Quality Control International v. United States

In the United States Court of Federal Claims

No. 20-37C

(Filed: May 29, 2020)

Opinion originally filed under seal May 20, 2020

)

QUALITY CONTROL )

INTERNATIONAL, LLC, )

) Bid Protest; Post-Award; FAR 15.306;

Plaintiff, ) Cross Motions for Judgment on the

) Administrative Record; Meaningful

) Discussions

v.

)

)

THE UNITED STATES, )

)

Defendant, )

)

and, )

)

PHOENIX MANAGEMENT, INC., )

)

Defendant-Intervenor. )

)

David A. Rose, Valdosta, GA, for plaintiff.

Kara M. Westercamp, Civil Division, United States Department of Justice, Washington,

D.C., with whom were Joseph H. Hunt, Assistant Attorney General, Robert E.

Kirschman, Jr., Director, Allison Kidd-Miller, Assistant Director, for defendant. Robert

Schlattman, Deputy General Counsel, General Services Administration, Denver, CO, of

counsel.

Johnathan M. Bailey, San Antonio, TX, for defendant-intervenor.

OPINION

FIRESTONE, Senior Judge.

This post-award bid protest involves the General Services Administration’s

(“GSA”) contract award for maintenance services in Montana to the defendant-intervenor

Phoenix Management, Inc. (“PMI”) issued on August 29, 2019. The plaintiff, Quality

Control International, LLC (“QCI”) had been the incumbent who provided the

maintenance services under a prior contract until January 31, 2020. On January 13, 2020,

QCI filed this action challenging the award to PMI together with a motion for a

temporary restraining order (“TRO”) and preliminary injunction (“PI”). On January 28,

2020, the court denied QCI’s motions for a TRO and PI. (ECF No. 23). Now pending are

the parties’ cross-motions for judgment on the administrative record.

In its protest, QCI has focused its challenge on the discussions GSA conducted

with QCI during the procurement process. QCI argues that but for GSA’s misleading

discussions regarding QCI’s price, QCI would not have raised its price and would have

had a substantial chance of being awarded the contract at issue. QCI alleges that GSA

misled QCI by improperly coercing QCI to increase its price and raising price concerns

based on an inaccurate Internal Government Estimate (“IGE”).

Defendant the United States (the “government”) and PMI argue that GSA’s

discussions with QCI were proper because GSA did not mandate that QCI raise its price.

They also argue that GSA rationally relied on the IGE to identify GSA’s concerns with

QCI’s proposed price. In addition, PMI argues that its pricing was consistently lower than

QCI’s pricing in any event and that it too was told by GSA that PMI’s initial price

appeared too low based on the same IGE. For this reason, PMI argues that QCI has failed

to demonstrate that it was prejudiced by GSA’s discussions regarding price.

2

For the reasons that follow, the government and PMI’s cross-motions for judgment

on the administrative record are GRANTED. QCI’s motion for judgment on the

administrative record is DENIED.

I. FACTUAL BACKGROUND

The following facts are taken from the Administrative Record (“AR”) filed on

January 21, 2020 (ECF No. 20).

On May 1, 2018, GSA issued request for proposals No. 47PJ0018R0027 (“RFP”).

AR 1. The RFP was a small business set-aside and sought proposals to provide

maintenance services for multiple GSA facilities in Billings, Bozeman, Butte, and

Missoula Montana. AR 1, 3. The RFP contemplated an award of a fixed-price contract,

AR 20, and included a base period of one year with four one-year options, AR 3.

Regarding the evaluation of offers, the RFP explained that award would be made on a

best-value tradeoff basis, with non-price factors, when combined, to be considered

approximately equal to price. AR 220.

Regarding price, the RFP stated that prices “will be evaluated for low price, price

reasonableness, price realism and balance.” AR 222. Further, the “sum of the pricing . . .

in the price proposal submitted by each offeror will be evaluated. Offerors whose prices

are unbalanced, unreasonable, or unrealistic, may be rejected as unacceptable.” Id.

