Amazon Web Services, Inc. v. United States

In the United States Court of Federal Claims

No. 19-1796C

(E-filed: March 6, 2020) 1

_________________________________

)

AMAZON WEB SERVICES, INC., )

)

Plaintiff, )

) Bid-Protest; Temporary Restraining

v. ) Order; Preliminary Injunction;

) Requirement of Security; RCFC 65.

THE UNITED STATES, )

)

Defendant, )

)

and )

)

MICROSOFT CORP., )

)

Intervenor-defendant. )

__________________________________ )

Kevin P. Mullen, Washington, DC, for plaintiff. J. Alex Ward, Daniel E. Chudd,

Sandeep N. Nandivada, Caitlin A. Crujido, Alissandra D. Young, Andrew S. Tulumello,

Daniel P. Chung, Theodore J. Boutrous, Jr., Richard J. Doren, and Eric D. Vandevelde, of

counsel.

Anthony F. Schiavetti, Trial Attorney, with whom appeared Joseph H. Hunt, Assistant

Attorney General, Robert E. Kirschman, Jr., Director, and Patricia M. McCarthy,

Assistant Director, Commercial Litigation Branch, Civil Division, United States

Department of Justice, Washington, DC, for defendant. Michael G. Anderson and

Benjamin M. Diliberto, Washington Headquarters Service & Pentagon Force Protection

Agency; and Tyler J. Mullen, Defense Information Systems Agency; of counsel.

1

This opinion was issued under seal on February 13, 2020. Pursuant to ¶ 4 of the ordering

language, the parties were invited to identify source selection, proprietary or confidential

material subject to deletion on the basis that the material was protected/privileged. The proposed

redactions were acceptable to the court. All redactions are indicated by brackets ([ ]).

Robert S. Metzger, Washington, DC, for intervenor-defendant. Jeffery M. Chiow, Neil

H. O’Donnell, Lucas T. Hanback, Stephen L. Bacon, Deborah N. Rodin, Cassidy Kim,

Eleanor M. Ross, Kathryn H. Ruemmler, Abid R. Qureshi, Roman Martinez, Anne W.

Robinson, Dean W. Baxtresser, Genevieve Hoffman, Riley Keenan, Margaret Upshaw, of

counsel.

OPINION AND ORDER

CAMPBELL-SMITH, Judge.

On January 22, 2020, plaintiff filed a motion for temporary restraining order

(TRO) and preliminary injunction (PI), pursuant to Rule 65 of the Rules of the United

States Court of Federal Claims (RCFC). 2 See ECF No. 130. In ruling on the motion, the

court has also considered: (1) the administrative record (AR), ECF No. 107 (notice of

filing the AR); 3 (2) intervenor-defendant’s response in opposition to plaintiff’s motion,

ECF No. 137; (3) defendant’s response in opposition to plaintiff’s motion, ECF No. 139;

and (4) plaintiff’s reply in support of its motion, ECF No. 144. The motion is ripe for

ruling, and the court deems oral argument unnecessary. For the following reasons,

plaintiff’s motion for a preliminary injunction is GRANTED.

I. Background

This protest action was filed on November 22, 2019. See ECF No. 1. The case

involves considerable detail, but for purposes of deciding this motion, the court will

relate only those details that are necessary to the instant analysis.

Plaintiff filed this action to protest the United States Department of Defense’s

(DOD) decision to award the Joint Enterprise Defense Infrastructure (JEDI) contract to

2

The court notes that RCFC 65 differentiates between preliminary injunctions (PI) and

temporary restraining orders (TRO) primarily on the basis of notice to the opposing parties.

Specifically, when the opposing party has notice, the relief requested is a PI. See RCFC 65(a).

When no notice is given, the relief requested is a TRO with a duration limited to fourteen days,

absent an extension. See RCFC 65(b). Although plaintiff has nominally requested both a PI and

a TRO, the court considers its motion as a request for a PI because defendant and intervenor-

defendant have each been afforded an opportunity to respond to plaintiff’s arguments. As such,

any separate request for a TRO is moot.

3

The administrative record (AR) in this case is comprised of an unusually large number of

files in a variety of formats, some of which were incompatible with filing through the court’s

case management/electronic case filing (CM/ECF) system. The court, therefore, departed from

its usual practice of requiring defendant to file the AR through CM/ECF, and ordered defendant

to file the AR on encrypted external hard drives. See ECF No. 98 (order).

2

intervenor-defendant, under Solicitation No. HQ0034-18-R-0077 (solicitation). See id. at

1; ECF No. 130 at 1 (identifying the resulting contract as Contract No. HQ0034-20-D-

0001). As alleged by plaintiff in the complaint, the JEDI program is DOD’s “plan to

upgrade and consolidate its cloud computing infrastructure across [DOD], which would

enable [DOD] to employ ‘emerging technologies to meet warfighter needs’ and maintain

‘our military’s technological advantage.’” 4 Id. at 17 (citation omitted).

DOD issued the JEDI solicitation on July 26, 2018. Id. at 18. After reviewing

proposals, the source selection authority was to make an award determination on a best-

value basis. The source selection plan stated: “The objective of this source selection is,

through a competitive solicitation process, to select the Offeror whose proposed solution

for JEDI Cloud represents the best value to the Government.” See AR at 64340.

Following the evaluation process, DOD publicly announced, on October 25, 2019, that it

had awarded the JEDI contract to intervenor-defendant. See ECF No. 1 at 90.

