Fisher Sand & Gravel Co. v. United States

In the United States Court of Federal Claims

No. 19-615C

(Originally filed: May 21, 2019)

(Re-issued: May 29, 2019) 1

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FISHER SAND & GRAVEL CO.,

Plaintiff, Post-award bid protest; CICA

stay override; Urgent and

v. compelling circumstances;

Determination and finding;

THE UNITED STATES, Reilly Factors; AFARS

5133.104(b)(a)(A); National

Defendant, emergency; National

Security.

and

SLSCO LTD.,

Intervenor.

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Scott R. Sleight, Seattle, WA, for plaintiff. Elizabeth W. Perka, of

counsel.

Anthony F. Schiaveti, Trial Attorney, United States Department of

Justice, Civil Division, Commercial Litigation Branch, Washington, DC,

with whom was Douglas K. Mickle, Assistant Director, for defendant.

David Cooper, Parag J. Rawal, Barbara Hebel, Katherine D. Denzel, Blake

M. Hedgecock, and Alexandria Tramel, U.S. Army Corps of Engineers, of

counsel.

David R. Hazelton, Washington, DC, with whom were Kyle R.

Jefcoat, Dean W. Baxtresser, and Chase A. Chesser, for intervenor.

1

This order was originally issued under seal to afford the parties an

opportunity to propose redaction of protected information. The parties

agreed that no redactions were necessary. One erratum has been corrected.

ORDER FOR JUDGMENT

BRUGGINK, Judge.

Plaintiff is a bidder on a solicitation by the Army Corps of Engineers

(“COE”) to contract for the construction of 46 miles of border fencing in

New Mexico. Plaintiff did not receive the award; instead it was given to

intervenor, SLSCO, on April 9, 2019. Plaintiff filed a timely protest at the

Government Accountability Office (“GAO”) on April 18, triggering the

Competition in Contracting Act’s (“CICA”) automatic 100-day stay of

contract performance. 31 U.S.C. § 3553(d)(3)(A) (2012). Pursuant to 31

U.S.C. § 3353(d)(3)(C) (2012), COE exercised its authority to override the

stay and continue with contract performance. This is an action challenging

that override decision. Pending are the parties’ cross motions for judgment

on the administrative record. 2 Oral argument was held on May 16, 2019.

At the conclusion of oral argument, the court announced that it would deny

plaintiff’s motion for judgment on the administrative record and grant

defendant’s and intervenor’s cross motions.

FACTUAL & PROCEDURAL BACKGROUND

On February 15, 2019, the President issued a proclamation declaring

a national emergency concerning the security of the southern border of the

United States. The proclamation recites that the “current situation at the

southern border presents a border security and humanitarian crisis that

threatens core national security interests and constitutes a national

emergency.” Administrative Record (“AR”) at 14. The proclamation

authorizes the use of armed forces to assist other elements of the government

to secure the border. In an undated (but presumably executed in March

2019) Department of Homeland Security (“DHS”) memo to the Department

of Defense (“DOD”), DHS asked for assistance from the Army in

constructing fencing in specific high-risk sectors of the border, all associated

with intense drug smuggling activity. See 10 U.S.C. § 284 (2012)

(authorizing DOD to provide “support for the counterdrug activity or

2

Intervenor also filed a motion to dismiss for lack of standing. SLSCO

notified the court that it withdrew that motion during oral argument, and we

are satisfied that plaintiff has the requisite economic interest in the outcome

of this proceeding to grant this court jurisdiction to hear the matter.

2

activities to counter transnational organized crime” to any other federal,

state, local, tribal, or foreign law enforcement agency). The priority areas

set out in the memo were Yuma and Tucson (in Arizona), El Centro (in

California), and El Paso (in New Mexico).

In response, the Assistant Secretary of Defense for Homeland Defense

and Global Security sought and received authority from the Acting Secretary

of Defense to immediately shift funds for the implementation of Option One,

which called for construction of fencing along 11 miles of the border near

Yuma and 46 miles near El Paso. The COE was designated as the

construction agent with a budget of up to $1 billion.