On June 6, 2018, QCI timely submitted its first price proposal. AR 224. QCI’s

proposed overall price was $6,009,580.00. AR 233. In evaluating QCI’s price, GSA

compared QCI’s overall price to the IGE of $7,398,875.39. AR 438. GSA stated that

QCI’s “price appears to be borderline unrealistic” and “[w]hen comparing the total costs

3

between the IGE and offeror pricing, QCI’s costs appear unrealistically low” because the

proposed price was “19% lower than the IGE and 16% lower than averaged offeror

pricing.” AR 440; see AR 488 (Source Selection Evaluation Board Recommendation for

first round offers stating the same). The internal review further stated “[h]owever, QCI

only has a few pricing elements that appear potentially unrealistic.” AR 440.

GSA decided to conduct discussions with the offerors. In conducting discussions

with QCI, GSA noted that several pricing factors appeared to be unreasonably or

unrealistically low. See AR 268. A letter was subsequently provided to QCI on June 10,

2019 to memorialize the discussion. AR 266. In connection to QCI’s price, the letter

stated:

• The mechanical labor costs at Bozeman, Butte, and Missoula appear

significantly low.

• The mechanical direct costs (costs other than self-performed labor) appear

significantly low at Billings, Bozeman, Butte, and Missoula.

• The offeror’s price of $6,009,580.00 does not appear realistic.

• The price proposal fails to include pricing for an administrative support

position.

• The proposed markup rates, when combined, are significantly high.

AR 268; see AR 440 (internal GSA review stating the same). The letter also provided that

“any items raised by the Government during the discussions must be addressed in writing

in QCI’s revised proposal.” AR 266.

A comparison of the specific costs with the IGE and GSA’s discussions with QCI

shows:

4

GSA’S INITIAL PRICE

DISCUSSIONS WITH QCI IGE QCI Initial Price

Bozeman $115,440.00 $[. . .]

Mechanical labor costs at Butte $115,440.00 $[. . .]

Bozeman, Butte and Missoula

appear significantly low Missoula $115,440.00 $[. . .]

Billings $76,000.00 $[. . .]

Mechanical direct costs (costs

other than self-performed Bozeman $77,000.00 $[. . .]

labor) appear significantly low

Butte $77,000.00 $[. . .]

at Billings, Bozeman, Butte

and Missoula Missoula $82,000.00 $[. . .]

The offeror’s price of

6,009,580.00 does not appear

realistic $7,398,875.39 $6,009,580.00

AR 610.

PMI’s initial proposed price was $5,739,665.88. AR 610. The letter memorializing

GSA’s discussions with PMI stated:

• The grounds maintenance/snow removal costs at all locations appear

significantly low.

• The mechanical direct costs (costs other than self-performed labor) appear

significantly low at the Butte and Missoula locations.

• The profit and markup rates of 16% when combined appear significantly

high.

• The offeror’s price of $5,739,665.88 appears unrealistically low.

AR 321. It further stated, “any items raised by the Government during the discussions

must be addressed in writing in Phoenix Management’s revised proposal.” AR 320.

A comparison of the specific costs with the IGE and GSA’s discussions with PMI

shows:

5

GSA’S INITIAL PRICE

DISCUSSIONS WITH PMI IGE PMI Initial Price

Billings $76,000.00 $[. . .]

The mechanical direct costs

(costs other than self- Bozeman $77,000.00 $[. . .]

performed labor) appear

Butte $77,000.00 $[. . .]

significantly low at the Butte

and Missoula locations. Missoula $82,000.00 $[. . .]

The offeror’s price of

$5,739,665.88 appears

unrealistically low. $7,398,875.39 $5,739,665.88

AR 610.

Following the first round of discussions, QCI and other offerors submitted revised

proposals. QCI revised its price proposal upward to $7,461,340.00. AR 276. PMI revised

its price proposal upward to $7,295,306.57. AR 610. GSA evaluated the revised

proposals. AR 494. Regarding price, GSA evaluated whether QCI’s revised proposal

improved on the previously identified weaknesses. AR 532-33. Regarding QCI’s overall

price, GSA stated that “[t]he majority of the price proposal increase is due to the increase

level of effort for mechanical, grounds maintenance/snow removal and custodial” and

that “QCI’s proposal appears to have addressed our concerns about the low level of total

price.” AR 533. The only significant weakness remaining was QCI’s markup rate. Id.; see

AR 546 (Source Selection Evaluation Board Recommendation stating the same); AR 552

(Source Selection Decision Document stating the same).

