Hvf West, LLC v. United States

In the United States Court of Federal Claims

No. 20-541C

Filed: September 4, 2020

Redacted Version Issued for Publication: September 18, 20201

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

*

HVF WEST, LLC,

*

Protestor, *

*

v. *

* Post-Award Bid Protest; Mixed-

UNITED STATES,

* Transaction Contract; Subject-Matter

* Jurisdiction; Standing; Cross-

Defendant,

* Motions for Judgment on the

v. * Administrative Record.

LAMB DEPOLLUTION, INC., *

*

*

Defendant-Intervenor. *

*

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

E. Sanderson Hoe, Covington & Burling LLP, Washington, D.C., for protestor.

With him were Thomas Brugato, Andrew R. Guy, and Darby J. Rourick, also of

Covington & Burling LLP, Washington D.C.

Ioana Cristei, Trial Attorney, Commercial Litigation Branch, Civil Division, United

States Department of Justice, Washington, D.C., for defendant. With her were Douglas

K. Mickle, Assistant Director, Commercial Litigation Branch, Robert E. Kirschman, Jr.,

Director, Commercial Litigation Branch, and Ethan P. Davis, Acting Assistant Attorney

General, Civil Division. Of counsel was Gregory J. Gusching, Attorney Advisor, Defense

Logistics Agency, Battle Creek, MI.

Shar Bahmani, Sacks Tierney P.A., Scottsdale, AZ, for defendant-intervenor.

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This Opinion was issued under seal on September 4, 2020. The parties were asked to

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

redactions that the parties proposed in response to the court’s request and one addition

for consistency. Words which are redacted are reflected with the notation: “[redacted].”

OPINION

The post-award bid protest at issue in the above-captioned bid protest filed by

protestor, HVF West, LLC (HVF) arises out of the award of a bridge contract issued by

the Defense Logistics Agency, Disposition Services (DLA DS) of the Department of

Defense, for the removal, demilitarization, mutilation and sale of government “scrap”

awarded to defendant-intervenor, Lamb Depollution, Inc. (Lamb). HVF responded with

the highest price offer to purchase the government property to be removed from

government facilities, and subsequently demilitarized or mutilated prior to being disposed

of by the contractor, pursuant to the bridge contract No. A0008025 (the Solicitation). After

HVF was found to be “non-responsible,” the contract was awarded to the defendant-

intervenor, Lamb, which submitted the second highest price offer. Protestor argues that

in finding it non-responsible, and then awarding the bridge contract to Lamb, DLA DS

acted arbitrarily and capriciously, and seeks to permanently enjoin the award. The parties

cross-moved for judgment on the administrative record. Defendant and defendant-

intervenor also filed motions to dismiss, arguing that this court’s bid protest jurisdiction,

pursuant to 28 U.S.C. § 1491(b)(1) (2018), does not provide subject-matter jurisdiction to

hear protestor’s bid protest because the bridge contract at issue is one for the sale of

government property, and that protestor lacks standing to challenge the award to Lamb.

By way of background, the Solicitation at issue in the case currently before the

undersigned was preceded by a previous award of a solicitation by DLA DS, pursuant to

Solicitation No. A0007598 (the ‘598 Contract), which also concerned the removal,

demilitarization, mutilation, and sale of government property. The ‘598 Contract, also was

awarded to Lamb, and the award also was protested by HVF in the United States Court

of Federal Claims. See HVF West, LLC v. United States, Case No. 19-1308C. On

November 22, 2019, Chief Judge Sweeney found in favor of HVF on the protest of the

‘598 Contract, finding that the Sales Contracting Officer (SCO) for DLA DS had “acted

irrationally by not following the evaluation process set forth in the solicitation” when

evaluating Lamb for award, and that HVF was prejudiced by the SCO’s actions. See HVF

West, LLC v. United States, 146 Fed. Cl. 314, 334–39 (2019) (HVF West I), recons.

denied, 16 Fed. Cl. 451 (2020), appeal docketed, No. 20-1414 (Fed. Cir. Jan. 30, 2020).

Chief Judge Sweeney also found that the United States Court of Federal Claims had

“subject-matter jurisdiction over HVF’s protest because the resulting contract from the

solicitation at issue [the ‘598 Contract] was for a mixed transaction—the awardee would

be buying property from the government while also providing a non-de minimis service to

the government.” See id. at 328–29. Chief Judge Sweeney also found that HVF had

“demonstrated a direct economic interest in the DLA’s award of the contract,” and,

therefore, HVF had standing to challenge the previous award to Lamb. See id. at 329–

31. Chief Judge Sweeney ultimately granted HVF’s request for injunctive relief, stating

that

the appropriate remedy is for the SCO to either (1) cancel its contract with

Lamb and determine a new awardee under the existing solicitation, or (2)

cancel its contract with Lamb and rebid the procurement under a new

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solicitation. The DLA must choose one of those options to cure the errors

noted above.

HVF West I, 146 at 341. Subsequent to Chief Judge Sweeney’s decision in HVF West I,

DLA DS did not cancel the ‘598 Contract awarded to Lamb, but issued a stop-work order

on the ‘598 Contract. On December 9, 2019, DLA DS issued the interim Solicitation in the

current protest, No. A0008025, as a bridge contract in anticipation of an appeal of Chief

Judge Sweeney’s decision to the United States Court of Appeals for the Federal Circuit,

which appeal was filed on January 30, 2020.2 After DLA DS awarded the bridge contract

to Lamb, HVF brought the above-captioned bid protest of the award of the bridge contract

in this court.3

FINDINGS OF FACT

Solicitation No. A0008025, the solicitation of the bridge contract at issue in the

above-captioned protest, No. 20-541C, stated that the “Invitation for Bid (IFB) is for a firm

fixed price sales contract where the bid price is expressed in United States dollars/cents

per pound,” and that “[t]his is a sales contract for the sale of scrap pursuant to provision

in Title 40, US Code, Chapter 5 wherein the Purchaser is agreeing to conduct

Demilitarization and mutilation of the property as a condition of sale.” (capitalization in

original). The Solicitation further stated that DLA DS “expects the Purchaser to perform

all requirements under this sales contract at the bid price provided by the Purchaser,” and

that “[t]he Agency guarantees to issue the total combined estimated annual generation of

DEMIL/MUT [Demilitarized/Mutilated] property offered in the amount of 19,000,000 lbs.

for sale within the terms of the Adjustment for Variation in Quantity or Weight clause (Sale

by Reference (SBR) Part 4, Condition 5).” (capitalization in original).

The Solicitation defined “Demilitarize (DEMIL)” as:

The act of eliminating the functional capabilities and inherent military design

features from DOD personal property. Methods and degree range from

removal and destruction of critical features to total destruction by cutting,

crushing, shredding, melting, burning, etc. DEMIL is required to prevent

property from being used for its originally intended purpose and to prevent

the release of inherent design information that could be used against the

2

The court notes that Case Number 20-1414 before the United States Court of Appeals

for the Federal Circuit refers to the appeal that Lamb filed. Subsequently, defendant filed

an appeal with the Federal Circuit, Case No. 20-1583. The Federal Circuit has

consolidated the appeals, and is considering the appeals together. See Order, HVF West,

LLC v. United States, Case No. 20-1583 (Fed. Cir. March 24, 2020).

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The parties were orally informed that defendant’s motion to dismiss for lack of subject-

matter jurisdiction was dismissed. The parties requested the court to incorporate that

decision in writing in this Opinion. The following Opinion addresses in writing the

defendant’s motions to dismiss for lack of subject-matter jurisdiction and standing, as well

as DLA DS’ finding by the defendant of non-responsibility on the part of HVF.

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United States. DEMIL applies to DOD personal property in both serviceable

and unserviceable condition.

(capitalization in original). “Mutilation (Scrap Classification (SCL) MUT)” is defined as a

“process that renders material unfit for its originally intended purposes by cutting, tearing,

scratching, crushing, breaking, punching, shearing, burning, neutralizing, etc. Required

to have Certificate of DEMIL or MUT signed by certifier and verifier.” (capitalization in

original).

The scrap material at issue in the Solicitation, also referred to as “property stream,”

“may consist of, but is not limited to”:

[A]luminum and steel scrap (light and heavy), copper, brass with

nonmetallic material to include plastic and textile, fiberglass, Kevlar and

body armor, satellite antennas, large weapon system and parts, wheeled

and tracked vehicles (lead acid batteries may be included), tank track,

trailers, containers, aircraft and aircraft components that are flight safety

critical aircraft parts (FSCAP) and sensitive components and textiles

requiring demilitarization and/or mutilation. This property consists of DEMIL

codes B, C, D[,] E, F and Q. Purchaser may also receive approved DEMIL

G property with Material Documented as Safe (MDAS) certificate and

DEMIL P property with declassification certificate.

(capitalization in original).

The Solicitation also explained that

[t]his sale is being offered as a bridge sale due to pending litigation involving

a previous award on Solicitation No. A0007598. If an appeal is taken in the

pending litigation the Agency does not expect it to be resolved for at least

12 month [sic]. Accordingly, the performance period of the sales contract

resulting from this IFB shall be limited to a 12-month base period, followed

by two 12-month option periods that may be exercised at the Sales

Contracting Officer’s (SCO) discretion. The sales contract also contains an

available six-month extension period that may be offered at the SCO’s

discretion at the end of each performance period, under the same terms

and conditions of the sales contract. In the event the extension is utilized,

the SCO shall advise the contractor in writing 30 calendar days prior to the

expiration of the current period of performance period [sic]. The extension

may be utilized in 30-day increments, a combination of 30-day increments,

or in its entirety. The entire length of the sales contract, if all option periods

and extension are used, shall not exceed three years.

(capitalization in original).

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Section 3 of the Solicitation, titled: “General Terms and Conditions” stated:

This is not a service contract administered in accordance with the Federal

Acquisition Regulations (FAR). This is a sales contract for the sale of scrap

pursuant to provision [sic] in Title 40, US Code, Chapter 5 wherein the

Purchaser is agreeing to conduct Demilitarization and mutilation of the

property as a condition of sale. The Government is not responsible for any

indirect or inconsequential expenses related to performance under this

sales contract. The measure of the Government’s liability, in any case

where liability of the Government to the Purchaser has been established,

shall not exceed refund of such portion of the purchase price as the

Government may have received. Purchaser may be required to attend

special training, seminars, instructions, classes, safety orientations, etc.,

provided by the Government or to provide information to perform work or

gain access to the site. Example: Pass and ID requirements, antiterrorist

training, Environmental Management Systems (EMS) policies and/or

equipment training.

(capitalization in original).