On April 4, 2019, relying on Federal Acquisition Regulation (“FAR”)

part 6.302.2, the COE Senior Contracting Official for the Fort Worth District

announced an intent to use an “Undefinitized Contract Action” (“UCA”) to

contract for the construction of the El Paso portion of the fencing. 3 It would

be a design and build contract. The effect was to limit dramatically

competitive procedures by using less formal letter contracts instead of the

more formal definitized contract process. Nevertheless, because COE had

recently competed (July 2018, amended March 27, 2019) and put in place

two prequalified contractor lists, consistently with CICA procedures and

DFARS regulations, the COE had a list of potential building contractors to

consult. 4 On March 28, 2019, COE sent all nine pre-qualified contractors a

solicitation for the El Paso work in the form of 10 narrative questions and a

contract line item number structure for the proposed contract. The questions

were listed in descending order of importance. The solicitation stated that

responses to the questions would be evaluated for “reasonableness, logic, and

risk.” AR at 68. COE promised to “select the most advantageous technical

approach that meets its mission needs.” Id.

Six of the prequalified companies responded to the solicitation. The

agency performed an initial review of the offerors’ responses to the

solicitation’s questions and ranked them according to its own view of the

technical merits that those answers revealed. The Source Selection

Authority (“SSA”) decided that only two of the six, SLSCO and another

3

A UCA, also known as a “letter contract,” allows for award while specific

terms and specifications are negotiated and memorialized in writing. See

Defense Federal Acquisition Regulation Supplement (“DFARS”) § 217.4.

4

DFARS § 236.7272.

3

contractor, not plaintiff, were highly enough rated to be evaluated as

prospects. The SSA selected SLSCO, the intervenor, as the most qualified

and the only firm with which it would negotiate. Permission was sought,

and granted on April 5, 2019, however, to proceed to make a commitment to

SLSCO, even before concluding price negotiations, on a sole source basis.

The Army issued a justification and approval (“J&A”) for less than full and

open competition on April 8, 2019, authorizing the COE to proceed with

award to intervenor on a sole source basis. The J&A stated that no further

time could be spent competing and negotiating the contract if the work was

to begin this fiscal year and be completed within the 18-month delivery

schedule anticipated by DHS and DOD. See AR at 36. A traditional, fully

competed approach would take, in the Army’s estimation in the J&A, nine

to twelve months just to make an award. Id. In the face of a declared

national emergency, that time could not be spent. Id.

Fisher became aware that SLSCO would be given the award on April

9, 2019, via a DOD press release. On April 18, 2019, Fisher filed its GAO

protest, triggering the automatic stay. On April 24, the agency made a

determination and finding (“D&F”) that contract performance should

continue notwithstanding the GAO protest. AR at 2-13. The D&F states

that “urgent and compelling circumstances that significantly affect interests

of the United States will not permit waiting for the decision of the

Comptroller General concerning the Protest” and cites 31 U.S.C. §

3553(d)(3)(C). AR at 11. It goes on to detail the government’s view that

the border crisis and cost in human capital outweighed, in the Army’s view,

the minimal effect to the protestor, which the D&F concludes has little

chance of winning its protest at GAO. We will discuss the D&F more fully

below.

Plaintiff filed its complaint here, challenging the D&F as arbitrary,

capricious, and not in accordance with the law, on April 25, 2019. The court

convened a status conference on April 29, whereupon a schedule was set for

resolution of the merits on an expedited basis. Plaintiff thus forewent a

request for preliminary relief. On May 3, 2019, however, plaintiff filed a

motion requesting that the record be supplemented to include materials from

the Army’s consideration of Fisher’s protest of the Yuma contract at GAO.