Regarding PMI’s overall price following the first round of discussions, GSA wrote

“[PMI’s] revised price has been increased from $5,739,665.88 to $7,295,306.57. The

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majority of the price proposal increase is due to the increase level of effort for

mechanical, grounds maintenance/snow removal and custodial.” AR 525. GSA further

stated that “[a]fter the level of effort adjustments [PMI’s] proposal appears reasonable,

realistic and balanced.” Id. Although the mechanical direct costs at Butte and Missoula

“still appear[ed] low” on the revised price, GSA stated that the prices were “not so

significantly low that it increases the risk to the Government considering [PMI’s] overall

price . . . appears reasonable, realistic and balanced.” Id.

GSA decided to conduct another round of discussions with six offerors, AR 548,

and on July 23, 2019, GSA sent a letter memorizing the discussions to QCI and PMI.

The letter to QCI stated:

• QCI’s markup rates remain high.

• QCI was also notified that it is not the Government’s intention to conduct

another round of discussions so offerors should submit their most

competitive offer.

AR 310. The letter to PMI stated:

• The mechanical direct costs for Butte and Missoula appear slightly low.

• When combined, the grounds maintenance and snow removal costs appear

significantly high at the Billings and Bozeman locations.

• [PMI] was also notified that it is not the Government’s intention to conduct

another round of discussions so offerors should submit their most

competitive price offer.

AR 324.

Following the final round of discussions, QCI and PMI together with other

offerors submitted final revised proposals. QCI’s final proposed price was $7,247,080.00.

AR 610. PMI’s final proposed price was $7,138,087.25. Id. GSA evaluated the final

revised proposals, AR 555, and determined that QCI’s final revised price was consistent

7

with the IGE but that the markup rates remained high, AR 572. GSA concluded,

however, that the markup rates were “not a weakness” despite raising GSA’s costs by

$180,000. AR 597.

Regarding PMI’s final price proposal, the GSA evaluators identified “no

significance weaknesses or deficiencies . . . with [PMI’s] price proposal.” AR 591. GSA

further stated “[PMI’s] price is in line with both the Government’s estimate as well as

comparable (but slightly lower) to other offeror’s pricing.” AR 591-92. The “[c]osts for

labor, materials, equipment, subcontracts and markups” were found “realistic, reasonable

and balanced.” AR 592.

The Source Selection Evaluation Board (“SSEB”) recommended that award

should be made to PMI with a final revised offer price of $7,138,087.25. AR 603. In

recommending PMI receive the award ahead of QCI, the SSEB stated, “[a]fter

considering [PMI’s] strong staffing proposal, strong management proposal, and

demonstration of experience on large, complex projects (also receiving favorable past

performance), the Government is unable to justify paying a premium of $108,992.75 for

QCI’s lower technical proposal.” AR 606. QCI has not challenged PMI’s higher technical

rating in this protest.

Following review of the SSEB’s recommendation, the Contracting Officer (“CO”)

selected PMI. The CO stated that “the government is unable to justify paying any price

premium for any of the three offerors’ higher rating for experience/past performance

when [PMI] submitted better staffing and management plans, and . . . has demonstrated

successful performance on large, complex maintenance contracts.” AR 614.

8

On September 6, 2019, QCI received a letter from the CO indicating that QCI’s

proposal had not been selected. AR 615. QCI was informed that the successful offeror,

PMI, was only slightly better on technical factors than QCI and QCI’s price was only

slightly higher than PMI’s price. Id.

QCI subsequently filed a protest with the GAO. See Compl. ¶ 15. Before the

GAO, QCI claimed that GSA’s discussions were misleading and coercive. The GAO

denied QCI’s protest on December 20, 2019. Id. ¶ 16. The GAO stated:

Based upon our review of the record, we find that the

agency’s communications were not misleading or coercive.

As described in detail above, the record demonstrates that,

during discussions, the agency accurately raised its concerns

regarding QCI’s proposed price, and then simply asked QCI

to address issues the agency had identified with respect to

QCI’s price proposal. For example, during the first round of

discussions, the agency advised QCI that its overall price--

and some of its price elements--were unrealistically low, and

informed QCI that “any items raised by the [g]overnment

during the discussions must be addressed in writing in QCI’s

revised proposal.” AR, Tab 6, Confirmation of Discussions

(First Round), at 1, 3. After receipt of this information, QCI

raised its price in its first revised proposal, before electing to

lower its price in its FRP. COS/MOL at 3, 6.

