEA’s Task Order. See ManTech Telecomms. & Info. Sys. Corp. v. United States,

49 Fed. Cl. at 79; CW Gov’t Travel, Inc. v. United States, 46 Fed. Cl. 554, 559 (2000)

(citing Parcel 49C Ltd. P’ship v. United States, 31 F.3d at 1153; and Scanwell Lab., Inc.

v. Shaffer, 424 F.2d at 869).

CONCLUSION

Accordingly, because IEA has demonstrated success on the merits and the

balance of the equitable factors weigh in IEA’s favor, the DSS is permanently enjoined

47

from obtaining “DoD Continuous Evaluation Mission support increase/further definition in

accordance with the updated Performance Work Statement Part 5, executed in P00002”

under Contract Line Item Numbers 2005, 3005, and 4005 in Modification No. P00002 to

Xcelerate Solutions’ Contract, Contract No. HS0021-16-C-0006. Protestor’s motion for

judgment on the Administrative Record is GRANTED. Defendant’s motion to dismiss is

DENIED. Defendant’s motion for judgment on the Administrative Record is DENIED.

Defendant-intervenor’s motion for judgment on the Administrative Record is DENIED. The

Clerk of the Court shall enter JUDGMENT consistent with this opinion.

IT IS SO ORDERED.

s/Marian Blank Horn

MARIAN BLANK HORN

Judge

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