Unlike the El Paso project, the COE did not execute an override for

the Yuma protest. Instead, on May 1, 2019, the agency confessed error in

the way it had handled the solicitation and notified GAO that it was

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terminating the awardee for convenience and resoliciting the work to include

plaintiff as a qualified offeror. The GAO protest was dismissed as moot

shortly thereafter. Plaintiff argued in its motion to supplement that the

agency’s decision to dismiss rather than override the stay in the Yuma protest

ought to be considered here as evidence of the Army’s irrationality in treating

like circumstances differently, i.e., because the Army did not need an

override for the Yuma protest, it did not need one for the El Paso work either.

After receiving expedited responses from the two opposing parties, we

denied plaintiff’s motion by order on May 16, 2019, finding the

circumstances of the two procurements different and thus concluding that the

Yuma materials were not necessary for effective judicial review in this case.

Fisher Sand & Gravel Co. v. United States, No. 19-615C, ECF No. 34 (Fed.

Cl. May 13, 2019) (unpublished order denying motion to supplement the

administrative record).

DISCUSSION AND CONCLUSION

The thrust of Fisher’s challenge to the override is that defendant failed

to meet the requirements of Army Federal Acquisition Regulation

Supplement (“AFARS”) 5133.104(b)(a)(A), which requires the Army to

“clearly address” the following four factors in a D&F overriding a CICA stay

on the basis of urgent and compelling circumstances:

1) Whether significant adverse consequences will necessarily

occur if the stay is not overridden;

2) Whether reasonable alternatives to the override exist that

would adequately address the circumstances presented;

3) How the potential costs of proceeding with the override,

including costs associated with the potential that GAO might

sustain the protest, compared to the benefits associated with the

approach being considered for addressing the agency’s needs;

and

4) The impact of the override on competition and the integrity

of the procurement system.

These factors are drawn directly from this court’s opinion in Reilly’s

Wholesale Produce v. Untied States, 73 Fed. Cl. 705, 711 (2006) (surveying

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CICA stay override cases). 5 Plaintiff alleges that the agency failed to

adequately address any of the factors and, as to the fourth, failed to address

it at all. 6 Our review, as in any bid protest, is one for rationality and

illegality. 28 U.S.C. § 1491(b)(2) (2012).

The D&F is a 12-page document, which is supported by over 300

pages of enclosures. The enclosures include: the President’s declaration of

national emergency; DHS’s request to DOD for help to combat drug

smuggling at the border; DOD’s and the Army’s memoranda in response

approving such help; El Paso project procurement documents; and the CO’s

analysis of 100-day construction delay costs.

The D&F itself begins with a background recital of the circumstances

leading to its issue and the El Paso procurement’s history. Section 4, Effect

and Impact of Override, begins the required analysis. There, the agency

states that proceeding with the override will allow SLSCO to begin

construction this year. The “impact on contractors” is concluded to be

“minimal” because there is no incumbent contract and because the Army

views Fisher’s likelihood of success at GAO to be low. AR 8. The next

section of the D&F more fully considers the merits of plaintiff’s protest at

GAO and concludes, like the section before it, that plaintiff is unlikely to be

successful at GAO, stating that most of its grounds for protest were late. AR

5

We note that the Reilly factors, although often relied on in the review of

override decisions based on urgent and compelling circumstances, are not

mandatory legal requirements in every instance. See, e.g., PMTech, Inc. v.

United States, 95 Fed. Cl. 330, 345 (2010) (noting that the standard of review

is arbitrary and capricious, not whether the agency has ticked off the list of

Reilly factors). As noted by plaintiff, however, the Army has purported to

bind itself to those Reilly factors by incorporating them into its supplemental

acquisition regulations. As stated later, we do not reach the issue of whether

this AFARS provision is binding and enforceable by plaintiff because we

find the D&F adequate regardless.

6

Intervenor argues, inter alia, that the D&F should be considered as meeting

the alternative standard for an override: “best interests of the United States,”

which do not implicate the Reilly factors. See 31 U.S.C. §

3553(d)(3)(C)(i)(I). We do not reach that question, however, because it is

clear that the D&F is authorizing the stay on the basis of urgent and

compelling circumstances.

6

8-10.