First, QCI has not established that the information provided

by the agency was inaccurate or communicated in bad faith.

Additionally, QCI has not demonstrated that it was actually

mandated, or required, to raise its price. Rather, the agency

stated that the items discussed must be addressed, but not how

they were to be addressed. The protester’s argument that it

was coerced by the agency to raise its price is not supported

by the record. Instead, the record shows that QCI was free to

propose any price it wished, so long as the agency’s concerns

were addressed in the revised proposal.

9

GAO Dec., B-417984 (ECF No. 12 at 4-5).1

II. PROCEDURAL HISTORY

QCI filed the instant protest on January 13, 2020. QCI’s motions for a TRO and PI

were fully briefed on January 23, 2020. The court denied QCI’s motions for a TRO and

PI on January 28, 2020. Quality Control Int’l, LLC v. United States, 147 Fed. Cl. 193

(2020). The court found that the “record demonstrates that GSA had concerns regarding

QCI’s initial proposed price, and GSA articulated those same concerns to QCI.” Id. at

199. The court also found that GSA’s discussions with QCI were not coercive. Id. (“GSA

identified what GSA considered to be a significant weakness in QCI’s price and gave

QCI the opportunity to address GSA’s concerns. Far from coercion, the record shows that

QCI was free to propose any price it wished in its revised proposal.”).

Following the court’s order on the motions for a TRO and PI, the parties filed

cross-motions for judgment on the administrative record. QCI’s Mot. for J. on the Admin.

R. (“MJAR”) (ECF No. 28); Def.’s Cross-Mot. for J. on the Admin. R. (“Def.’s MJAR”)

(ECF No. 31); PMI’s Cross-Mot. for J. on the Admin. R. (“PMI’s MJAR”) (ECF No. 32).

Briefing on these motions was completed on March 27, 2020. Oral argument was heard

on May 14, 2020.

1

“Although not binding on this court, GAO opinions are properly used for information and

guidance, given the GAO’s experience and expertise.” Global Comput. Enters., Inc. v. United

States, 88 Fed. Cl. 350, 412 (2009) (quotation omitted).

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III. LEGAL STANDARDS

The court reviews a bid protest to determine whether “(1) the procurement

official’s decision lacked a rational basis; or (2) the procurement procedure involved a

violation of regulation or procedure.” WellPoint Military Care Corp. v. United States,

953 F.3d 1373, 1377 (Fed. Cir. 2020) (internal quotation marks and citation omitted). In

deciding whether the procurement agency acted rationally, the court applies the arbitrary,

capricious, an abuse of discretion standard. See id. The arbitrary and capricious standard

is “highly deferential” and the “protestor bears the burden of proving that a significant

error marred the procurement in question.” Glenn Def. Marine (Asia), PTE Ltd. v. United

States, 720 F.3d 901, 907 (Fed. Cir. 2013) (internal quotation marks and citation

omitted). Pursuant to this standard, an agency’s procurement decisions are entitled to a

“presumption of regularity” and “the agency’s action must be upheld as long as a rational

basis is articulated, and relevant factors are considered.” Emery Worldwide Airlines,

Inc. v. United States, 264 F.3d 1071, 1085 (Fed. Cir. 2001) (citations omitted).

“Importantly, the APA requires that ‘due account shall be taken of the rule of

prejudicial error.’” WellPoint Military Care Corp., 953 F.3d at 1377 (quoting 5 U.S.C.

§ 706). Therefore, “[t]o prevail in a bid protest, a protestor must show a significant,

prejudicial error in the procurement process.” Id. (quoting Alfa Laval Separation, Inc. v.

United States, 175 F.3d 1365, 1367 (Fed. Cir. 1999)). In other words, the “protestor must

show that but for that error, the protestor had a substantial chance of receiving a contract

11

award.” Office Design Grp. v. United States, 951 F.3d 1366, 1373-74 (Fed. Cir. 2020).

“Prejudice is a question of fact.” Id. at 1374.