The Solicitation at issue in the above-captioned protest required that the

“Purchaser’s facility must be located within 50 miles of DLA Disposition Services Tucson,

Arizona Centralized DEMIL Division (CDD),” and that “[b]idders must be able to receive

up to 40 direct shipments per week in addition to the 25 loads per week the bidder must

remove from Tucson CDD and at RIP [Receipt in Place] locations on and around Davis

Monthan AFB [Air Force Base].” (capitalization in original). The Solicitation further stated

that the Purchaser

is expected to DEMIL/MUT and remove a minimum of 1,585,000 pounds

per month. Weight is tracked and billed by weight tickets and DLA Form

1367 for outbound scrap removed from the site. The Purchaser is

responsible for removal and disposal of all scrap, to include all metallic and

non-metallic material resulting from the DEMIL/MUT process at no cost to

the Agency.

(capitalization in original). The Solicitation also required that “[a]ll DEMIL/MUT operations

will be conducted off Government premises” (capitalization in original), with the exception

of “downsizing,” which is the limited destruction of government property which occurs on

government premises, but which “is authorized only to the extent for property to be

properly and safely transported.” The Purchaser is “required to clean-up the workspace,

remove, and dispose of any parts or debris resulting from the Purchaser[’]s

performance/downsizing at the end of each work day.” (capitalization in original).

The Solicitation at Section 2, Subsection 1, titled: “Demilitarization/Mutilation

Section,” provided further requirements for the removal, demilitarization and mutilation of

the scrap at issue, including that the “Apparent High Bidder” “must complete training and

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submit an appointment letter with the certifiers name and signature on it to the SCO before

work can begin.” (capitalization in original). Furthermore, “[a]gency verifier(s) must be

present for all DEMIL/MUT operations. If the Agency verifier is unavailable for any reason,

operations are to be shut down until the verifiers return.” (capitalization in original). The

Solicitation in the above-referenced Subsection also reiterated that the Purchaser was

“required to move all property located on DLA Disposition Services Tucson CDD

[Centralized DEMIL Division] and at RIP [Receipt in Place] locations on and around Davis

Monthan AFB [Air Force Base],” and that the Purchaser is “required to DEMIL/MUT all

property streams.” (capitalization in original). The Solicitation further stated that “[a]ll

military markings and data plates are to be completely destroyed during the DEMIL/MUT

process.” (capitalization in original). The “[m]ethod and degree of demilitarization will be

IAW [in accordance with] DODM 4160.28 Vol 3,” and the “appointed Agency Verifier will

have final say in the DEMIL/MUT of property.” (capitalization in original). Notably, the

Solicitation in the above-referenced Subsection stated that title to the scrap does not pass

to the Purchaser until “the DEMIL or Mutilation has been completed and the Certificate of

DEMIL or Mutilation has been signed by both the Purchaser certifier and the Agency

verifier and the [Form] 1367s is [sic] signed by both the Purchaser certifier and the Agency

verifier.” (capitalization in original).

The Solicitation contained an “Environmental and Human Safety Notice,” which

stated:

It is the responsibility of the Purchaser to ensure that the ultimate end use

of the property is performed in an environmentally compliant manner. As

such, prior to the award of any hazardous item, each high bidder’s premises

and/or the intended disposal facility may be subject to an on-site inspection

by a Government representative. All offerors are advised that they must

comply with all applicable Federal, State and local laws, ordinances,

regulations, etc. with respect to human safety and the environment during

the processing, use, or disposal of material purchased from the Department

of Defense.

(capitalization in original).

Regarding “Bid Evaluation and Award,” the Solicitation stated:

a. This is not a service contract awarded or administered in accordance with

the Federal Acquisition Regulations (FAR). This is a sales contract for the

sale of scrap that will be awarded and administered pursuant to the

provisions in Title 40, US Code, Chapter 5.

b. The Government intends that a single award will be made to a

responsible bidder with the highest priced responsive bid, unless a

determination is made to reject the bid under 41 CFR § 102-38.205.

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c. Under 41 CFR § 102-38.205, the Agency reserves the right to accept or

reject any or all bids. The Agency may reject any or all bids when such

action is advantageous to the Government, or when it is in the public interest

to do so.

d. A responsive bid is a bid that complies with the terms and conditions of

the sales offering, and satisfies the requirements as to the method and

timeliness of the submission. Only responsive bids may be considered for

award.

e. The general standards in FAR Part 9 on contractor responsibility

determinations that are applicable to procurement contracts are not directly

applicable to sales contracts awarded under 40 U.S. Code § 545, but may

be considered by the Sales Contracting Officer in evaluating bidder

responsibility.

f. A responsible bidder is one that has the necessary organization,

experience, financial resources, accounting process, operation controls,

technical equipment and facilities, or the ability to obtain them, to perform

the requirements of the sales contract, and has no disqualifying factors (i.e.,

is not suspended, debarred or an ineligible transferee).

g. Prior to award, the Agency will conduct a pre-award survey of the

apparent high bidder. Only the high bidder will be evaluated through this

screening process and there will be no comparative analysis done on other

bidders. At a minimum, an apparent bidder must submit an End Use

Certificate (EUC), DLA Form 1822, and Statement of Intent (SOI) DLA Form

2536. The apparent high bidder shall be required to provide detailed

information on every storage location the apparent high bidder intends to

use. The pre-award survey may be conducted at the apparent high bidder’s

facility(ies) or other location(s) as deemed necessary by the Agency and

may include but is not limited to a review of a the [sic] apparent high bidder’s

facilities and equipment, financial capability or disclosure of the apparent

high bidder’s financial condition, quality assurance, safety, environmental

responsibility and transportation. The apparent high bidders shall cooperate

in the pre-award vetting process by assisting in arrangements and/or by

providing requested information in a timely manner. The apparent high

bidder is advised that accomplishment of a pre-award survey or furnishing

documents to the Agency in support of the pre-award survey is part of the

assessment of the bidder’s responsibility and is not a guarantee the bidder

will receive award of a contract. The SCO may rely upon information

obtained in the pre-award survey in making his assessment of the bidder’s

present responsibility.

(capitalization in original). The Solicitation further stated that the pre-award survey will

include, but is not limited to: the passing of “an inspection by Agency personnel prior to

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contact [sic] award”; an “Environmental Responsibility Determination (ERD)” conducted

by DLA DS personnel; a “Trade Security Control Assessment” conducted by DLA DS

personnel; and a review of “[n]ecessary licenses, permits and certifications.” If the SCO

determined that the apparent high bidder

cannot be found affirmatively responsible, the next highest bidder will be

assessed in the same pre-award survey process. This same process of

vetting the next highest responsive bidder may continue, at the sole

discretion of the Sales Contracting Officer, until a responsive bidder is

identified and is determined to be affirmatively responsible.

Once the apparent high bidder was notified that it was the apparent high bidder, it had

three working days to:

a. Complete and return End Use Certificate (EUC), DLA Form 1822 to the

SCO. (SCO will provide these forms at notification);

b. Complete and return Statement of Intent (SOI), DLA Form 2536 to the

SCO. (SCO will provide these forms at notification); [and]

c. Provide DEMIL/MUT certifier appointment letters to the SCO.

(capitalization in original).

On December 30, 2019, DLA DS announced that pursuant to Solicitation No.

A0008025, five companies had submitted bids, including HVF and Lamb. HVF was the

apparent high bidder, offering $[redacted] per pound. Lamb’s offer was second highest,

at $[redacted] per pound.

In HVF’s SOI, HVF stated that it intended to sell the “materials recovered from

DEMIL and metals processing.” (capitalization in original). HVF’s End-Use Certificate also

stated:

Following verification and certification that DEMIL/Mutilation has been fully

completed pursuant to DoD regulations and Solicitation 8025 requirements

to the condition of scrap as defined in both said regulations and the

Solicitation, it is anticipated that the resultant scrap will be sold and used by

the purchaser as feed charge material to furnaces and melted, with the

molten metal then used in the manufacture of products.

(capitalization in original). The site where HVF intended to conduct the demilitarization

and mutilation of government property is located in Tucson, Arizona, and shares part of

its perimeter fence with Davis Monthan Air Force Base (DMAFB), one of the locations

from which the Solicitation provided for government scrap to be removed. HVF provided

DLA DS with a statement of HVF’s “Key Demilitarization/Mutilation Personnel,” which

provided the following names and information:

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Arizona

[Redacted]

- Vice President

- 24 years of experience in operation/processing metallic/non-metallic

materials and plant management. Primary overall management

responsibility for Demil/Mut Operations.

[Redacted]

- Production Manager.

- 30 years experience in the U.S. Military: Army and Air Force

- 15 years experience in DLA in property disposal, Demil coordinator.

- 14 years experience in managing the processing of metallic/non-

metallic materials; oversight of Demil/Mut deliveries and operations.

[Redacted]

- Production and Maintenance Manager.

- Responsible for operation and maintenance of metallic

processing/demil/mut equipment.

- 14 years of experience in processing metallic/non-metallic materials.

[Redacted]

- Production and Sales Manger

- 16 years of experience in processing metallic/non-metallic materials.

[Redacted]

- Manager of Environmental compliance

- Safety and environmental training

- Operations and maintenance equipment

- 11 years of experience.

[Redacted]

- Office Manager

- 4 years of experience in processing metallic/non-metallic materials.

On site operators, welders, drivers, and security.

Michigan

[Redacted]

- President

- 50 years of experience in operation/processing metallic/non-metallic

materials.

9

[Redacted]

- Executive Vice President

- 50 years of experience in operation/processing metallic/non-metallic

materials.

[Redacted]

- Senior Vice President

- 25 years of experience in operation/processing metallic/non-metallic

materials.

[Redacted]

- Senior Vice President/General Counsel

- 35 years of experience of addressing legal matters in the metals

processing industry including agreements and contracts with agencies of

the US Government.

[Redacted]

- Vice President Environmental Affairs

- 40 years of experience of addressing environmental compliance

matters in the metals processing industry.

[Redacted]

- Associate General Counsel

- 8 years of experience of addressing legal matters in the metals

processing industry including agreements and contracts with

agencies of the US Government.

[Redacted]

- Environmental Manager

- 32 years of experience addressing environmental compliance

matters.

Full accounting department led by CPAs

(capitalization and emphasis in original).

On January 14, 2020, members of DLA DS conducted an initial inspection of HVF’s

facility. The DLA DS members present during the January 14, 2020 inspection included

David Powell, Phillip Groll, and Forrist Richardson. Also on January 14, 2020, Mr. Groll

completed a pre-award survey on DLA Form 2537 (the January 14, 2020 Form 2537).

The January 14, 2020 Form 2537 stated that the most recent regulatory inspection by the

Arizona Department of Environmental Quality (ADEQ) Pima County of the HVF site was

conducted on May 28, 2014. The January 14, 2020 Form 2537 described the result of the

May 28, 2014 inspection as follows:

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Upon review of the records and inspection results, it was determined the

[sic] HVF is not currently a generator of hazardous waste and that no

potential Resource Conservation and Recovery Act (RCRA) violations

related to this compliance inspection were observed at the time of

inspection on May 28, 2014. The inspection determined the facility to be in

substantial compliance with the requirements of 40 CFR of the Code of

Federal Regulations, A.R.S., A.A.C., and applicable permit/license

requirements under Title 7 of Pima County Code.