Section 7, Basis for the Override, cites the national emergency at the

southern border as a “security and humanitarian crisis” threatening core

national security interests. AR 11 (quoting the President’s Declaration of

National Emergency). Without the override, the Army believes that it is

“highly unlikely” that construction would be undertaken this fiscal year, and

thus the 18-month delivery schedule would be lost. Id. It goes on to

explain that DOD’s allocation of $1 billion for the border barrier project

expires this fiscal year. Failure to timely use those funds would negatively

impact border security and military operational readiness, warns the D&F.

Id.

Section 8, Reasonable Alternatives, recites that the COE Fort Worth

District Director of Contracting, “considered all forms of alternative

contractual mechanisms to bridge the gap during the pendency of the

Protest,” but found that only the letter contract used here could meet the

government’s needs. Id. The Director also indicates in this section that a

review of historical average timelines for negotiating and awarding contracts

of this magnitude reveals that 9-12 months would be necessary, which is

antithetical to the government’s goals of beginning construction this year and

finishing within 18 months. Id.

The next, and final, section considers the harm to the government

without an override. The gist is that the government’s ability to complete

the work in the 18-month timeline is a significant risk to its mission to secure

the border. The Army cites the need for physical barriers to stem the tide of

narcotics and individuals trafficked over the border. The El Paso sector is

cited as a particularly active area of smuggling across the border with “at

least three transnational criminal organizations” operating in the sector. AR

12. Serious amounts of narcotics are listed as having been interdicted in this

sector (15,000 lbs of marijuana, 342 lbs of cocaine, 40 lbs of heroin and 200

lbs of methamphetamines). Id. The delay imposed by the CICA stay

would cost roughly $4 million to the government, but more significant than

monetary losses, the D&F states that the risk to human lives and wellbeing

presented by the unsecured border is “immeasurable.” Id. Thus, “the cost

to the United States should GAO sustain the Protest, however unlikely,

cannot adequately or fully be measured in dollars and cents.” Id.

The D&F goes on to explain that the UCA contracting mechanism

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used for the El Paso project is such that “only 50% of the required funding

can be obligated at time of contract award. The remaining 50% of the

funding remains unobligated until a proposal is received from the contractor

and the UCA can be definitized into a Firm Fixed Price contract action.” Id.

at 12-13. The import of which is that the first 100 days of performance are

“critical to the success of the entire action” because the inability to definitize

the contract by the end of the fiscal year would threaten the entire project due

to the expiration of funds. Id. at 13.

We are satisfied that the D&F clearly lays out the agency’s

consideration of the significant adverse consequences for proceeding with

the stay in place. Plaintiff argues that the adverse consequences to border

security are only a potential and not a necessary result of the CICA stay. 7

This, Fisher argues, is insufficient to meet the test because the agency in the

D&F has not demonstrated an “immediate threat to health, welfare, or

safety.” AT&T Corp. v. United States, 133 Fed. Cl. 550, 556 (2017). We

disagree. The D&F explicitly cites large quantities of illicit narcotics that

have passed through the border area implicated in this procurement. We

will not second guess the executive’s conclusion that this presents an urgent

and compelling danger to the health and welfare of American citizens and

residents.

We are also satisfied that the agency has clearly addressed whether

there are reasonable alternatives to the override that would meet the

government’s needs. Given the timeline for this project and the specter of

the funds for it expiring, we find the agency’s conclusion rational, and we

will, again, not substitute our own judgment for that of the executive.

As to the third factor, the potential cost of the override compared with

proceeding without it, including the risk that GAO might sustain, we find

that, although some of the analysis is misplaced, the agency has met this

requirement in the D&F. The agency conducted a risk analysis of the delay

7

Plaintiff also argues that the potential loss of funds cannot provide the basis

for compelling circumstances because FAR part 6.301(c) instructs that

failure to properly plan or the expiration of funding is not a justification for

an agency proceeding without full and open competition. 48 C.F.R. §

6.301(c) (2018). We find this regulation inapposite as it is a limit on agency

authority to employ non-competitive procedures to procure goods and

services rather than the circumstances faced here, a stay override.