IV. DISCUSSION

QCI argues that GSA acted arbitrarily, capriciously, and not in accordance with

the FAR by failing to have meaningful discussions and instead coercing or misleading

QCI to raise its proposed price. See QCI’s MJAR at 10-11. QCI contends that GSA

engaged in misleading discussions because GSA (1) improperly coerced QCI to raise

proposed prices during the first round of discussions or face elimination from the

competition and (2) arbitrarily and capriciously relied on the IGE during the discussions.

QCI’s MJAR at 12-13.

FAR § 15.306 provides the standards for agency exchanges with offerors after

receipt of proposals. FAR § 15.306(d) states that once an agency decides that discussions

will be held, the agency is generally required to conduct meaningful discussions with all

responsible offerors that submit proposals within the competitive range that “maximize

the [g]overnment’s ability to obtain best value.” Discussions are meaningful where they

“generally lead offerors into the areas of their proposals requiring amplification or

correction.” D & S Consultants, Inc. v. United States, 101 Fed. Cl. 23, 40 (2011) (quoting

Banknote Corp. of Am., Inc. v. United States, 56 Fed. Cl. 377, 384 (2003)). The agency

must at least indicate “deficiencies, significant weaknesses, and adverse past performance

information to which the offeror has not yet had an opportunity to respond.” FAR

§ 15.306(d)(3). However, the agency has no obligation to instruct the offeror “how to

12

rewrite its proposal” to address the proposal’s deficiencies. Fort Carson Support Servs. v.

United States, 71 Fed. Cl. 571, 612-613 (2006).

Courts have addressed circumstances where discussions are not meaningful

because the discussions are misleading. See Greenland Contractors I/S v. United States,

131 Fed. Cl. 216, 225 (2017). An agency misleads an offeror when the discussion leads

the offeror “into responding in a manner that does not address the agency’s concerns” or

the discussion “misinforms the offeror concerning its proposal weaknesses or

deficiencies.” D & S Consultants, Inc., 101 Fed. Cl. at 41 (quoting Analytical & Res.

Tech., Inc. v. United States, 39 Fed. Cl. 34, 48 (1997)). See CEdge Software Consultants,

LLC v. United States, 117 Fed. Cl. 419, 434-35 (2014) (“Discussions are misleading

when a procuring agency issues ‘incorrect, confusing[,] or ambiguous’ communications

that misdirect an offeror attempting to revise its proposal.”) (alteration in original and

citation omitted).

Relevant to this protest, where the agency discussion coerces the offeror to present

a particular price that prejudices the offeror, the discussion is considered misleading. SRS

Techs., B-254425.2, 94-2 CPD ¶ 125, 1994 WL 576118 at *2-4 (Sept. 14, 1995).

However, discussions are not coercive where the record demonstrates that an offeror was

free to make any adjustment to its proposal, and voluntarily adjusted its proposal in

response to an agency’s concerns. See CSC Gov’t Sols. LLC v. United States, 129 Fed.

Cl. 416, 439-40 (2016). In addition, where the agency prejudicially conveys or relies on

incorrect information in the discussions, the discussions are also misleading. Caddell

Constr. Co. v. United States, 125 Fed. Cl. 30, 45-46 (2016). Thus, if an IGE is incorrect,

13

it could result in misleading discussions. See First Enter. v. United States, 61 Fed. Cl.

109, 120 (2004).

A. GSA Did Not Coerce QCI to Raise Its Price.

The court finds that QCI’s contention that GSA engaged in misleading discussions

on the grounds that GSA coerced QCI to raise its proposed price is not supported. As

discussed above, during the first round of discussions GSA explained in writing to QCI

that it “appeared” that some of QCI’s prices were significantly low and that QCI’s total

proposed price did not appear realistic. GSA also stated in its letter to QCI that “any item

raised by the Government during discussions must be addressed in writing in QCI’s

revised proposal.” AR 266-67.

QCI asserts that these statements taken together amounted to a “mandate” to QCI

to raise its price. QCI’s MJAR at 10-13. In this connection, QCI argues that if QCI had an

option to explain its prices, GSA should have explicitly stated that QCI “could reasonably

explain the low prices and provide proof of its costs and reasoning for its low price.” Id.

at 14.

The government and PMI respond that GSA’s statements to QCI did not amount

to coercion. Rather, consistent with the FAR, GSA’s statements merely put QCI on notice

of the problems GSA had identified. The government and PMI argue that GSA then

properly asked QCI to address those concerns without dictating any specific outcome.