(capitalization in original). The January 14, 2020 Form 2537 did not indicate any concerns

regarding HVF’s environmental responsibility, and gave HVF a “RESPONSIBLE”

environmental assessment, further stating that HVF “has processes in place to maintain

environmental responsibilities and has Emergency Response Plans and Training.”

(capitalization in original). The January 14, 2020 Form 2537 also answered the question

of whether there was “evidence of property being stored longer than 1 year,” in the

negative.

The administrative record in the above-captioned protest also contains an “Offsite

Recycling/Demilitarization Facility Inspection Form” (capitalization omitted), completed by

David Powell and Forrist Richardson on January 15, 2020, after their January 14, 2020

inspection by DLA DS. The inspection form provided the following comments:

- Visual observation: GOV Demil Scrap material still on site since last

contract ended in Dec 2018

-- Several piles of material were observed on site. Can’t determine if its [sic]

storage or pending removal. Site Contractor leadership indicated/stated

removal will be completed by 2 Feb 2020

- Over 500 Tires observed on site.

-- Recommend permit determination for waste tires/used tires.

- Perimeter fence required on east side of HVF compound. Can’t use Davis

Monthan AFB perimeter fence as their perimeter fence. Required a 5ft “clear

zone” between the perimeter fence. REF DOD 5100.76-M, Enclosure 9

- Noted/observed material (Tri-Wall lids) stacked next to fence (Southwest

end of compound), over ft high [sic], obstructing visual observation and

potential breach. Required 5 ft clear zone.

- Noted several areas on south and west perimeter fence with brush/weeds

over the top or through perimeter fence that requires removal.

(capitalization in original).

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Also on January 14, 2020, William Elson, Senior Vice Present and General

Counsel of HVF, wrote the following email to Todd Koleski, the Sales Contracting Officer

for DLA DS assigned to the bridge contract currently at issue:

Mr. Koleski:

The visit by Mr. Dave Powell and his team of HVF West’s Tucson facility

was conducted today. We would appreciate your forwarding Mr. Powell’s

report to you summarizing his team’s visit and the completed Offsite

Recycling/Demilitarization Facility Inspection Form. During and after Mr.

Powell completed his site visit, he was asked if he required any additional

information to which he responded that he would review his notes and the

notes of his team and let us know. Mr. Powell was shown the area where

Demil/Mut work was to be performed including the current concrete pad in

that area. We advised Mr. Powell that two miscellaneous scrap material

piles located in that area would be moved. We also advised Mr. Powell of

our intention to lay crushed asphalt in front of the concrete pad. Mr. Powell

requested that demarcation implements be placed to show that the

Demil/Mut area was separated from the rest of our plant. Mr. Powell indicted

[sic] that he was looking to make a second visit to the site not later than the

end of January to confirm that the Demil/Mut site area was then ready for

receipt of government material.

In addressing the question on the Offsite Recycling/Demilitarization Facility

Inspection Form regarding the date of the most recent regulatory inspection

we, [sic] advised Mr. Groll that as best we could recollect, Pima County had

visited our site about three years ago but that we would review our files and

get back with him. In fact, the most recent regulatory inspection of our site

was conducted almost 6 years ago by Pima County. The County confirmed

in its letter of June 11, 2014, copy attached, that HVF was not a generator

of hazardous waste and that no RECRA [Resource Conservation and

Recovery Act] violations were observed. Our Joe Stead will forward the

June 11 2014 letter on to Mr. Groll.

In connection with your review of HVF West’s (“West”) responsibility under

the referenced solicitation attached are the following.

1. West’s Operational Plan describing among other matters, its operational

controls, quality assurance, safety, environmental responsibility,

transportation capabilities, technical equipment and facilities and

accounting processes.

2. Identification of key personnel at West providing a brief description of

their responsibilities and experience in demilitarization and mutilation and

in the processing of metallic and non-metallic materials.

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3. Copies of the various permits issued for our facility.

4. A letter to you summarizing West’s financial condition and resources.

The material in number 1, 2, and 3 above, were as well delivered to Mr.

Powell today and we had advised him that we would be forwarding these

materials on to you. Item 4 above was not delivered to Mr. Powell. We

request that the letter and attachments regarding West’s financial condition

and resources remain with you and your superiors in Battle Creek and such

other personnel at DLA Disposition Services in Battle Creek who are

required to review the financial information in assisting your consideration

during the pre-award survey.

We request that should you require any additional information following your

review of the enclosed materials and the report provided to you by Mr.

Powell, please so advise by e-mail. We will respond to requests for

additional information promptly.

(capitalization in original).

On January 15, 2020, ADEQ performed an unannounced inspection of the HVF

site in response to an anonymous complaint submitted to ADEQ. The inspection

consisted of two parts: a hazardous waste inspection, and a solid waste inspection.

Pursuant to the two-part inspection, ADEQ generated a Hazardous Waste Inspection

Report and a Solid Waste Field Inspection Report, completed by ADEQ inspectors Jenna

Brickner and Anthony Stone, respectively. HVF’s on-site representative for both

inspections was Scott Laughlin. The Hazardous Waste Inspection Report stated on the

cover page that “Follow-up action is needed; please submit the requested documentation,

which is detailed on the inspection report.” In the Hazardous Waste Inspection Report,

Jenna Brickner also checked the box next to: “Check this box if there is ‘a risk to any

person, the public health, safety or welfare or the environment’ per ARS § 41-1009.” The

“Observation” section of the ADEQ Hazardous Waste Inspection Report stated:

The purpose of this inspection was respond [sic] to a complaint submitted

to ADEQ. The agency’s hazardous waste inspections unit co-inspected the

facility with the solid waste unit.

During the inspection, ADEQ observed multiple piles of assorted military

scrap metal. Some piles were placed on concrete and some piles were

placed directly on soil. Military aircraft can be painted with a product that

contains chromium and/or cadmium. ADEQ observed painted aircraft parts

and paint chips throughout the property, on and off the paved areas.

ADEQ identified a pile of painted aircraft parts that appeared to contain

more painted pieces than other piles. The paint is a lime green color which

is distinctive of aircraft paint containing chromium and/or cadmium. When

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the tractor scoops up the metal scrap for processing, it grinds the paint chips

into a powder. The concrete slopes downward to soil to the south. At the

time of the inspection, ADEQ observed that stormwater had collected in a

surface depression of the soil located downgradient of the pile of painted

aircraft pieces.

ADEQ retrieved samples in two locations at the facility. The first location

was at the base of the pile mentioned above. The sample collected was of

the powdered layer on the concrete. The second sample was from the top

three inches of soil in the area between the concrete slab and collection of

stormwater.

ADEQ sent the samples to a third party registered environmental lab for

analysis [Eurofins TestAmerica]. The results for the sample located at the

base of the pile, are 1100 mg/Kg for total chromium and 4.2 mg/L for

cadmium by Toxicity Characteristic Leaching Procedure (TCLP). The

results for the sample from the soil downgradient of the pile, are 480 mg/Kg

for total chromium and 4.9mg/L for cadmium by TCLP. Sample analysis for

TCLP regulatory levels is an approved procedure for determining an

accurate waste determination pursuant to 40 CFR § 262.11 / A.A.C. R18-8-

262.

The sample results indicate that the facility is storing and disposing

hazardous waste without a permit. [sic] consequently disposing its

hazardous waste directly into the environment. These actions are violations

pursuant to A.A.C. R18-8-270(B)(1) and 40 CFR § 265.31 / A.A.C. R18-8-

265.

(capitalization in original). The ADEQ Hazardous Waste Inspection Report also stated

that “[p]ending the results of the sample analysis, ADEQ may require further

documentation,” and directed HVF “[g]oing forward, [to] manage, store, and dispose of

waste fluorescent lamps as universal waste and [to] discontinue disposal at the city

household hazardous waste center.”

Like in ADEQ’s Jenna Brickner’s Hazardous Waste Inspection Report on HVF’s

site, the Solid Waste Field Inspection Report, completed by Anthony Stone of ADEQ, also

stated that “Follow-up action is needed; please submit the requested documentation,

which is detailed on the Notice of Opportunity to Correct.” The following comments were

provided in the Solid Waste Inspection Report:

On January 15, 2020, Solid Waste Inspections Unit (SWU), conducted a

complaint based inspection of HVF West for compliance with Arizona’s

provisions for solid waste, used oil, waste tires, and lead acid batteries.

After the SWU identified itself and stated its purpose for the inspection,

permission was granted by Scott Laughlin, Vice President Operations, to

14

inspect the property. The SWU documented its observations with a number

of photographs. Refer to the enclosed ADEQ Photo-log.

Mr. Laughlin stated that HVF West is a metal recycling facility that is paid

by the U.S. Military to shred military aircraft and other items. The shredded

material is sorted to remove the ferrous and non-ferrous metals for

recycling. According to Mr. Laughlin, the metal processing is conducted on

an as-needed basis once the product arrives. Mr. Laughlin stated that he

was not allowed to provide information about the specifics of the process,

material being processed, when material was received, when material will

be sent out, origin of the material, or where the material will be will be [sic]

sent. However, he did state that 100 percent of the shredded piles are

considered to be product and not a waste.

During the inspection, SWU observed that HVF West had not created

sufficient measures to reduce the potential of soil contaminations from their

recycling activities. Concrete had been installed on a large portion of the

outdoor facility yard located around the processing building; however, the

majority of the material on-site appeared to be sitting directly on bare soil.

The used oil storage building contained one larger container of used oil

properly labeled with the words “used oil” and placed in functional

secondary containment. All used oil is transported by Arizona Waste Oil

Services. SWU did not observe used oil [or] contaminated soil during the

inspection. No waste batteries were on-site at the time of inspection.

Damaged tires are cut into small pieces and disposed at Los Realis landfill.

Whole tires are taken to the Pima County Waste Tire Collection site on Ina

Road. They are later collected by CRM and taken to Mesa to be processed.

Mr. Laughlin is currently working on an arrangement with CRM to directly

transport them to Mesa and bypass the Ina Road location. SWU reviewed

some waste tire manifests that demonstrated HVF West is currently

removing tires from the site and they stated all the tires will be removed by

the middle of February.

While aircraft tires are considered off-road tiers and the waste tire collection

site regulations do not apply to them, HVF must still use best management

practices to help with fire suppression. HVF should implement the same

standards as a waste tire collection site, which includes but is not limited to

fire extinguishers, “No Smoking” signs, and access routes. SWU gave Mr.