8

associated with the 100-day stay, finding that such a delay would cost

approximately $4 million. This analysis, while cogent and relevant to the

harm to the government posed by the stay, is not addressed to the cost to the

government if GAO sustains the protest and the agency is forced to

recompete the work. The Army did consider, however, the nonmonetary

costs associated with a stay of performance (humanitarian and border

security concerns) and found them too great to ignore. In the context of this

procurement, we find this sufficient. The D&F’s statement that the costs

associated with these problems are not strictly measurable in extra taxpayer

dollars should the agency be forced to recompete is rational.

The fourth factor, the impact on competition and the integrity of the

procurement system, is largely missing from the government’s calculus in

the D&F. Plaintiff finds this per se objectionable and a violation of

regulation that can only be remedied by enjoining or declaring insufficient

the agency’s D&F. Defendant and intervenor argue that the D&F as

adequate in this regard or that the fourth factor is not determinative here

because either the AFARS provision is not legally binding or because it is

merely procedural in nature and thus does not afford plaintiff the right to

substantive relief for a mere failure to follow it in a pro forma manner.

We note that that intervenor has argued that the AFARS’ adoption of

the Reilly factors is problematic because that provision is not the product of

notice and comment rulemaking. Plaintiff argues that it need not be because

it only supplements the already legally-promulgated provisions of the FAR.

Intervenor rejoins that enforcing that provision strictly against the Army

creates a substantive legal requirement, the same as the substantive

provisions of the FAR. Ultimately, we do not reach the issue because it is

unnecessary to our conclusion.

We find that the Army’s consideration of the merits of Fisher’s

underlying GAO protest sufficient in these circumstances to meet the fourth

Reilly prong and AFARS 5133.104. Under normal circumstances, the

agency would be required to consider whether CICA or other legal

requirements were being, in effect, thwarted by the issuance of an override.

Here, however, where an agency is faced with a declared national emergency

and has authorized use of non-competitive procurement procedures, the

calculus necessarily shifts. The public’s interest in a competitive

procurement is balanced against the agency’s need to address the national

emergency. Congress has already made the determination that the

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competitive procurement system is not overborne by the occasional need for

expediency by excepting from CICA’s competition requirements situations

in which agencies face urgent and compelling circumstances, including

overriding of the 100-day stay during a GAO protest.

Further, national security concerns must be considered by the court in

any bid protest. 28 U.S.C. § 1491(b)(3) (2012). Here, they are particularly

implicated by the President’s declaration. The bona fides of the national

emergency are assumed in this proceeding. As such, these concerns weigh

heavily in favor of the government’s conduct both on the merits of the protest

and the balancing of harms when considering whether equitable relief is

appropriate. As stated at the conclusion of oral argument, we find the

declaration of a national emergency to be the anvil that falls on the scale of

justice in favor of the government in these circumstances. It undergirds our

consideration of the reasonableness of the Army’s D&F and it suggests that

relief would not be appropriate even if we found a legal infirmity in the

override.

In sum, no relief can be granted. Plaintiff has not shown irrationality

nor illegality in the agency’s pursuit of an override nor has it established the

requisite balancing of the equities in its favor to merit relief. 8 That is why

we denied plaintiff’s motion for judgment on the administrative record and

granted the cross-motions of defendant and intervenor. Accordingly, the

Clerk of Court is directed to enter judgment for defendant and to dismiss the

complaint. No costs.

s/Eric G. Bruggink

Eric G. Bruggink

Senior Judge

8

We agree with defendant that, whether declaratory or injunctive relief is

the appropriate remedy, the court must consider the equities, including the

balance of harms, when making such a determination. See PGBA, LLC v.

United States, 389 F.3d 1219, 1228 (Fed. Cir. 2004) (citing Samuels v.

Mackell, 401 U.S. 66, 71-72 (1971) (holding that, in the context of state

prosecutions begun prior to the federal suit, where the declaratory relief

would have the same effect as injunctive, the same equitable principles must

be considered)). Here, they weigh in favor of the government due to the

national security crisis laid out by the President.

10