The government and PMI contend that the record shows that GSA in its letter to QCI did

not mandate that QCI raise its price. Def.’s MJAR at 11; see PMI’s MJAR at 8-9.

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The question before the court is whether GSA’s instruction to QCI to “address”

pricing concerns coerced QCI to raise its prices. The court, like the GAO, finds that the

answer is no. As discussed above, an agency does not coerce an offeror to take specific

action simply by identifying a flaw in the offeror’s proposal and stating that if the flaw is

not addressed the offeror may not be eligible for award. This court and the GAO when

faced with similar contentions have consistently held that, so long as the offeror has

discretion as to how to respond to the government’s concern, there is no coercion. See

CSC Gov’t Sols., 129 Fed. Cl. at 439-440 (“CSC cannot reasonably argue that it was

coerced . . . [where] it chose to acknowledge the . . . concerns raised in [the agency’s]

notice, and raised its costs”). For example, in Global Dynamics, LLC v. United States,

130 Fed. Cl. 211, 213-16 (2016), the court concluded that where an offeror was told that

its “total proposed price appear[ed] low when compared to all other offerors in the

competitive range” and was instructed to “review [its] total proposed price,” the offeror

was not improperly “instructed to raise its price.” Id. Similarly, in another case, the GAO

found “no merit to [the] argument” that the Navy mandated that an offeror raise its prices

where the Navy stated that the prices “appear to be priced somewhat lower than the

government estimate” and “advised [the offeror] to carefully review [its] price proposal

for any misunderstanding of the requirement.” ITW Military GSE, B-403866.3, Dec. 7,

2010, 2010 CPD ¶ 282, 2010 WL 4968775 at *3 (“This did not compel ITW to take any

particular action, but left to the firm’s business judgment whether it should raise its prices

or explain the prices earlier submitted.”). In both of these cases, the offeror retained

discretion regarding how to respond to the concerns identified by the government.

15

In contrast, only where an agency informs an offeror that it must take a specific

action is the offeror’s discretion improperly constrained. For example, in SRS Techs., the

GAO stated that where the agency required that government-estimated equipment costs

“should be proposed as stated without any discounting,” the offeror was improperly

required “to use the government’s equipment costs estimate for its proposed equipment

costs.” SRS Techs., B-254425.2, 94-2 CPD ¶ 125, 1994 WL 576118 at *2-4 (Sept. 14,

1995). The GAO therefore found that, because the offeror was required to take a specific

action, the offeror was improperly coerced during discussions.

Here, the record demonstrates that GSA’s statements requiring QCI to address

pricing concerns did not impermissibly limit QCI’s ability to exercise its own business

judgment in responding to those concerns. Unlike the protestor in SRS Techs., QCI was

not required to submit its next proposal at a particular price. Rather, GSA merely required

QCI to “address” the prices that “appeared” low or unrealistic. Like the government’s

statements that the offerors in Global Dynamics and ITW Military GSE review any prices

that appeared too low, GSA’s statements here do not amount to a mandate to raise prices

or offer a particular price. To the contrary, GSA’s discussion letter to QCI avoided any

conclusive determinations regarding an acceptable price. Instead, the letter merely stated

that QCI’s prices “appeared” low or unrealistic. AR 268. The record demonstrates that

GSA did not require QCI to take any specific action.

Furthermore, QCI’s assertion that it was coerced into raising its price because

GSA failed to tell QCI that it could provide more explanation or proof in support of its

initial price is without support. As discussed above, GSA was not required to explain to

16

QCI exactly how GSA’s concerns could be met under FAR 15.306. See Fort Carson

Support Servs., 71 Fed. Cl. at 612-613. Instead, GSA meets its obligation to conduct

meaningful discussions under the FAR by “apprising [an offeror] of deficiencies in its

proposal.” See D&S Consultants, Inc., 101 Fed. Cl. at 40-41. The language used in the

discussions left QCI with the option to explain why the prices were not actually low or

unrealistic, rather than raising its prices. QCI was free to “make any adjustment to its

[proposed price] or none at all, based on its assessment of the validity of the [GSA’s]

concerns.” See Innovative Test Asset Sols. LLC v. United States, 125 Fed. Cl. 201, 226

(2016).