Laughlin two compliance assistance posters which will help with tire

determination, storage, and disposal.

Mr. Laughlin was informed that anything declared a waste (tires or waste

generated from shredding activities) is not allowed to remain on the property

15

longer than ninety days or it considered [sic] improper disposal of solid

waste.

(capitalization in original).

The administrative record indicates that David Powell and Forrist Richardson of

DLA DS visited HVF’s site again on January 23, 2020. In a January 24, 2020 internal DLA

DS email to Sales Contracting Officer, Todd Koleski, with the subject: “HVF Site Visit 23

Jan 2020,” David Powell of DLA DS wrote:

Todd,

Our visit with HVF’s Scott Laughlin and staff was not what Forrist and I

expected. Looking at Attachment 5 (A5) from HVF’s original layout and

given what we thought would be fixed (vegetation, piles of debris left of A5)

was not cleared. In A5 there were laydown and overnight storage areas

planned out. However, what we saw was a roped off-see Ruff Sketch (RS)-

from ground level looked very narrow. I asked Scott if this is HVFs [sic]

proposed area for DLA? He said yes. I asked him if he believed this area

can handle 90 trucks per week laydown, breakdown and stage areas and

send to hammer mill processing to include rolling stock and aircraft. His

answer was a not so confidant, yes.

I brought [sic] the fence line on the Northside of HVF stating that fence is

the border between DM and HVF. We told him about HVF using DM fence

line as a border would not be possible because the outriggers at the top

would face in towards HVF, they need to face outward [sic]. The email chain

below has HVF asking the question.

We spoke about what needs to happen to the property after hours using the

proposed DLA area all items need to go back into DLA’s area overnight if

not demiled/mutted [sic]. He was not opposed to it. Scott also mentioned

they could move the vehicle drain stations into our area. I said looking at

what you’re proposing this would shrink our foot print [sic] adding these

stations. After looking at the ground layout vs A5 I asked for a new

Planograph-measured so I know where our boundaries end and what we

have to work with. Photos were not possible but Scott did say he would

provide photos of the new area.

Concerns; [sic]

- Size of operating area. If load integrity is fluid certified timely-it could work-

-could also be a choke point

- Fenced in area and fence line Northside.

16

- If our site is completely enclosed within HVF does this satisfy DLA Security

and eliminate the need to remove-vegetation overgrowth and put to bed the

fence issue?

On January 27, 2020, DLA DS received an email from Greg Lamb, President of

defendant-intervenor Lamb, the company which had submitted the second-highest bid for

the bridge contract, and which is the defendant-intervenor in the current protest before

the court. Greg Lamb’s January 27, 2020 email stated:

I am providing the information below so that it may be reviewed and

considered when evaluating the award of the Tucson CDD DLA contract to

the apparent high bidder. It is our belief that significant non-compliance may

be occurring at the Apparent High Bidders [sic] site and they should be

thoroughly investigated before the award of any contracts. I believe the

information to be correct, compliance/environmental hazards serious and in

the best interest of the Government to thoroughly evaluate the responsibility

factors of the site operator prior to the award of the contract.

(capitalization in original). Greg Lamb’s January 27, 2020 email also provided a bullet-

point list detailing several concerns regarding HVF’s facility, including that: (1) there was

a “[p]otential accumulation of solid waste in the form of a substantial amount of tires

estimating 20,000 in quantity as well as several other potentially uncharacterized waste

piles throughout the property;” (2) “[t]he site is not permitted as a solid or special waste

disposal facility;” (3) “[a]ny residual materials generated from their recycling process may

not be characterized correctly;” (4) “[s]everal piles of Dirt and Dirt w/solid waste may be

on site, that may contain unlawful amounts of Chromium, cadmium and possibly even

PCBs depending on the age and makeup of the materials; (5) “[t]here is no reporting

under EPCRA Section 313 – TRI; (6) even though an ECHO report “shows there is no

violation . . . you will see there are also no current inspections;” and (7) a website link to

a “Pima county interactive map which is time lapsed . . . will visually demonstrate what

may be the accumulation of sloid [sic] waste over the last 10 years.” (capitalization in

original; emphasis omitted). Greg Lamb’s January 27, 2020 email also “urge[d]” DLA DS

“to contact the Arizona Department of Environmental Quality.” Attached to Greg Lamb’s

January 27, 2020 email were Google Map photos of the HVF West facility from 2014 and

2018 showing the apparent accumulation of piles of material, including tires, over time.

In an email dated January 28, 2020, Anthony Stewart of DLA DS requested

authorization from Eric Ray, DLA DS Environmental Operations Monitor, for another site

visit of HVF’s facility. Anthony Stewart wrote:

As per previous phone conversation, looking to get this done sooner than

later [sic]. Have concerns regarding scrap tire build-up[.]

Please schedule this site visit as soon as possible and contact me before

the site visit occurs so I can provide our desk audit findings.

17

The next DLA DS site visit of HVF occurred on February 3, 2020. In attendance

for DLA DS were David Powell and Lisa Henninger. In attendance for HVF were William

Elson, Senior Vice President and General Counsel, David Splan, Vice President and

Environmental Manager, and HVF managers, Scott Laughlin and Joe Stead. Lisa

Henninger of DLA DS completed a DLA Form 2537 for the February 3, 2020 site visit (the

February 3, 2020 Form 2537). The responses provided in Lisa Henninger’s February 3,

2020 Form 2537 were far more unfavorable regarding HVF’s environmental responsibility

in comparison to the responses in the January 14, 2020 DLA Form 2537 completed by

Phillip Groll after the initial site visit of HVF by DLA DS on January 14, 2020. As discussed

above, Phillip Groll provided in the January 14, 2020 Form 2537 that there were no

environmental concerns at HVF’s facility, and he had given HVF a “RESPONSIBLE”

environmental assessment. The February 3, 2020 Form 2537 completed by Lisa

Henninger concluded that HVF was “NON-RESPONSIBLE.” (capitalization in original).

The February 3, 2020 Form 2537 completed by Lisa Henninger of DLA DS also discussed

the January 15, 2020 ADEQ inspection, stating:

ADEQ performed an inspection for Solid Waste and Hazardous Waste.

Deficiencies reported; not sufficient measure to prevent soil contamination;

identified tire collection site requirements not met; observed aircraft parts

with paint containing cadmium and chromium stored directly on soil; and

observed storm water collection down gradient from pile of painted aircraft

parts. The ADEQ also collected two samples of soil which the results

included levels of chromium and cadmium. Due to the results of samples,

HVF was sited [sic] for storing and disposing HW [hazardous waste] without

a permit and disposing of HW directly into the environment.

(capitalization in original). The February 3, 2020 Form 2537 answered the question of

whether there was “evidence of property being stored longer than 1 year,” in the

affirmative, and stated:

HVF stated that the mounds of residue from scrapping processes is not

waste but is a commodity product. They stated that the commodity is

shipped for sorting to remove ferrous and non-ferrous metals for recycling.

HVF did not provide any shipment documentation for commodity removals

and could not provide any specifics for last removal time-frame or recycling

location.

The February 3, 2020 Form 2537 also stated that DLA DS was “[u]nable to determine

which commodities can be responsibly managed due to multiple environmental

concerns.” In a supplemental document to her February 3, 2020 Form 2537, Ms.

Henninger stated:

The HVF West site is a facility for scraping operations therefore some debris

and refuse is understood. The concern is property is not segregated in any

orderly fashion and designation areas for property such as tires is not

determined. . . .

18

TIRES. The HVF West site does not have a tire collection permit through

ADEQ. The need for a permit was identified in the ADEQ inspections on 1-

15-2020 and DLA survey inspection on 2-3-2020. The site states that the

tires are exempt from the permit because they are not Over The Road

(OTR) tires. Although the site does receive some aircraft tires they also

received vehicle tires which do require the site collection permit. Also, HVF

West disposes of the tires on the Waste Tire Disposal Manifest as “OTR

Tires” which contradicts their claim to being exempt.

(capitalization in original).

Lisa Henninger also detailed her concerns related to the February 3, 2020 HVF

site visit in a February 14, 2020 internal DLA DS memorandum, which stated:

I, Lisa Henninger, am an Environmental Protection Specialist at the DLA

Disposition Services Tucson site. I was assigned to perform the

environmental portion of the Pre-Award Site Survey, DLA Form 2537, for

HVF West. Area Manager, David Powell, and I conducted the survey on

Monday, February 3, 2020, from approximately 0930.

We began our survey of the HVF West site in their conference room with

company representatives Joe Stead, David Splan, William Elson and Scott

Laughlin. The DLA Form 2537 was reviewed question by question for the

HVF West Representatives to provide feedback. During this review they

informed us that they were recently inspected by ADEQ and Pima County

with no issues. They also informed us that there were soil samples taken

and that the results were not available yet. We specifically reviewed the

requirements of having a tire permit which they stated the site was exempt

from due to their tires being off road and aircraft. I provided the ADEQ

guidelines and requested them to provide documentation showing they

were exempt. The review also required HVF West to provide documentation

of their Spill Plan, outgoing invoices for waste disposal, hazardous

manifests, and employee training requirements. We also discussed the

disposal method for residue where they identified that the residue from

demilitarization was a product. They continued that the residue was actually

a commodity that they sell for metal recovery processes.

After reviewing the survey form we continued to perform a physical

inspection of the entire HVF West site. During the physical inspection I

observed the process for scrapping tires. The site has their own shredding

machine however the tires were store [sic] at multiple locations throughout

the yard. Next I evaluated the hazardous property storage space where

requirements such as spill kits, fire extinguishers, no smoking signs were

all met. Continuing the physical inspection I observed scrap property stored

on the soil and several large mounds of processed residue that was

19

identified as a commodity by HVF West representatives. These mounds

appeared to have been stored for a long period of time and would be

estimated at 150 tons of residue property. I asked HVF West

representatives how the commodity was disposed of which they answered,

the process was propriety [sic]. I continued by asking what type of facility

they use and when the last time a shipment was sent out however the

representatives could not provide any answers. My observation is the

mounds of property have been at the HVF West location for several years.

Without any documentation or guidance on the disposal process I cannot

verify that the property is being disposed of in accordance with regulations.

The final physical evaluation location was the area of the HVF West yard

that was designated for the DLA Disposition Services demilitarization

process. The area was clear of any debris and was primarily soil with an

exception of a cement pad on the South end with three walls. I informed the

HVF West representatives that my survey results are contingent on

providing the documentation to support their responses.

On February 5, 2020, I received an email from William Elson, attached were

several documents to respond to the survey questions. They include two

ADEQ reports from the inspection on January 15, 2020. The solid waste

inspection was performed by ADEQ representative Anthony Stone listing

environmental concerns to include; storage of tires, soil contamination,

potential hazardous constituents of shredding materials and declared

waste. Another concern was tires could not be stored on site more than 90

days. On February 15, 2020, Anthony Stone sited HVF with violation, A.A.C.