In both its complaint and its motion for injunctive relief, plaintiff describes the

solicitation’s evaluation factors and alleges a host of errors in their application. See

generally, ECF No. 1, ECF No. 130-1. The factor most critical to the court’s present

analysis, however, is Factor 5, which addresses “the Offeror’s proposed approach to

application and data hosting.” AR at 151496, 151506. As part of the technical proposals

under Factor 5, the offerors were instructed to submit price proposals based on various

factual scenarios. See id. at 151496. The agency was then to evaluate the proposals for

each Price Scenario to determine whether the proposal was a “technically feasible

approach when considering the application and data hosting requirements in Section L for

this Factor and the specific scenario requirements in Attachment L-2.” Id. at 151506.

See also id. at 151496 (Section L requirements); id. at 198-217 (Attachment L-2 Price

Scenarios requirements).

Plaintiff’s allegations of improper evaluation analyzed in this opinion relate

specifically to Price Scenario 6, in which each offeror is instructed to propose prices on

facts related to its “Containerized Data Analysis Framework.” See ECF No. 130-1 at 16-

20; AR at 215. The Price Scenarios were revised through Amendment 005, which

4

Plaintiff offers the following definition of the term cloud computing:

“Cloud Computing” refers to a shared pool of configurable computing resources

(e.g., networks, servers, storage, applications, and services) that can be rapidly

provisioned and released with minimal management effort or service provider

interaction. Cloud computing is an alternative to traditional “on-premises”

information technology resources, which require users to plan, procure, manage,

and maintain physical computing resources (i.e., servers).

ECF No. 1 at 17.

3

instructed offerors to “[a]ssume that all data in these price scenarios is highly accessible

unless otherwise stated.” AR at 64310. The amended version of Price Scenario 6 did not

expressly state that the “highly accessible” assumption did not apply. See id. at 64327-

29. It did, however, use the similar term “highly available” in several instances. Id.

After DOD issued Amendment 005, an offeror sought the following clarification:

The Government has introduced a new term “highly accessible” without

definition. Could the government confirm that the term “highly accessible”

is defined as either “Online Storage” or “Nearline Storage” as defined in

Attachment J-8?

Id. at 64332. In response, DOD stated: “The term ‘Highly Accessible’ is meant to be

understood as online and replicated storage.” Id. (emphasis added).

The solicitation defines online storage as “[s]torage that is immediately accessible

to applications without human intervention.” Id. at 650. And it defines nearline storage

to mean “[s]torage not immediately available, but can be brought online quickly without

human intervention.” Id. The solicitation does not define the term “replicated storage,”

but plaintiff reads this to be a separate characteristic of the required storage from its

designation as online, based on its understanding of the term as a reference to “the

practice of storing data more than once so that there are multiple copies of the data.”

ECF No. 130-1 at 17. Neither defendant nor intervenor-defendant offers an alternative

definition for “replicated storage” in their responses. See ECF No. 137, ECF No. 139.

Plaintiff alleges that intervenor-defendant’s proposal under Factor 5, Price

Scenario 6 proposed [ ] storage rather than online storage, in contravention of the

solicitation requirement reflected in Amendment 005 and the subsequent DOD

clarification. See ECF No. 130-1 at 18. Intervenor-defendant’s proposal for Price

Scenario 6 proposes [ ] storage, see AR at 174754-57. And as defined in intervenor-

defendant’s proposal, [ ] storage is [ ] storage, [ ]. Id. at 173315.

In its source selection report, the Price Evaluation Board (PEB) stated that plaintiff

proposed online storage for Price Scenario 6, and that intervenor-defendant proposed [ ]

storage for Price Scenario 6. The PEB attributed the price difference between the two

proposals, in part, to this difference.

5.5.6.1. [Plaintiff] proposed a total price of $[ ] for Price Scenario 06.

Approximately [ ]% of [plaintiff’s] price before adjustments was in the

Storage category with a value of $[ ]. [Plaintiff’s] proposed discounting

strategy resulted in an adjustment of $[ ], or a [ ]% decrease in price. The

significant variance in price from [intervenor-defendant] was attributed

to a technical approach where [plaintiff] proposed their [ ] online storage

4

in so [sic] they could [ ]. A separate MFR was completed to document

their rationale and was identified in the IPR Memo.

5.5.6.2. [Intervenor-defendant] proposed a total price of $[ ] for Price

Scenario 06. Approximately [ ]% of [intervenor-defendant’s] price

before adjustments was in the Storage category with a value of $[ ].

[Intervenor-defendant’s] proposed discounting strategy resulted in an

adjustment of $[ ], or a [ ]% decrease in price. The significant variance

in price from [plaintiff] was attributed to the technical approach where

[intervenor-defendant] proposed their [ ] storage solution which meets

the technical feasibility requirements and offers a [ ] unit price.

Id. at 176363 (emphasis added). The crux of plaintiff’s argument on this point is that the

PEB erred in concluding that intervenor-defendant’s [ ] storage met “the technical

feasibility requirements,” because, pursuant to Amendment 005 and DOD’s clarification

thereof, offerors were required to propose online storage. ECF No. 130-1 at 17-18.

Plaintiff contends that as a result of intervenor-defendant’s “noncompliant storage

solution,” DOD “should have found [intervenor-defendant’s] technical approach

unfeasible, assigned a deficiency, and eliminated Microsoft from the competition.” Id. at

19.