For these reasons, QCI’s claim of misleading discussions based on its proposed

price being coerced fails, and the court denies QCI’s motion for judgment on the

administrative record with regard to this issue.

B. QCI’s Claim that GSA’s Reliance on the IGE Led to Misleading

Discussions Is Not Supported.

The court further concludes that GSA’s discussions were not misleading based

upon GSA’s reliance on the IGE. QCI claims that GSA compared QCI’s prices with an

unsupported IGE which led to an erroneous discussion regarding QCI’s prices. As

discussed above, QCI’s proposal as compared to the IGE broke down as follows:

17

GSA’S INITIAL

DISCUSSIONS WITH QCI IGE QCI Initial Price

Bozeman $115,440.00 $[. . .]

Mechanical labor costs at Butte $115,440.00 $[. . .]

Bozeman, Butte and Missoula

appear significantly low Missoula $115,440.00 $[. . .]

Billings $76,000.00 $[. . .]

Mechanical direct costs (costs

other than self-performed Bozeman $77,000.00 $[. . .]

labor) appear significantly low

Butte $77,000.00 $[. . .]

at Billings, Bozeman, Butte

and Missoula Missoula $82,000.00 $[. . .]

The offeror’s price of

6,009,580.00 does not appear

realistic $7,398,875.39 $6,009,580.00

AR 610.

QCI contends that GSA’s reliance on the IGE was erroneous and thus misleading

when conducting discussions with QCI for two reasons. First, QCI argues that “it is

common knowledge among contractors that the government estimate is often inaccurate.”

QCI’s Reply at 7 (ECF No. 33). Second, QCI argues that GSA should have given

deference to QCI’s original proposed price because QCI was an incumbent. Id. at 8.

The government and PMI respond that it was not arbitrary and capricious for GSA

to raise concerns with QCI’s price based on a comparison of QCI’s prices with the IGE.

PMI asserts that QCI’s statement that the IGE should not be relied on because it is

“inaccurate” is not supported by any evidence. PMI’s Reply at 4-5 n.2 (ECF No. 35). The

government argues that agencies are not required to give deference to an incumbent’s

18

proposed price. See Def.’s Reply at 4-5 (ECF No. 34) (citing Lyon Shipyard, Inc v.

United States, 113 Fed. Cl. 347, 357 (2013)).

The court agrees with the government and PMI that GSA was not arbitrary or

capricious in raising concerns regarding QCI’s initial price based on a comparison of

QCI’s prices with the IGE. While it is true that discussions that rely upon incorrect

information that prejudice the offeror are misleading, Caddell Constr. Co., 125 Fed. Cl.

at 45-45, QCI has not offered any support for its contention that the IGE was inaccurate

beyond the conclusory statement that it is common knowledge that IGE’s are often

inaccurate. This bare allegation is not sufficient to prove that GSA’s IGE was not

accurate in this case. It is well settled that agency action is entitled to a “presumption of

regularity.” See Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d

1324, 1338 (Fed. Cir. 2001) (“Because of that presumption of regularity, the agency

should not be required to provide an explanation unless that presumption has been

rebutted by record evidence suggesting that the agency decision is arbitrary and

capricious. . . . The litigant challenging that presumption necessarily bears a heavy

burden.”). This court has previously rejected a similar argument that the protestor “would

have been awarded the contract if the agency had not failed to ‘assess the veracity and

accuracy of its initial estimates’” after receiving offers where the protestor offered no

analysis as to why the IGE was inaccurate. First Enter. v. United States, 61 Fed. Cl. 109,

120 (2004) (quotation omitted).2 Likewise, QCI has failed to provide any analysis as to

2

To the extent QCI argues that because some offers submitted had a final price below the IGE,

the IGE was inaccurate, the court finds this argument unsupported. Even where all the offers

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why the IGE is inaccurate here, and its motion for judgment on the administrative record

on this ground is rejected.