R18-13-303(A)- Placing, depositing, or allowing to be placed or deposited

refuse or other objectionable waste on a person’s premises or on any public

street, road or alley, and the violation was signed by Scott Laughlin. The

hazardous waste inspection was performed by ADEQ representative Jenna

Brickner. Her concerns included military scrap being placed directly on the

soil, aircraft paint chips throughout property, and storm water

contamination. During the inspection, two soil sample [sic] were retrieved

due to concerns of hazardous aircraft paint being released into the soil and

storm water. The results of the samples included levels of chromium and

cadmium that were over the regulated limit. Due to these results, HVF West

was cited for violation of storing and disposing hazardous waste without and

permit and disposing hazardous waste directly into the environment.

I reviewed other documentation provided by HVF West to include an invoice

for disposing tires, employee training checklist, Tier II reporting, and fire

extinguisher inspection. I had multiple concerns of the documentation on

waste tire disposal manifest identifying them as “OTR Tires”. However, HVF

West stated their tires were exempt because they were not over the road

tires. Other documents were fuel being shipped for disposal on an invoice

instead of a Hazardous Waste Manifest as required by EPA. The employee

training checklist provided was for an employee on “2/5/2020” which was

20

two days after our survey with two of the major training requirements written

in. HVF West provided Tier II reporting however they did not provide Tier III

reporting as listed on the survey form. HVF West stated that they do not

store or dispose of hazardous waste however the EPA number they

provided on the Statement of Intent, AZR000521872, is registered as

having RCRA activities described as “receiving hazardous waste from off-

site.”

Due to my findings during the inspection and my review of the

documentation provided by HVF West, I found the contractor to have an

environmental assessment of non-responsible. HVF West would need to

resolve the ADEQ violations and obtain a tire permit at a minimum before

consideration and reevaluation.

I, Lisa Henninger, swear that the above statements are accurate and true

to the best of my knowledge.

(capitalization in original).

Also on February 3, 2020, Mr. Elson of HVF sent the following email to DLA DS,

and provided requested documentation to DLA DS:

Further to your and Lisa Henninger’s visit this morning, you confirmed that

the product piles in our yard will not inhibit the flow of material to the site in

our 33 acre facility designated for receipt of what you had suggested could

amount to 90 truckloads per week. You commented that the area we have

designated and setoff was sufficient to accommodate the potential of

receiving 90 truckloads a week.

In an internal DLA DS email dated February 6, 2020, David Powell, however, detailed his

concerns from the February 3, 2020 HVF site visit:

My main concern is the process flow layout. Currently, we’ve been given a

plot of land. It looks large enough but the question remains-how will it be

set-up to function as a MUTB/Demil processing area? I don’t believe Scott

has grasped the idea of our flash to bang concept 12 days from induction

to demil. When I asked what his plan was to separate Demil from MUB, how

the 90 truck weekly turn-over will look like Scott said this is given post

award. I said yes but I need a macro view of HVFs [sic] plan of attack. I

reminded him once trucks begin to roll I need to know their process will

handle the operation. Once again he’s given DLA an area to work in but I

don’t see where he’s going to place certain items of equipment needed;

troch-cut, shearing, offloading box trailers and where incoming truck

property is staged offloaded and worked. Reminding him both Demil/MUTB

must be separated during the process. I asked Scott to give me a draft

process flow of how items will go into and out of HVF.

21

(capitalization in original).

In a memorandum from Mr. Elson of HVF to Ms. Henninger of DLA DS,

Environmental Specialist for DLA DS, detailing the February 3, 2020 DLA DS visit to the

HVF site, Mr. Elson stated:

A. ADEQ and PIMA County Inspections.

We opened the meeting on February 3, 2020 advising you and Dave of an

ADEQ site inspection at our facility on January 15 and a PIMA County

RECRA inspection on January 31.

We advised you that the ADEQ site visit was in follow up to a complaint filed

with the ADEQ by an individual whose name was not provided by the

ADEQ. The reports that were generated following the ADEQ inspection

were forwarded to Scott Laughlin by e-mail on January 28, 2020, consisting

of a Solid Waste Field Inspection Report and a Hazardous Waste Inspection

Report. There is information in the reports as well as pictures attached to

each of the reports which contain confidential and proprietary process

information. We consider the foregoing are consequently exempt from

disclosure under 5 USC 552(b)(4).

Notwithstanding the notation in the e-mail to Mr. Laughlin that HVF West

would receive additional materials from the ADEQ, in light of the historical

directive from senior management to be proactive in circumstances with

regulating authorities, we also advised you that following receipt of the

ADEQ reports, we did not wait for further contact from the ADEQ, but that

on January 30 we reached out to and spoke with Jenna Brickner, the

Hazardous Waste inspector to discuss next steps. Jenna instructed us to

speak with Brandon Green. We followed up with Mr. Green also on January

30 who advised us that we should follow up with Mr. Green’s supervisor,

Terry Bear. We have been in contact with Mr. Bear and expect to be meeting

with him in the next several days.

During the ADEQ visit on January 15, Ms. Brickner thought that the follow

up materials may include a request for a site assessment although she did

not know the details of the breadth or extent that the site assessment may

entail. Following our receipt of the ADEQ reports on January 28, we met

with Brown and Caldwell on January 30, 2020 at the facility for in excess of

2 hours which concluded in our engaging the firm to assist with a site

assessment and analysis, if required, and related issues that may arise in

this regard. . . .

The Investigation reports from ADEQ are not final promulgations by the

ADEQ under Arizona law. As we advised you and Dave, prior to the Arizona

22

visit on January 15, the last visit we had at our site was from PIMA County

in 2014 which resulted in a letter from PIMA County concluding that HVF

West was in compliance with the Pima County RECRA and solid waste

permit was not required. A copy of the letter from PIMA County is attached.

We had provided that letter to DLA previously. We told you and Dave that

we have full intention to work expeditiously with the ADEQ to reach an

acceptable plan of action to address these matters and that we are fully

committed to proceed as required under Arizona law. Consistent with our

initial reaction to the ADEQ reports, we will continue to be proactive with the

ADEQ to reach an acceptable plan. We have both the intent and resolve to

address and conclude these matters with the ADEQ as quickly as possible

as required under Arizona and federal law. Note that we have the ability

from a technical, financial and personnel perspective to timely address

these matters with the ADEQ and to fully implement a plan of action once

finalized.

We did not share with you during our meeting the particular technical

expertise that we have in house. [Redacted], our Vice President of

Environmental Affairs has 30 years environment experience including work

with both federal and state environmental regulations and interacting with

environmental agency representatives. [Redacted] leads our affiliated

group of companies in environmental compliance and permitting. Before

joining our affiliated group of companies on May 1, 2016, [redacted] had in

excess of 28 years experience as a regulator working at the Michigan

Department of Environmental Quality and the City of Detroit Water &

Sewage Department. [Redacted] works with [redacted] on environmental

compliance and permitting.

We have not received a report from PIMA County. Should we receive a

report from PIMA County regarding their visit addressing RECRA matters,

we will forward on to you. The Pima County inspectors who visited our site

were Mr. James Jones, Air Quality Inspector, 520-724-7348, and Ms. Nora

Atondo, RECRA Compliance Inspector, 520-724-7429. We have included

their phone numbers should you wish to follow up with them.

B. Tires

As to your question regarding the need for a permit for the tires at our facility,

attached are Arizona statute sections 44-1301 and 44-1304.01. Section

1301 defines both motor vehicle and off road motor vehicle. Section 1304

addresses requirements re 100 and 500 but is limited to only motor vehicle

tires.

On page 2 of the ADEQ Solid Waste Field Inspection Report, Mr. Anthony

Stone notes that aircraft tires, being off the road tires, are not subject to the

tire collection site regulations.

23

Further, attached are examples of documents we receive [sic] from the

Pima County Waste Tire Collection Facility at our delivery of tires. There

are two examples attached one for 100 tons and the other of 158 tons, each

of which are noted as off the road tires. We also attach a billing ticket from

the land fill showing the tires as being nonstandard tires. Note, that the

landfill has separate disposal charges for different categories of tires.

Please see the attached fee schedule from Pima County indicating that

charge for standard motor vehicle tires is $30 a ton while the charge for off

the road tires is $150 a ton.

(capitalization and emphasis in original). On February 7, 2020, Ms. Henninger of DLA DS

wrote the following internal email:

I have received the supporting documentation from the HVF representatives

in response to our recent On Site [P]re-Award Survey. I am preparing the

form DL2537 for submission however I wanted to forward the two ADEQ

inspection reports that were conducted on January 15, 2020. These initial

reports from ADEQ shows several deficiencies from HVF to include notice

of tire storage violations, SWPPP violations and a violation for refuse being

displaced on public property. The results of the inspections state a follow

up is required to determine any further violations. I wanted to share these

reports in advance so the results of the DL2537 are anticipated.

(capitalization in original).

On February 19, 2020, Mr. Elson emailed Ms. Henninger regarding the lab results

of the soil samples HVF had sent for independent testing. Mr. Elson’s February 19, 2020

email stated:

Lab results of the samples taken by ADEQ were analyzed for TCLP [Toxicity

Characteristic Leaching Procedure] cadmium and total chromium. We were

advised by the ADEQ that the State of Arizona does not have access to an

in state lab capable of conducting an analysis for the presence of

hexavalent chromium (chromium VI), and therefore the ADEQ lab results

tested only for total chromium. We however wanted to know if there was

hexavalent chromium in the samples taken by ADEQ. In response to our

inquiry, the ADEQ suggested an out of state lab recognized by the ADEQ

which had the capability of testing for chromium VI. We forwarded our split

samples associated with those taken by the ADEQ to the recommended lab

which conducted analyses for chromium VI and has determined that there

was hexavalent chromium in the sample but at levels substantially below

the State of Arizona non-residential levels identified in Arizona

Administrative Code at 18-7-205.

24

We also had our split samples analyzed for total cadmium since Arizona

Administrative Code Section 18-7-205 does not provide a level for TCLP

cadmium. Therefore, soil remediation under the foregoing rule is not

required in response to TCLP test results showing the presence of

cadmium. The results of the lab analyses do however confirm that total

cadmium, chromium VI, and trivalent chromium (chromium III) are at levels

substantially below the non-residential level established under the Arizona

Administrative Code section 18-7-205. Consequently, soils removal,

remediation or treatment with the object to bring cadmium, chromium VI,

and/or chromium III below the levels established under the foregoing rule

are not required. The report from Legend Technical Services which had

performed both total cadmium, TCLP cadmium and total chromium is

attached. Legend Technical forwarded the sample to Pace Analytical

National Tennessee who performed the TCLP for Hexavalent Chromium.