For this reason, among others, plaintiff asks the court to issue a preliminary

injunction, “to prevent Defendant United States from proceeding under Contract No.

HQ0034-20-D-0001, which was awarded under Solicitation No. HQ0034-18-R-0077-

0002 to [intervenor-defendant], until [plaintiff’s] protest is resolved.” ECF No. 130 at 1.

II. Legal Standards

A. Bid Protests

In its complaint, plaintiff invokes this court’s bid protest jurisdiction. See ECF

No. 1 at 15-16. This court’s bid protest jurisdiction is based on the Tucker Act, which

gives the court authority:

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

solicitation by a Federal agency for bids or proposals for a proposed contract

or to a proposed award or the award of a contract or any alleged violation of

statute or regulation in connection with a procurement or a proposed

procurement. . . . without regard to whether suit is instituted before or after

the contract is awarded.

28 U.S.C. § 1491(b)(1) (2012). The Tucker Act also states that the court may grant “any

relief the court considers proper . . . including injunctive relief.” 28 U.S.C. § 1491(b)(2).

5

The court’s analysis of a “bid protest proceeds in two steps.” Bannum, Inc. v.

United States, 404 F.3d 1346, 1351 (Fed. Cir. 2005). First, the court determines,

pursuant to the Administrative Procedure Act standard of review, whether the “agency’s

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

with [the] law.” Glenn Def. Marine (ASIA), PTE Ltd. v. United States, 720 F.3d 901,

907-08 (Fed. Cir. 2013) (citing 28 U.S.C. § 1491(b)(4) (adopting the standard of 5 U.S.C.

§ 706)). If the court finds that the agency acted in error, the court then must determine

whether the error was prejudicial. See Bannum, 404 F.3d at 1351.

To establish prejudice, “a protester must show ‘that there was a substantial chance

it would have received the contract award but for that error.’” Alfa Laval Separation, Inc.

v. United States, 175 F.3d 1365, 1367 (Fed. Cir. 1999) (quoting Statistica, Inc. v.

Christopher, 102 F.3d 1577, 1582 (Fed. Cir. 1996)). “In other words, the protestor’s

chance of securing the award must not have been insubstantial.” Info. Tech. &

Applications Corp. v. United States, 316 F.3d 1312, 1319 (Fed. Cir. 2003). The

substantial chance requirement does not mean that plaintiff must prove it was next in line

for the award but for the government’s errors. See Sci. & Mgmt. Res., Inc. v. United

States, 117 Fed. Cl. 54, 62 (2014); see also 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.”). But plaintiff

must, at minimum, show that “had the alleged errors been cured, . . . ‘its chances of

securing the contract [would have] increased.’” Precision Asset Mgmt. Corp. v. United

States, 125 Fed. Cl. 228, 233 (2016) (quoting Info Tech., 316 F.3d at 1319).

Given the considerable discretion allowed contracting officers, the standard of

review is “highly deferential.” Advanced Data Concepts, Inc. v. United States, 216 F.3d

1054, 1058 (Fed. Cir. 2000). As the Supreme Court of the United States has explained,

the scope of review under the “arbitrary and capricious” standard is narrow. See

Bowman Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 285 (1974). “A

reviewing 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,” and “[t]he court is

not empowered to substitute its judgment for that of the agency.’” Id. (quoting Citizens

to Preserve Overton Park v. Volpe, 401 U.S. 402, 416 (1971)); see also Weeks Marine,

Inc. v. United States, 575 F.3d 1352, 1368-69 (Fed. Cir. 2009) (stating that under a highly

deferential rational basis review, the court will “sustain an agency action ‘evincing

rational reasoning and consideration of relevant factors’”) (citing Advanced Data

Concepts, 216 F.3d at 1058).

B. Injunctive Relief

Injunctive relief before trial is a “drastic and extraordinary remedy that is not to be

routinely granted.” Nat’l Steel Car, Ltd. v. Canadian Pac. Ry., Ltd., 357 F.3d 1319, 1324

6

(Fed. Cir. 2004) (citation omitted). As the United States Court of Appeals for the Federal

Circuit has held:

To determine if a permanent injunction is warranted, the court must consider

whether (1) the plaintiff has succeeded on the merits, (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 1029, 1037 (Fed. Cir. 2009) (citing PGBA,

LLC v. United States, 389 F.3d 1219, 1228-29 (Fed. Cir. 2004)). The court considers the

same factors in evaluating whether a preliminary injunction is warranted. See Am.

Signature, Inc. v. United States, 598 F.3d 816, 823 (Fed. Cir. 2010) (citations omitted).

The decision of whether injunctive relief is appropriate falls within the court’s discretion.

Dell Fed. Sys., L.P. v. United States, 906 F.3d 982, 991 (Fed. Cir. 2018) (citing PGBA,

389 F.3d at 1223).

III. Analysis

A. Preliminary Injunction Factors

1. Likelihood of Success on the Merits

In order to succeed on the merits of its bid protest, plaintiff must demonstrate: (1)

that the “agency’s action was arbitrary, capricious, an abuse of discretion, or otherwise

not in accordance with [the] law,” Glenn Def., 720 F.3d at 907-08; and (2) that the error

was prejudicial, see Bannum, 404 F.3d at 1351.

a. Plaintiff Is Likely to Show Defendant Erred in Evaluating

Intervenor-Defendant’s Factor 5, Price Scenario 6

Plaintiff argues that it is likely to succeed on the merits with regard to its

allegations that the DOD improperly evaluated intervenor-defendant’s Price Scenario 6

based on a plain reading of the requirements and definitions in the solicitation, the

relevant amendment thereto, and the clarification issued by the DOD, as recited above.