To the extent that QCI contends that GSA should have relied on QCI’s prices as

the incumbent, this contention also fails. The court agrees with the government’s

argument noted above that GSA is not required to give deference to the incumbent’s

prices. Accepting QCI’s argument that its prices as the incumbent are presumptively

correct would shift the established burden of proof in a bid protest case from the protestor

to the United States whenever the protestor is the incumbent. However, it is axiomatic

that in a bid protest the “protestor bears the burden of proving that a significant error

marred the procurement in question.” Glenn Def. Marine (Asia), 720 F.3d at 907

(emphasis added). As a “seasoned contractor” and incumbent with presumable

knowledge of the contracting process, QCI had no basis to “assume that [GSA] would

evaluate it[s] offer based on [the protestor’s] historical task order prices,” rather than the

IGE. See Lyon Shipyard, 113 Fed. Cl. at 357. Moreover, QCI’s argument that any

deference should be given to its proposed initial price cuts against its challenge to the

accuracy of the IGE given that QCI’s final proposed price, $7,247,080.00, was within

2.1% of the IGE, $7,398,875.39. AR 610. Clearly, QCI thought that a final price close to

the IGE was justified.

received are significantly different from the IGE, that fact “is not itself sufficient to establish the

reasonableness of the bidders’ prices and the unreasonableness of the government’s estimate.”

See First Enter., 61 Fed. Cl. at 120 (quoting Overstreet Elec. Co., Inc. v. United States, 47 Fed.

Cl. 728, 733 (2000)).

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In sum, the record shows that GSA consistently used the IGE in its internal review

of all proposals, discussions with offerors, and its final award decision. QCI has provided

no reason to question the legitimacy of the IGE. The court thus concludes that GSA’s

discussions were not misleading to the extent GSA identified concerns with QCI’s price

based on GSA’s comparison of QCI’s prices with the IGE.3

V. CONCLUSION

For the forgoing reasons, QCI’s motion for judgment on the administrative record

is DENIED, and the government and PMI’s cross-motions for judgment on the

administrative record are GRANTED. No costs. The Clerk is directed to enter judgment

accordingly.4

3

The court also addresses PMI’s argument that, even if GSA’s discussions were misleading,

QCI’s claim must fail because QCI has failed to demonstrate prejudice. See PMI’s MJAR at 17-

18. PMI argues that QCI cannot show prejudice because PMI’s initial proposed price was lower

than QCI’s proposed price and GSA’s discussions with PMI included the same language QCI

alleges was misleading. Id. at 18. PMI contends that in such a circumstance QCI was not

prejudiced by any allegedly misleading language. According to PMI, it faced the same choice as

QCI regarding whether to raise its prices and therefore, even if the discussions were misleading,

PMI would still have gotten the award given that its price was lower and its technical rating was

higher. Id.

Although it is not necessary for the court to reach this alternative argument, it nonetheless agrees

with PMI that QCI cannot show prejudice. As discussed above, a “protestor must show that but

for [the alleged] error, the protestor had a substantial chance of receiving a contract award.”

Office Design Grp., 951 F.3d at 1373-74. Here, it is undisputed that PMI had a superior technical

rating to QCI and that PMI’s initial proposed price was also lower than QCI’s initial proposed

price. Thus, PMI’s proposal would still be superior to QCI’s proposal, even if GSA’s discussions

with all offerors were misleading. QCI has not shown that absent the alleged error in the

discussions QCI could have overcome PMI’s lower price and PMI’s unchallenged superior

technical proposal. For this alternative reason, the court rejects QCI’s protest.

4

The parties were asked to propose redactions prior to the public release of the May 20, 2020

opinion. In evaluating the proposed redactions, there “is a strong presumption in favor of a

common law right of public access to court proceedings.” See e.g., In re Violation of Rule 28(d),

635 F.3d 1352, 1356 (Fed. Cir. 2011). In addition, the court may exercise its discretion in

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IT IS SO ORDERED.

s/Nancy B. Firestone

NANCY B. FIRESTONE

Senior Judge

declining redactions that would render the affected document incomprehensible. Id. at 1360;

Allied Tech. Grp., Inc. v. United States, 94 Fed. Cl. 16, 23 n.1 (2010) (“[I]f the court were to

accept all of [the] proposed redactions, it would ... result[ ] in a nearly incomprehensible public

document.”). In light of these standards, the court has accepted some of the redactions proposed

to by the parties regarding proposed prices and declined those that render the opinion

incomprehensible. The redactions are indicated with a bracketed ellipsis (“[…]”).

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