The lab results from Pace Analytical are also attached under cover from

Legend Technical.

Processed scrap metal, which includes metallic fines, is included in the

definition of excluded scrap metal under federal law and correspondingly

under Arizona law. Consequently, processed scrap metal is exempt as a

solid waste under both federal and Arizona law. As a hazardous waste must

first meet the definition of solid waste, if a material is not a solid waste it

cannot be a hazardous waste. The TCLP test is used for the purposes of

determining if a solid waste exhibits the characteristics of toxicity pursuant

to 40 CFR 261.24. If a material is not a solid waste, then the TCLP test

results are irrelevant since a material must be a solid waste in order to meet

the definition of a hazardous waste. The grab samples pulled by the ADEQ

included metallic fines which are not a solid waste and therefore cannot be

a hazardous waste. Consequently the TCLP test directed to non-waste

material was inappropriately used by ADEQ to draw a regulatory

conclusion. We therefore take issue with the Hazardous Waste Report

indication that we have stored or disposed of hazardous waste at our

property which conclusion was based upon the TCLP test performed for the

ADEQ.

(capitalization in original). On March 2, 2020, Tim Cronk of DLA DS’ Environmental Field

Office, who completed the “Final Report: Final Environmental Responsibility

Determination” on HVF’s proposed site for contract performance, discussed below, called

ADEQ regarding HVF and detailed the phone call in an internal memorandum. The March

2, 2020 internal memorandum from Mr. Cronk stated:

SUBJECT: Phone Conversation with Arizona Department of Environmental

Quality (ADEQ) Regarding HVF West.

I contacted Ms. Jenna Brickner of ADEQ on February 26, 2020 regarding

HVF West and asked if she would send me a copy of her report. ADEQ

25

received a complaint concerning HVF West and conducted an

environmental inspection on January 15, 2020.

I called Ms. Brickner on March 2, 2020 regarding her report to discuss her

findings and if there was a plan for remediation at HVF West. The following

are my questions and Ms. Brickner’s responses:

Tim Cronk (TC) – The report you provided shows the Cadmium level at a

level greater than the reportable limit yet I don’t see anything in the report

addressing the issue.

Jenna Brickner (JB) – We are working on an NOV (Notice of Violation) now

and will be issuing to HVF West. We have recommended to them that they

join our Voluntary Remediation Program which they have agreed to join. We

will then work with them regarding the remediation of the soil and how to

move forward with that remediation.

TC – So HVF West does not have a violation at this point due to the high

levels of Cadmium but ADEQ will be issuing in the future, correct?

JB – That is correct. We are drafting now and have been in contact with

HVF West recommending they join our program which they have agreed to

join. We will then work with them on getting the soil cleaned up.

TC – Are you aware of the issues with the tires? I know Mr. Stone was the

inspector but was wondering if you are aware of that situation. He stated

there were several violations but he wrote up a single violation. Do you know

if HVF West has a plan with ADEQ to remove the tires and if that plan is

underway?

JB – I’m familiar with the situation but that is not my area of work. I do know

HVF West began removing tires shortly after the inspection and have been

removing them since. They are actively working to get those removed and

get below the limit. I believe the Notice of Opportunity to Correct

Deficiencies runs out in 90 days, which will be in April.

TC – So there is no formal plan but HVF West is working that issue and

removing the tires. How do you know if they have complied with the 90 day

removal requirement?

JB – Yes, they are and have been removing tires since the inspection. They

will have to send us photos of the area to prove they have remediated the

tires and removed them. It is incumbent upon them to prove they have

removed the tires. ADEQ won’t just conduct another inspection.

26

TC – Is it against the law for material to be placed directly on the soil in

Arizona?

JB – It is not against the law. As long as it is Solid Waste, it can be placed

on the soil but must have a containment system. That is allowed. If the

material contaminates the soil, then it is against the law and they must

remove the contaminants. We talked to HVF West and recommended that

once they get the soil remediated for the Cadmium, they may want to put in

a cement pad to work on. We have been in communication with them over

this issue.

TC – Do you know if HVF West has applied or will apply for a permit?

JB – I’m not sure what kind of permit you are referring to but they do not

have a Hazardous Waste Permit and I don’t believe they are going to apply

for one. They would only need a permit if they are going to treat hazardous

waste.

(capitalization and emphasis in original).

In another internal memorandum dated March 2, 2020, Mr. Cronk detailed a phone

conversation with Mr. Powell, who was present at multiple DLA DS inspections of HVF’s

proposed site for contract performance. The March 2, 2020 internal memorandum from

Tim Cronk stated:

I called Mr. Powell to ask about taking photos of HFV [sic] West from the

perimeter of the fence line. When the site visit took place in support of the

Environmental Responsibility Determination (ERD), no photos were

submitted with the report. I stated that since we did not take any photos

during the visit, could he take photos through the fence [sic]. Mr. Powell

stated that they had started taking photos during the visit and the owner of

the facility called his attorney to ask if that was acceptable. Apparently, the

attorney said no. The attorney also said to delete any photos already taken.

Mr. Powell said the owner then walked over to him and witnessed Mr.

Powell deleting the photos on his phone. The owner then stated no other

photos were allowed.

On March 12, 2020, Tim Cronk of DLA DS completed an internal memorandum

labeled: “Final Report: Environmental Responsibility Determination” (the Final

Environmental Responsibility Determination), regarding HVF. The Final Environmental

Responsibility Determination on HVF stated, in full:

This report is submitted as a result of a request from the DLA Disposition

Services Sales Contracting Traditional Branch to conduct and [sic]

Environmental Responsibility Determination (ERD) regarding Huron Valley

27

Fritz – West (HVF West). The review was conducted in accordance with

Defense Logistics Agency Standard Operating Procedure (SOP 4715.06-

01) dated September 17, 2018.

The ERD was completed on March 12, 2020 with a final recommendation

of “NOT RECOMMENDED.”

The initial ERD was assigned to and completed by Mr. Anthony Stewart of

the DLA Disposition Services Environmental Branch. His initial report

included the completion of the DLA Two-Way Memorandum from the Sales

Office to the Environmental Office to include the checklist at the bottom of

the two-way memorandum. He conducted a review of the Invitation for Bid,

the Statement of Intent, and the Enforcement and Compliance History

Online (ECHO). Mr. Stewart contacted HVF West on January 10, 2020

regarding the sale and completed the Destination Interview Questions. He

also contacted the Arizona Department of Environmental Quality (ADEQ)

on January 10, 2020 to conduct the Regulator Interview Questions. It was

during this conversation that Mr. Stewart spoke with Ms. Jenna Brickner

about HVF West and she indicated that ADEQ was scheduled to visit HVF

West in the next few days. She also indicated that ADEQ would provide

DLA Disposition Services a copy of the report when it was complete.

Two primary issues among others contributed to the “Not recommended”

as a result of the ERD. The first issue that raised concern was outlined in

the Arizona Department of Environmental Quality Hazardous Waste

Inspection Report dated 1-15-2020. The report indicated two soil samples

had been obtained from locations on HVF West’s property that had been

identified as an area to process Government property. It was also a location

where visible paint chips on the ground were identified by the ADEQ

inspector. The soil samples were sent to Eurofins TestAmerica in Phoenix,

AZ for testing. The result of the soil sample indicated there were high levels

of heavy metals to include Cadmium and Chromium. The results for the

sample located at the base of the pile (sample 1), of Cadmium was 4.2 mg/L

by Toxicity Characteristic Leaching Procedure (TCLP). The results for the

sample from the soil downgradient of the pile, 4.9 mg/L for Cadmium by

TCLP. In both instances, the level of Cadmium exceeded the maximum

concentration of contaminants for the toxicity characteristics per the

Hazardous Materials, Substances & Wastes Compliance Guide 2018/2019.

Specifically, §261.24 (Toxicity characteristic), table 1 lists the regulatory

level for Cadmium as 1.0 mg/L. The results of the soil sample 1 and soil

sample 2 for Cadmium far exceed this limit.

Although the Chain of Custody report . . . indicated both a TCLP Chromium

and a Total Chromium were ordered, only the total Chromium results were

included in the Eurofins report. The results for the sample located at the

base of the pile (sample 1), were 1100mg/kg for total Chromium. The results

28

for the sample from the soil downgradient of the pile (sample 2), were 480

mg/kg for total Chromium. The total Chromium results from the laboratory

report indicate the probability of a level of Chromium significantly greater

than the regulatory level. However, without a TCLP result, the Chromium

level report was considered in the decision to not recommend HVF West

but not as a regulatory violation as with the Cadmium.

A review of HVF West’s records did not indicate they were authorized nor

permitted by the Environmental Protection Agency nor the state of Arizona

to Transfer, Store, or Dispose of Hazardous Waste. Additionally, Mr.

Anthony Stone’s Solid Waste Field Inspection Report dated January 15,

2020 noted an observation that HVF West had not created sufficient

measures to reduce the potential of soil contamination from their recycling

activities. Concrete had been installed on a large portion of the outdoor

facility yard located around the processing building; however, the majority

of the material on-site appeared to be sitting directly on bare soil.

On January 27, 2020, DLA received an email from Greg Lamb regarding

issues at the Apparent High Bidders [sic] facility (HVF West’s facility).

Included in his email were several claims of regulatory violations regarding

“potential accumulation of solid waste in the form of tires . . .,” “solid waste

permit violations and the lack of a special waste permit,” “Automobile

Shredder Residue accumulation violations,” and “several piles of Dirt and

Dirt w/solid waste may be on site.” Included in the email were several

Google Map satellite photos of HVF West’s facility stating they were from

2014 through 2018. The photos clearly represented large piles of tires

throughout the property. DLA Disposition Services Environmental Office

then researched and retrieved Google Map Satellite photos of the same

location at HVF West dated February 2020 showing tires in the same

locations throughout the property. Some of the piles had grown in size and

there appeared to be additional tires located throughout the property that

were either in fewer numbers or not there at all in the 2014 Google satellite

photo. These photos were used to verify the presence of large piles of tires

on the property and confirm ADEQ[’]s report of accumulating solid waste on

the premises.

On January 28, 2020, DLA Disposition Services Environmental Office sent

a Memorandum to Disposition Service Director West (DSD West) directing

an on-site Survey of the HVF West facility in accordance with the SOP. In

an effort to ensure all personnel understood the tasking for the site survey,

DLA Disposition Services Environmental Office held a teleconference on

January 31, 2020 with DSD West and the Tucson survey team. On Feb 2,

2020, Disposition Services Tucson sent Ms. Lisa Henninger and Mr. David

Powell to the HVF West facility to conduct the on-site survey. Ms. Lisa

Henninger submitted her PRE-Award/Post-Award on-site HM/HW

Recycler/Processor Manufacturer report (DLA Form 2537) dated February

29

3, 2020. Included in her report were several enclosures to support her site

survey. On February 14, 2020, Ms. Lisa Henninger submitted her PRE-

AWARD/Post-Award on-site HM/HW Recycler/Processor Manufacturer

report (DLA Form 2537) dated February 3, 2020. Included in her report were

several enclosures to support her site survey. On February 14, 2020, Ms.