More specifically, plaintiff alleges that intervenor-defendant’s Price Scenario 6 proposal

fails to comply with the requirement that storage be “highly-accessible,” a term defined

as “online and replicated storage.” AR at 64332. Had the DOD properly evaluated

intervenor-defendant’s proposal of [ ] storage in Price Scenario 6, according to plaintiff,

the DOD would have concluded that the proposal was “noncompliant,” and “should have

found [intervenor-defendant’s] technical approach unfeasible, assigned a deficiency, and

eliminated [intervenor-defendant] from the competition.” ECF No. 130-1 at 19.

7

As an initial matter, neither defendant nor intervenor-defendant dispute that the

solicitation required the proposals under Price Scenario 6 to include “highly-accessible,”

or online, storage. See ECF No. 139 at 27 (defendant stating that “[f]or Price Scenario 6,

[plaintiff] is correct that the solicitation did not specify a storage type, and that, under the

terms of Amendment 0005, offerors were to “‘[a]ssume that all data in these price

scenarios is highly accessible unless otherwise stated’”); ECF No. 137 at 18 (intervenor-

defendant arguing that its “proposed solution to Price Scenario 6 meets the [solicitation’s]

requirement for ‘highly accessible’ storage”).

Rather than dispute the applicable storage requirement, defendant makes two

arguments. First, defendant contends that plaintiff “seeks to elevate superficial labels

over technical performance,” and second, that if correct, plaintiff “would have been as

technically deficient as [intervenor-defendant], and so would be in no position to

complain of prejudice.” ECF No. 139 at 27. 5

With regard to its first argument, defendant claims that plaintiff “fails to recognize

that the storage that [intervenor-defendant] proposed for Price Scenario 6, despite parts of

it being marketed by [intervenor-defendant] as ‘[ ] storage,’ meets the solicitation

definition of ‘online storage’—that is, it is immediately accessible to applications without

human intervention.” Id. at 28. In support of this assertion, defendant cites to specific

features of intervenor-defendant’s proposal that, it argues, amount to immediate access,

but defendant does not identify any part of the record in which the DOD made such an

equivalence determination during the evaluation process. See ECF No. 139 at 28-29.

Defendant cites instead to the Technical Evaluation Board’s (TEB) Consensus

Report in which the TEB determines that intervenor-defendant’s Price Scenario 6 is

“technically feasible,” and argues that such a determination was within the DOD’s

discretion. See id. at 29. (citing AR at 151327-28). The cited section of the report,

however, does not discuss the application of the terms “highly accessible,” “highly

available,” “online,” or “nearline,” to intervenor-defendant’s proposal. See AR at

151327-28. Thus, defendant has not identified any evidence in the record that the DOD’s

decision to deem intervenor-defendant’s proposal as “technically feasible” resulted from

an exercise of discretion, nor does it explain how the DOD’s discretion could extend so

far as to allow it to depart from the precise and explicit definition of the term “highly

accessible.”

5

The court has carefully reviewed intervenor-defendant’s arguments relating to its

inclusion of [ ] storage in its proposal for Price Scenario 6. See ECF No. 137 at 17-23. In the

interest of honoring the parties’ request for an expedited ruling on this motion, the court will

only address intervenor-defendant’s arguments that are both material and substantively different

from defendant’s.

8

Defendant’s second argument—that if intervenor-defendant’s proposal is deficient

so is plaintiff’s—likewise fails to effectively address plaintiff’s claims. As an initial

matter, the assertion that plaintiff’s proposal suffered from the same deficiency as

intervenor-defendant’s does not necessarily lead to the conclusion that either deficiency

should be overlooked. Moreover, the record appears unlikely to support this argument.

Plaintiff cites to evidence in the record that, while [ ] storage was part of its Price

Scenario 6 proposal, its proposal primarily relied on, and certainly included, online

storage. See ECF No. 144 at 10-11 (citing AR at 152866-67).

The court concludes that—based on the portions of the record cited by the parties

and the arguments made thereon—plaintiff is likely to demonstrate that defendant erred

in determining that intervenor-defendant’s Factor 5, Price Scenario 6 was “technically

feasible” according to the defined terms of the solicitation.

b. Plaintiff Is Likely to Show Prejudice

In addition, the court finds that plaintiff is likely to demonstrate that defendant’s

error was prejudicial, i.e., that plaintiff’s chance of securing the award was not

insubstantial absent the error. See Info. Tech., 316 F.3d at 1319. To show prejudice,

plaintiff is not required to prove it was next in line for the award but for defendant’s

errors. See Data Gen., 78 F.3d at 1562 (“To establish prejudice, a protester is not

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

contract.”). But plaintiff must, at a minimum, show that “had the alleged errors been

cured, . . . ‘its chances of securing the contract [would have] increased.’” Precision Asset

Mgmt. Corp. v. United States, 125 Fed. Cl. 228, 233 (2016) (quoting Info Tech., 316

F.3d at 1319).

Plaintiff takes the position that upon a finding that intervenor-defendant’s proposal

of [ ] storage was “noncompliant,” defendant “should have found [intervenor-

defendant’s] technical approach unfeasible, assigned a deficiency, and eliminated

[intervenor-defendant] from the competition.” ECF No. 130-1 at 19. Plaintiff also

argues that this improper evaluation resulted in a skewed price analysis. See id. at 20-22.