Lisa Henninger submitted a Memorandum for Record where she detailed

her site survey/visit and provided additional details of the visit,

conversations, and observations. In her memorandum, Ms. Henninger

addresses her concerns regarding responses from HVF West to her

questions. Her Memorandum stated HVF West would not or could not

answer specific questions about tire disposal. When pressed regarding tire

disposal, HVF West responded that the information was “proprietary.” Ms.

Henninger summed up her Memorandum by stating “due to my findings

during the inspection and my review of the documentation provided by HVF

West, I found the contractor to have an environmental assessment of non-

responsible.” These issues along with her summation of a not responsible

support the Environmental Office conclusion to not recommend this sale.

On March 2, 2020, DLA Disposition Services Environmental Office

contacted the ADEQs Resource Conservation and Recovery Act (RCRA)

inspector (Jenna Brickner) who conducted the Hazardous Waste portion of

the inspection. The ADEQ report did not address their future intentions for

the heavy metal violation. The report listed these observations but did not

address nor imply there was any kind of violation or that HVF West would

receive a Notice of Violation (NOV) for the high level of Cadmium. ADEQ’s

Ms. Jenna Brickner stated during the phone call that ADEQ was in the

process of issuing a NOV to HVF West for the heavy metal Cadmium. She

did not state when she though the NOV would be complete or when it might

be issued to HVF West. She also did not state when the remediation must

be completed but that it would be stipulated in the NOV itself. She did state

that HVF West is cooperating with the ADEQ and the two entities are

working to put a plan together for HVF West.

The second issue noted by the ADEQ cited HVF West was “Placing,

depositing, or allowing to be placed or deposited refuse or other

objectionable waste on a person’s premises or on any public street, road,

or alley.” A.A.C. R18-13-303(A). This was noted in Mr. Anthony Stone’s

Solid Waste Field Inspection Report dated Jan 15, 2020. Mr. Stone’s report

provided a synopsis of HVF West’s tire procedures and operation and

recommended best practices regarding fire suppression for tires. The report

also stated that HVF West was informed that “anything declared a waste

(tires or waste generated from shredding activities) is not allowed to remain

on the property longer than ninety days or it considered [sic] improper

disposal of solid waste.”

30

DLA Environmental Office contacted Mr. Stone on or about Feb 11, 2020

regarding this issue. Mr. Stone stated that the amount of tires and the

number of violations he noted at HVF West caused him to issue a single

Solid Waste violation for improper tire storage instead of individual citations

for each violation. During the conversation, Mr. Stone indicated that HVF

West was allusive [sic] and evasive in their responses to his questions. Mr.

Stone also stated that when HVF West was asked certain questions

regarding their processes and procedures for disposing of tires, they stated

that the information regarding the tires was “proprietary” and they would not

answer. The report provided to DLA Disposition Services by ADEQ included

a “NOTICE OF OPPORTUNITY TO CORRECT DEFICIENCIES” with the

violation:

“A.A.C. R18-13-303(A) Placing, depositing, or allowing to be placed or

deposited refuse or other objectionable waste on a person’s premises or on

any public street, road or alley.”

The Notice states: “Within 90 calendar days of the date of this notice; please

submit documentation to the ADEQ contact above demonstrating that no

violation has occurred or documentation that the alleged deficiency has

been corrected. Acceptable documentation includes, but is not limited to

photographs, receipts, standard operating procedures, and/or relevant logs.

Once ADEQ has received the requested documentation, the case will

be closed and a letter will be issued stating that the agency will take

no further action as a result of this inspection.”

On March 2, 2020 DLA Disposition Services Environmental Office

contacted our DLA Representative Mr. David Powell from the Tucson, AZ

office regarding his site visit. The subject of the conversation was the lack

of photos provided by his team during the visit. Mr. Powell stated he began

to take photos of the area where DLA Disposition Services property would

be processed by HVF West. He then stated that a representative from the

HVF West team accompanying him during the tour of the property called an

HVF West attorney and asked if photos should be allowed as part of the

tour. The representative then asked Mr. Powell to cease taking photos and

asked him to delete the photos he had already taken. To ensure Mr. Powell

deleted the photos, the representative visually observed Mr. Powell delete

the photos. This gave concern to our team that HVF West was not fully

cooperating with DLA in accordance with the Invitation for Bid (A0008025)

which states “the apparent high bidder shall cooperate fully with the

Government when informed by the Agency of an ongoing investigation by

any DOD or Federal Government Investigation service or agency or during

the Agency’s Compliance Reviews or Audits.”

31

The issue noted by the ADEQ regarding solid waste (tires) was the second

of two issues that caused DLA Disposition Services concern and resulted

in our submission of a “not recommended” in our report. HVF West had

nearly 4 times the allowable amount of Cadmium in the soil according to the

Hazardous Materials, Substances & Wastes Compliance Guide 2018/2019

at their facility. Although the Total Chromium report from Eurofins is non-

conclusive due to the report nature, it does provide concern regarding the

amount of Chromium in the soil. The facility was given 90 days to remove

the tires and submit proof to ADEQ regarding their compliance with the

citation. The DLA Environmental Office, through their Environmental

Responsibility Determination process, concludes it would not be prudent to

issue material to this company given they had just been cited by the

regulating authority in Arizona for excessive heavy metals in the ground and

a solid waste violation that is still within the remedy time frame (90 days).

This Sale is NOT RECOMMENDED.

(capitalization and emphasis in original; internal references omitted).

On March 13, 2020, Todd Koleski, the Sales Contracting Officer for DLA DS

assigned to the bridge contract at issue in the above-captioned protest, wrote a letter to

Scott Laughlin of HVF, informing him of the DLA DS non-responsibility determination with

regard to HVF. The March 13, 2020 letter stated, in full:

Dear Mr. Laughlin:

1. Upon examining HVF’s capability to perform the requirement in an

environmentally compliant manner, examining the types of information and

evidence outlined in the IFB, and review of e-mails and documents from

HVF West regarding the company’s responsibility generally and arguments

regarding ADEQ findings specifically, e.g., February 5, 10, and 19 HVF

West e-mails, I cannot make an affirmative determination that HVF West

LLC is a responsible high bidder to purchase the property and perform the

requirements of Disposition Service Invitation for Bid A0008025.

2. Section 4, paragraph 7, subparagraph g states: “prior to award, the

Agency will conduct a pre-award survey of the apparent high bidder.” The

solicitation further provided that “the pre-award survey . . . may include but

is not limited to a review of the apparent high bidder’s facilities and

equipment, financial capability or disclosure of the apparent high bidder’s

financial condition, quality assurance, safety, environmental responsibility,

and transportation. The apparent high bidders shall cooperate in the pre-

award vetting process by assisting in arrangements and/or by providing

requested information in a timely manner.” The agency takes these

measures to ensure that a potential awardee can perform the requirement

of the IFB in an environmentally compliant manner.

32

3. As noted above, I am unable to make an affirmative determination that

HVF West LLC is a responsible high bidder, for the following reasons:

First, HVF West LLC did not fully cooperate in the pre-award vetting

process. Specifically, DLA personnel were not allowed to take all required

pictures required for the environmental assessment. Additionally, what few

photos were taken were required to be deleted in the presence of your

personnel. Anytime DLA personnel asked questions concerning disposal,

the reply was, “that is proprietary information.”

Second, during the environmental responsibility determination (ERD)

assessment, there were a number of deficiencies identified at your facility

that raise significant concerns with the non-complaint manner in which solid

wastes have been managed. The two primary issues identified in the ERD

are outlined below.

a. DLA learned that the Arizona Department of Environmental Quality

(ADEQ) had conducted a solid waste inspection and a hazardous waste

inspection of your facility. Their report indicated two soil samples had been

obtained from locations on HVF West’s property in areas identified in an

area used to process Government property. The soil samples were sent to

Eurofins Test America in Phoenix, AZ. The results of the soil samples

indicated that HVF West had nearly four (4) times the allowable Cadmium

in the soil per the Hazardous Materials, Substances & Wastes Compliance

Guide 2018/2019. Additionally, although the chain of custody report noted

that both TCLP Chromium and Total Chromium were ordered, only total

Chromium results were included in the Eurofins report. The total Chromium

results from the laboratory indicate the probability of chromium significantly

greater than the regulatory level. Upon contacting the ADEQ, DLA learned

that a Notice of Violation for the high level of Cadmium was forthcoming and

the NOV would require remediation.

b. The second issue was noted by the ADEQ in a Solid Waste Field

Inspection Report dated Jan 15, 2020. As a result of that report, HVF West

was cited for “Placing, depositing, or allowing to be placed or deposited

refuse or other objectionable waste on a person’s premises or on any public

street, road, or alley.” A.A.C. R18-13-303(A). The report noted an

observation that HVF West had not created sufficient measures to reduce

the potential of soil contamination from their recycling activities. Specifically,

concrete had been installed on a large portion of the outdoor facility yard

located around the processing building; however, the majority of the

material on-site appeared to be sitting directly on bare soil. The report also

noted that tires or waste generated from shredding activities were not

allowed to remain on the property longer than ninety days or it is considered

improper disposal of waste. DLA contacted the ADEQ regulator on or about

Feb 11, 2020 to discuss the report and findings. The ADEQ regulator stated

33

that the amount of tires and the number of violations he noted at HVF West

caused him to issue a single Solid Waste violation for improper tire storage

instead of individual citations for each violation. During the conversation,

the regulator indicated that HVF West was elusive and evasive in their

responses to his questions. He also stated that when HVF West was asked

certain questions regarding their processes and procedures for disposing

of tires, they stated that the information regarding the tires was “proprietary”

and they would not answer. HVF West was given 90 days to remove the

tires and submit proof to ADEQ regarding their compliance with the citation.

3. Due to the concerns raised by the above information over the non-

compliant manner in which solid wastes have been managed at the facility

HVF intends to use for recycling, the violations noted by regulators,

including ongoing or uncorrected non-compliance, there is an unacceptable

risk that property released by DLA would not be managed in a compliant

manner or would have the potential to cause the agency to incur future

liability under state or federal laws and regulations governing the

remediation or clean-up of environmentally contaminated sites. For the

above reasons, I have made the determination that your firm is not a

responsible bidder under Disposition Service Invitation for Bid A0008025.

4. This is considered a final agency action on our evaluation of you as the

apparent high-bidder under Invitation for Bid A0008025.

(capitalization in original).