Under the terms of the Source Selection Plan, a “deficiency” is defined as: “A

material failure of a proposal to meet a Government requirement or a combination of

significant weakness[es] in a proposal that increases the risk of unsuccessful contract

performance to an unacceptable level.” AR at 64355. The court has concluded that it is

likely plaintiff will demonstrate that intervenor-defendant proposed [ ] storage when the

solicitation explicitly required online storage. In the context of a procurement for cloud

computing services, the court considers it quite likely that this failure is material. As

such, plaintiff likely is correct that defendant should have assigned a deficiency to

intervenor-defendant’s proposal for Factor 5, Price Scenario 6.

9

In making its case that it was prejudiced by this evaluation error, plaintiff does not

only rely on its allegation that this deficiency should have resulted in defendant

eliminating intervenor-defendant from competition. Plaintiff also points to the PEB

evaluation, which specifically attributes a price difference of $[ ] between plaintiff’s and

intervenor-defendant’s proposals to the fact that plaintiff proposed online storage while

intervenor-defendant proposed [ ] storage. Defendant claims that “while demonstrating

that [intervenor-defendant’s] proposed storage costs for this price scenario were [ ] than

[plaintiff’s], [plaintiff] does not illuminate why that is the case.” ECF No. 139 at 31.

According to defendant, the price difference is attributable to the different discounts

offered by each offeror. See id. The PEB, however, explained the reasons for the price

difference in its source selection report:

5.5.6.1. [Plaintiff] proposed a total price of $[ ] for Price Scenario

06. Approximately [ ]% of [plaintiff’s] price before adjustments was in

the Storage category with a value of $[ ]. [Plaintiff’s] proposed

discounting strategy resulted in an adjustment of $[ ], or a [ ]% decrease

in price. The significant variance in price from [intervenor-

defendant] was attributed to a technical approach where [plaintiff]

proposed their [ ] online storage in so [sic] [ ]. A separate MFR was

completed to document their rationale and was identified in the IPR

Memo.

5.5.6.2. [Intervenor-defendant] proposed a total price of $[ ] for

Price Scenario 06. Approximately [ ]% of [intervenor-defendant’s] price

before adjustments was in the Storage category with a value of $[ ].

[Intervenor-defendant’s] proposed discounting strategy resulted in an

adjustment of $[ ], or a [ ]% decrease in price. The significant variance

in price from [plaintiff] was attributed to the technical approach

where [intervenor-defendant] proposed their [ ] storage solution

which meets the technical feasibility requirements and offers a [ ] unit

price.

AR at 176363 (emphasis added).

After considering the portions of the record identified by the parties and the

argument made thereon, the court considers it likely that plaintiff’s chances of receiving

the award would have increased absent defendant’s evaluation error. Even if what

appears to be a deficiency did not result in intervenor-defendant’s elimination from

competition, a reduction in the $[ ] price advantage attributed by the PEB to intervenor-

defendant’s use of [ ] storage likely would affect the price evaluation, which in turn,

would affect the best value determination.

10

Accordingly, the court concludes that plaintiff is likely to succeed on the merits of

its argument that the DOD improperly evaluated intervenor-defendant’s Factor 5, Price

Scenario 6.

2. Irreparable Harm

“A preliminary injunction will not issue simply to prevent a mere possibility of

injury, even where prospective injury is great. A presently existing, actual threat must be

shown.” Qingdao Taifa Grp. v. United States, 581 F.3d 1375, 1379 (2009) (quoting

Zenith Radio Corp. v. United States, 710 F.2d 806, 809 (Fed. Cir. 1983)). Here, plaintiff

argues that it “will suffer irreparable harm without injunctive relief” because it has no

“‘adequate remedy in the absence of an injunction.’” ECF No. 130-1 at 57 (quoting

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)). According to plaintiff, “in the absence of a

temporary restraining order and preliminary injunction, [plaintiff] could lose the

opportunity to perform the JEDI Contract, earn the revenue and profits resulting from

contract performance, ensure its technology is widely used by [the DOD], and gain

additional experience working for the Government.” Id.

In support of these assertions, plaintiff has filed the declaration of Jennifer

Chronis. Ms. Chronis is plaintiff’s General Manager for its business with the DOD. See

ECF No. 130-2 at 13. She declares, in relevant part, that intervenor-defendant’s

continued performance of the JEDI Contract would provide [intervenor-

defendant] with an unfair competitive advantage in any recompetition of the

JEDI Contract resulting from [plaintiff’s] protest. Any additional contract

performance would give [intervenor-defendant] access to further non-public

information that would allow [intervenor-defendant] (but not [plaintiff]) to

better tailor any revised proposal submitted in a JEDI recompetition.

Id. at 14. She adds that plaintiff “has already begun to feel the impact of the JEDI award

with the [ ]. Id. This delay will harm plaintiff because it [ ]. Id. at 14-15. Ms. Chronis

further states that plaintiff will lose customers to the JEDI program, starting with

customers who will participate in the pilot stage of the program during the contract

transition period. 6 Id. at 15.

6

Defendant disputes plaintiff’s claim that plaintiff will lose customers during the pilot

stage of the JEDI program. See ECF No. 139-1 at 5-6 (declaration of Sharon Woods, Director

and Program Manager for the Cloud Computing Program Office at the DOD). The court does

not have sufficient facts to resolve this dispute, and as such, will not weigh this alleged harm in

its analysis.

11

Defendant argues that plaintiff’s claims of irreparable harm are too speculative

and generic to support an injunction, and insists that any harm plaintiff may suffer would

not be irreparable. See ECF No. 139 at 60-62. The court disagrees. Plaintiff has

identified specific losses reasonably expected during the transition period including the

loss of competitive advantage in any renewed competition, and damage to plaintiff’s

ability to serve its customers. These are precisely the types of injuries that this court has

previously found to constitute irreparable harm. See, e.g., NetStar-1, 98 Fed Cl. 735

(holding that the loss of competitive advantage during a transition period constitutes

irreparable harm and justifies preliminary injunctive relief); Serco, Inc. v. United States,

81 Fed. Cl. 463, 502 (2008) (noting that loss derived “from a lost opportunity to compete

on a level playing field for a contract, has been found sufficient to prove irreparable

harm”) (citations omitted); Hospital Klean of Tex., Inc. v. United States, 65 Fed. Cl. 618,

624 (2005) (stating that lost profits “stemming from a lost opportunity to compete for a

contract on a level playing field [have] been found sufficient to constitute irreparable

harm.” (citations omitted)).

Defendant also argues that any damage plaintiff may suffer is not irreparable

because the DOD “has broad discretion to take action during any renewed competition to

neutralize any unfair competitive advantage that may then exist.” ECF No. 139 at 61.

The court, however, cannot accept an agency’s prospective offer to use its discretion to

mitigate what otherwise appears to be irreparable harm caused by an abuse of that

discretion. The court is constrained to make its ruling based on the record before it, not

based on actions that may be taken in future.

Intervenor-defendant objects to a finding of irreparable harm, in part, because

plaintiff “waited nearly 90 days before asking the Court to take the extraordinary step of

issuing a temporary restraining order and preliminary injunction.” ECF No. 137 at 60.

According to intervenor-defendant, this delay “undercut[s] [plaintiff’s] claim of

irreparable harm.” Id. Intervenor-defendant does not identify the date on which it begins

its 90-day calculation, but the record in the case shows that plaintiff filed its complaint on

November 22, 2019, see ECF No. 1 (complaint); the parties filed an agreed-upon briefing

schedule, which includes deadlines for plaintiff’s instant motion, on January 13, 2020,

see ECF No. 111 (joint status report); and the motion was filed on January 22, 2020, see

ECF No. 130.

The court agrees that the delay weakens plaintiff’s claim of irreparable harm, but

does not find that it invalidates plaintiff’s position altogether. Whatever harm defendant

and intervenor-defendant may have suffered as a result of its delay, plaintiff has

demonstrated that it will continue to suffer irreparable harm between now and the time

that the merits of this dispute are finally resolved. As such, the court concludes that this

factor weighs in plaintiff’s favor.

12

3. Balance of Hardships

Plaintiff argues that neither defendant nor intervenor-defendant will suffer if the

court issues the requested injunction. See ECF No. 130-1 at 59. Plaintiff summarizes its

argument as follows:

All of [DOD’s] cloud computing needs, include those for the pilot program

agencies, are being satisfied today by existing cloud contracts with [plaintiff,

intervenor-defendant], and other providers. And a host of existing contract

vehicles for cloud computing services are available for the military’s

immediate and approaching requirements. In fact, [DOD] has at its disposal

more than 600 cloud initiatives across the Department. Contrary to the

Government’s insinuations, no [DOD] command or agency is waiting for the

JEDI Contract to fulfill current cloud computing needs. A brief delay in JEDI

Contract performance during the pendency of the protest to allow for the

adjudication of serious claims of procurement irregularities will not deprive

[DOD] of the means to satisfy its cloud computing needs.

Id. at 59-60 (internal citations omitted).

According to defendant, however, the balance of hardships factor weighs heavily

against issuing an injunction due to the impact a delay in the JEDI program would have

on national security, and the attendant cost. See ECF No. 139 at 62-68. In support of this

assertion, defendant submits the declarations of several military officers. 7 Mr. David

Spirk, [ ]. See ECF No. 139-2 at 1-3. Lieutenant General Bradford J. Shwedo, Director

for Command, Control, Communications, and Computers/Cyber (C4), Chief Information

Officer, Joint Staff, refers to cloud computing services as “critical,” and states that they

are currently non-existent “across most of DOD.” ECF No. 139-4 at 2-3.

Defendant also argues that an interruption in the JEDI program will result in

“unrecoverable financial harm totaling between five and seven million dollars per month

of delay.” ECF No. 139 at 67 (citing ECF No. 139-3 at 6 (declaration of [ ])). [ ], who

serves as [ ] submitted a declaration to support that estimated loss. See ECF No. 139-3.

Therein, [ ] details the methods that he used to calculate the loss by piecing together the

7

Defendant also filed several classified declarations from “senior leaders of the [DOD]

Joint Artificial Intelligence Center (JAIC), Army Special Forces, and Project Maven [who] attest

to the specific impact that any injunction would have on the critical missions of those

organizations.” ECF No. 139 at 65; ECF No. 114 and ECF No. 138 (notices of filing classified

information). Defendant includes no substantive discussion of these classified declarations. The

court has reviewed the declarations, and has determined that their content does not alter the

court’s analysis. As such, the court omits specific discussion of these classified declarations, as

defendant did.

13

services that would be available under the JEDI program from other available products.

See id. at 3-6. [ ] explains that:

if [DOD] customers were to use [plaintiff’s] contracts instead of JEDI, the

cost to [DOD] would be nearly double. Spread across JEDI’s two[-]year

base period, . . . result[ing] in a projected cost increase of $198.76 million.

Likewise, if [DOD] were to use current [intervenor-defendant’s] government

contract offerings (other than JEDI) instead of [plaintiff’s], the escalation,

factored over the two-year base period of the JEDI contract, results in a

projected cost increase of approximately $115.4 million. [DOD] would

reasonably expect cost to range somewhere between these two figures. The

ultimate harm to [DOD] would depend upon what share of cloud services

that would have been provided under JEDI that are ultimately provided by

[plaintiff] or [intervenor-defendant] under other already-available contracts.

Id. at 6.

For its part, intervenor-defendant argues that the balance of hardships factor

weighs against plaintiff because intervenor-defendant has invested “hundreds of millions

of dollars to prepare for JEDI’s imminent operational date,” ECF No. 137 at 60, and

“[o]ther efforts that [intervenor-defendant] has invested in over the past three months of

JEDI contract performance will also be wasted if an injunction issues,” id. at 63.

The court does not question the importance of the JEDI program, and understands

the urgent desire to have the services thereunder made available to defendant as soon as

possible. The national security implications certainly weigh in defendant’s favor. See

Aero Corp., S.A. v. United States, 38 Fed. Cl. 237, 241-42 (1997) (stating that when

national security issues are implicated, it “clearly places the weight of the balance-of-

harms factor on defendant’s side of the scale”). As defendant itself acknowledges,

however, this procurement is complex and conducting it correctly is necessarily time-

consuming. It states that:

[DOD] has consistently moved expeditiously to acquire and field this new

capability, while vigilantly insisting on a fair competition to obtain the best

product, serving the interests of the nation and the competitors. Irrespective

of the urgency, a procurement of this magnitude cannot be conducted

overnight. The time [DOD] took to validate its requirements and issue a

solicitation accurately describing its needs supported, rather than detracted

from, the urgent need to field the right capabilities.

ECF No. 139 at 66. In the court’s view, a delay now—in order to ensure the procurement

was properly conducted—serves the same ends as those that defendant has thus far

worked so hard to achieve.

14

Moreover, defendant indicates that the primary harm it will suffer will be

inconvenience and expense, rather than the inability to carry out national security

functions. It states:

although any injunction will cause significant harm to national security,

[DOD] will, of course, seek to mitigate that harm and achieve its mission to

protect the Nation. If necessary, it will pursue inferior alternative measures

to fill in for the capabilities it is unable to obtain through JEDI. Such

alternatives come with a significant financial cost to American taxpayers,

however—[DOD] calculates that delayed performance of the JEDI contract

will result in unrecoverable financial harm totaling between five and seven

million dollars per month of delay.

Id. at 67 (citing ECF No. 139-3 at 6 (declaration of [ ])).

Taken together the parties’ arguments make clear that the benefits of the JEDI

program, while no doubt significant, are prospective. Put another way, a delay in the

JEDI program would simply require defendant to continue using the means by which it is

presently accomplishing its important missions until the court can determine whether the

procurement at issue was properly conducted. The court recognizes the considerable

potential cost—to both defendant and intervenor-defendant—involved in such a delay.

A mechanism to ameliorate such damages, however, is found in RCFC 65(c), which

provides: “The court may issue a preliminary injunction . . . only if the movant gives

security in an amount that the court considers proper to pay the costs and damages

sustained by any party found to have been wrongfully enjoined or restrained.” The court

will require such security in this case to protect defendant and intervenor-defendant, and

will address the amount it deems proper below.

In the final analysis, the balance of harms weighs against plaintiff, but for the most

part, the harms that defendant or intervenor-defendant may suffer can be offset by the

continued use of presently-available technology and the requirement for plaintiff to give

adequate security pursuant to RCFC 65(c).

4. Public Interest

“There is an overriding public interest in preserving the integrity of the

procurement process by requiring the government to follow its procurement regulations.”

Turner Constr. Co. v. United States, 94 Fed. Cl. 561, 586 (2010) (citation and internal

quotation marks omitted), aff’d, 645 F.3d 1377 (Fed. Cir. 2011). Here, the court has

concluded that plaintiff is likely to succeed on the merits of its claim that defendant

improperly evaluated intervenor-defendant’s Factor 5, Price Scenario 6. Both defendant

and intervenor-defendant argue, however, that the public interest in national security

15

should outweigh plaintiff’s concern for the integrity of the procurement process. See

ECF No. 137 at 63-65; ECF No. 139 at 64-66.

The court takes seriously the national security concerns implicated by the JEDI

program. But the fact that defendant is operating without the JEDI program now cuts

against its argument that it cannot secure the nation if the program does not move

forward immediately. The court does not find, under the present circumstances, that the

benefits of the JEDI program are so urgently needed that the court should not review the

process to ensure the integrity of the procurement.

For this reason, the public interest factor weighs in favor of plaintiff.

5. Balancing the Factors

In considering whether injunctive relief is warranted, the court must balance the

relevant factors. No single factor is determinative, as “the 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, 427 (Fed. Cir. 1993).

Here, plaintiff’s delay in filing for injunctive relief, the national security

implications present in this case, and the cost of delay, weigh against plaintiff.

Nonetheless, based on the evidence and argument presented by the parties, those

considerations are overborne by: (1) plaintiff’s likelihood of success on the merits; (2)

the irreparable harm plaintiff will suffer absent a preliminary injunction; (3) the ability

for defendant to continue the cloud computing solutions presently in use; (4) the public

interest in protecting the integrity of the procurement process; and (5) the requirement of

security as a means of ameliorating the financial risk to defendant and intervenor-

defendant. The court finds that, in this case, the factors weigh in favor of a preliminary

injunction. 8

B. Requirement of Security

Under RCFC 65(c), plaintiff is required to “give[] security in an amount that the

court considers proper to pay the costs and damages sustained by any party found to have

been wrongfully enjoined or restrained.” The court finds that such security is warranted

in this case. “‘The amount of a bond is a determination that rests within the sound

discretion of a trial court.’” Serco, Inc. v. United States, 101 Fed. Cl. 717, 722 (2011)

(citing Sanofi-Synthelabo v. Apotex, Inc., 470 F.3d 1368, 1385 (Fed. Cir. 2006)).

8

Because the court finds the error with regard to defendant’s evaluation of intervenor-

defendant’s Factor 5, Price Scenario 6 is sufficient to justify preliminary injunctive relief, the

court does not evaluate in this opinion the remainder of the errors alleged by plaintiff.

16

Defendant suggests that the court require plaintiff to “post no less than $42 million

in security to account for the potential delay.” ECF No. 139 at 69. Defendant arrives at

this figure by multiplying its estimate that interim services may cost “between $5 million

and $7 million per month,” by its estimate that a preliminary injunction “could last for six

months or more.” Id. (citing ECF No. 139-3 at 6 (declaration of [ ])). In its reply,

plaintiff characterizes defendant’s security request as “grossly overstated,” and claims

that defendant’s “estimated financial harm is speculative and its methodology unsound,”

but offers no alternative estimates. ECF No. 144 at 33. Instead, plaintiff asks the court to

waive the security requirement. See id.

In support of its proposed security amount, defendant cites to [ ] declaration. See

ECF No. 139 at 69. In his declaration, [ ] details the methods that he used to calculate

defendant’s potential loss by piecing together the services that would be available under

the JEDI program from other available products. See ECF No. 139-3 at 3-6. He

concludes that defendant “anticipates a financial harm of between $5 and $7 million

dollars every month that performance of the JEDI contract is delayed.” Id. at 6. He also

admits the costs are somewhat uncertain, explaining that “[t]he ultimate harm to [DOD]

would depend upon what share of cloud services that would have been provided under

JEDI that are ultimately provided by [plaintiff] or [intervenor-defendant] under other

already-available contracts.” Id. at 6. In addition, defendant notes that plaintiff’s

pending motion to supplement the administrative record and for discovery may extend

the length of a preliminary injunction. See ECF No. 139 at 69.

In the court’s view, some degree of uncertainty or speculation is inherent in

defendant’s attempt to quantify the harm it may suffer as a result of the preliminary

injunction. Defendant appears to have made a good faith effort to identify and quantify

the potential harm it could suffer as a result of the preliminary injunction if it ultimately

prevails on the merits in this case. Plaintiff has not offered alternative calculations, nor

does it specify the parts of [ ] analysis with which it disagrees. As such, [ ] calculations

are the only evidence from which the court can determine the proper security amount.

The court concludes that considering defendant’s calculations, and plaintiff’s

pending request to supplement the administrative record and to conduct discovery, the

provision of security in an amount of $42 million to cover six months of anticipated

costs, is warranted.

17

IV. Conclusion

Accordingly, for the reasons explained in this opinion:

(1) Plaintiff’s motion for a PI, ECF No. 130, 9 is GRANTED;

(2) The United States, by and through the Department of Defense, its officers,

agents, and employees, is hereby PRELIMINARILY ENJOINED from

proceeding with contract activities under Contract No. HQ0034-20-D-

0001, which was awarded under Solicitation No. HQ0034-18-R-0077,

until further order of the court;

(3) Pursuant to RCFC 65(c), plaintiff is directed to PROVIDE security in the

amount of $42 million for the payment of such costs and damages as may

be incurred or suffered in the event that future proceedings prove that this

injunction was issued wrongfully. As such, on or before February 20,

2020, plaintiff is directed to FILE a notice of filing on the docket in this

matter indicating the form of security obtained, and plaintiff shall

PROVIDE the original certification of security to the Clerk of Court. 10

The clerk shall HOLD the security until this case is closed; and

(4) On or before February 27, 2020, the parties are directed to CONFER and

FILE a notice of filing attaching a proposed redacted version of this

opinion, with any competition-sensitive or otherwise protectable

information blacked out.

IT IS SO ORDERED.

s/Patricia E. Campbell-Smith

PATRICIA E. CAMPBELL-SMITH

Judge

9

Plaintiff’s motion was filed as a combined motion for a TRO and PI, but the court

previously determined the request for a TRO is moot. See infra at 2 n.2.

10

The court refers plaintiff to RCFC 65.1, which provides guidance on acceptable sureties,

and plaintiff is encouraged to contact the Clerk of Court, Lisa Reyes, at 202-357-6406 with any

questions. A surety bond for a preliminary injunction can be found in the court’s rules, see

RCFC, Appendix of Forms, Form 11.

18