After finding HVF non-responsible, DLA DS proceeded to consider Lamb for the

award of the bridge contract currently at issue, as Lamb had submitted the second-

highest offer in response to the bridge contract solicitation, No. A0008025. Lamb provided

DLA DS with the required documents, including: Statement of Intent; End-Use Certificate;

Employee Training Matrix; documents related to Lamb’s Waste and Service Vendors;

Licenses and Permits; training attendance log; and spill response and clean up.

On March 19, 2020, Jennifer Bechtel of DLA DS contacted ADEQ regarding Lamb.

A conversation record completed by Jennifer Bechtel detailed the conversation as follows:

ADEQ just got an anonymous complaint yesterday and will do an inspection

in the next few weeks on Lamb. She will send a different inspector this time

(than sent for HVF West). “Doesn’t want to be in the middle.” Will know more

in time. She will send an impartial inspector.

Also on March 19, 2020, Tim Cronk sent the following internal DLA DS email to

schedule a DLA DS conference call regarding inspecting the Lamb facility:

This meeting is to discuss the upcoming site visit at Lamb Depollution in

Tucson, AZ. (1100 Eastern Time Zone) Due to the intense scrutiny this

34

Scrap Sale is under, we want to ensure we are thorough during our visit. As

you probably know, HVF West received a “not recommended” from the

Environmental Office. I then had to provide a final report supported by 25

enclosures. The report was well over 100 pages. At any rate, want to make

sure we are on the same page as this will also get litigated at some point.

Topics to consider:

- Permit review

- Environmental Liability Insurance review

- Safety review

- Site walk-thru

- photos of site

- if photos are not allowed, detail every square

foot of property covered.

- noted areas of discolor

- noted areas of excessive scrap/clutter

- Material on hand

- Material status (on ground or concrete)

- Number of tires on hand

- Review of manifest removing property

- Review of sales receipts removing property

- Storm Water permit review

- Storm Water prevention Plan

I know I’m missing several topics but the checklist should fill

in the gap.

Also on March 19, 2020, DLA DS conducted a pre-award inspection of Lamb’s

facility, which was detailed in a March 19, 2020 DLA Form 2537, completed by Lisa

Henninger (the March 19, 2020 Form 2537). The March 19, 2020 DLA Form 2537 for

Lamb stated that “As of 3/19/2020, Lamb Depollution has not received a regulatory

inspection at their new location on Nebraska Street in Tucson, Arizona.” The March 19,

2020 Form 2537 also stated that “[a]s of 3/19/2020, Lamb Depollution has not received

an official fire/safety inspection. However, Greg Lamb advised that the site was in contact

with local authorities to schedule an inspection. The inspection date was still pending at

time of the survey.” The March 19, 2020 Form 2537, however, did not indicate any

environmental concerns at Lamb’s facility, and concluded that “Lamb Depollution can

responsibly manage the commodities of scrap and waste as long as they move the

property efficiently,” and Lamb was given a “RESPONSIBLE” environmental assessment.

(capitalization in original). In a supplemental statement in support of the responses

provided in the March 19, 2020 Form 2537, Lisa Henninger explained that there was

property being stored at Lamb’s facility, but stated that “[t]he Lamb Depollution site has

not been in operation for a year therefore it is assumed that the property present has not

been stored over a year. During survey review, the scrap we being segregated as well as

a truck being loaded. Based on these findings it would be determined that the current

35

property is actively being moved. [sic]” The supplemental statement written by Lisa

Henninger also stated:

The Lamb Depollution site is for a scrapping process [sic] therefore some

housekeeping issues is [sic] expected. During the visual survey it was

observed that the scrap was segregated and organized and employees

were using racks to ensure the areas were free from loose debris. Several

areas the scrap was on wood plates, metal plates or contained in liners [sic].

However, in the sheering operation area the scrapping process did occur

directly on the soil. Recommendation would be to ensure property with high

risk of discharge not be processed directly on the soil and that scrapping

process required to be processed on the soil not be stored for long periods

of time.

As noted above, on March 18, 2020, ADEQ received an anonymous complaint

regarding the Lamb Depollution facility. On March 23, 2020, a complaint receipt form was

generated by Jenna Brickner of ADEQ, which described the anonymous complaint as

follows:

The site has historically been used and is believed to be currently being

used [sic] to process Department of Defense aircraft aluminum, other

Department of Defense metallic and non-metallic materials and metals from

other sources. It is believed that processing takes place directly on and over

the soils. As such, the potential exists for the presence in the soils, with the

further potential exposure to surface and ground water, of metallic

constituents consisting of but not limited to cadmium, chromium, lead and

mercury, potentially constituting storage and disposal of hazardous and

solid wastes.

In response to the anonymous complaint, ADEQ performed an inspection of

Lamb’s facility on April 1, 2020. ADEQ generated a Hazardous Waste Inspection Report,

completed by Jenna Brickner. The Hazardous Waste Inspection Report stated that “[n]o

deficiencies were noted during the course of the inspection” and that “[n]o ADEQ action

will result from this inspection.” The Hazardous Waste Inspection Report also found no

“‘risk to any person, the public health, safety or welfare or the environment’ per ARS

§ 41-1009.” In the section for inspector observation and notes, the Hazardous Waste

Inspection Report stated:

At the time of the inspection, the facility was not open for business. When

operating, the facility accepts and processes end of life aircraft, avionics,

textiles, body armor, parachutes, vehicles (including tires), glass, textbooks,

et al. for recycling. Scrap is separated and stored in separate bermed areas.

Concrete barriers surround 3 sides of each pile. Both unprocessed and

processed scrap metal is stored on top of a metal sheet with the aim of

minimizing soil contamination. Mr. Lamb told ADEQ that none of the

materials brought in from their customers is waste. All materials listed above

36

are accepted at the facility to be recycled. The only exception to this is when

a vehicle arrives which still contains fuel, lubricants, or other fluids. The

facility will not accept vehicles containing these and other fluids and they

are rejected and returned to the customer. Everything is recycled except in

the event that vehicle fluid removal is needed, however, the facility policy is

to reject vehicles that still contain liquids.

The April 1, 2020 ADEQ inspection of Lamb’s proposed site for contract

performance also generated a Solid Waste Field Inspection Report, completed by

Anthony Stone. As did the Hazardous Waste Inspection Report, the Solid Waste Field

Inspection Report on Lamb also stated that “[n]o deficiencies were noted during the

course of the inspection,” and that “[n]o ADEQ action will result from this inspection.”

On April 3, 2020, Tim Cronk of DLA DS completed Lamb’s “Final Environmental

Responsibility Determination,” which stated:

This report is submitted as a result of a request from the DLA Disposition

Services Sales Contracting Traditional Branch to conduct and

Environmental Responsibility Determination (ERD) regarding Lamb

Depollution (aka Lamb Fuels). The review was conducted in accordance

with Defense Logistics Agency Standard Operating Procedure (SOP

4715.06-01) dated September 17, 2018.

The ERD was completed on April 3, 2020 with a final recommendation of

“RECOMMENDED.”

The initial ERD was received from the Sales office on March 16, 2020 and

assigned to Ms. Jennifer Bechtel of the DLA Disposition Services

Environmental Branch. Shortly after receiving the assignment, Ms. Bechtel

took a position with the Air National Guard and was re-assigned prior to

completing the ERD. Prior to her departure, she conducted a review of the

Invitation for Bid, [and] the Statement of Intent. A review of the Enforcement

and Compliance History Online (ECHO) returned no results for Lamb

Depollution. She also contacted the Arizona Department of Environmental

Quality (ADEQ) on March 19, 2020 to conduct the Regulator Interview

Questions. It was during this conversation that Ms. Bechtel was informed

by Ms. Jenna Brickner that ADEQ had received an anonymous complaint

directed at Lamb Depollution. Ms. Brickner indicated that she was not sure

when ADEQ would visit Lamb Depollution but it would be in the next two

weeks.

On March 17, 2020, DLA Disposition Services Environmental Office sent an

email to Disposition Service Director West (DSD West) directing an on-site

Survey of the Lamb Fuels facility in accordance with the SOP. In an effort

to ensure all personnel understood the tasking for the site survey, DLA

Disposition Services Environmental Office held a teleconference on March

37

19, 2020 with DSD West and the Tucson survey team. On March 19, 2020,

Disposition Services Tucson sent Ms. Lisa Henninger, Mr. David Powell,

and Mr. Forrist Richardson to the Lamb Fuels facility to conduct the on-site

survey. Ms. Lisa Henninger submitted her PRE-Award/Post-Award on-site

HM/HW Recycler/Processor Manufacturer report (DLA Form 2537) signed

March 25, 2020 with an attachment that expounded on the report itself. The

team were not allowed to take photos with their own cameras or phones but

were provided a Lamb Fuels phone to take photos. Lamb then reviewed the

photos on the phone and sent them to the Tucson Team. The Tucson Team

stated they did not believe any photos had been removed. Included in Ms.

Henninger’s report were several enclosures to support her site survey which

are available upon request (see list below). Mr. Dave Powell also submitted

a report via email and is available upon request. No negative input was

reported by Mr. Powell.

On March 30, 2020, Tim Cronk contacted the PIMA County Fire Department

in Tucson, Arizona and spoke with Willie Treach. Mr. Treach is the Fire

Marshall for PIMA County and handles permits for specific activities. He

stated that he had recently visited Lamb Fuels and was concerned over the

fact that they were missing several permits for operations they were

conducting at the site. He stated that Lamb Fuels reviewed all the

requirements with him and are working closely to obtain the necessary

permits. Lamb Fuels did not have a permit to operate a plasma cutter,

operate a secure gate, use mobile trailers onsite, and had not provided their

emergency information to the Fire Marshall. When asked about the

operations at Lamb Fuels and if the Government should sell scrap material

to this buyer, Mr. Treach had no reservation in supporting the sale. . . .

One [sic] April 1, 2020, Tim Cronk contacted Mr. Greg Lamb of Lamb Fuels

to conduct the buyer interview. Mr. Lamb was just finishing up with the

Arizona Department of Environmental Quality and after the ADEQ departed,

we completed our conversation regarding the sale. Mr. Lamb was forthright

and did not hesitate to answer questions. During the conversation, Mr.

Lamb stated he already had a copy of the ADEQ inspection that had just

concluded and would forward a copy. I noted no outstanding issues or

causes for concern during the interview.

Lamb Depollution, also known as Lamb Fuels, appears to be a responsible

partner with the City of Tucson, AZ and an environmentally responsible

business. The ADEQ report had no negative findings other than minor

admin issues. The local Fire Department had no additional issues with

Lamb Fuels other than those noted above and were confident Lamb Fuels

would continue to cooperate. The Fire Marshall had no concerns that Lamb

Fuels would obtain the necessary permits. A search of the internet revealed

no negative reviews of the company. A Google Map search did not appear

to show hazardous material, tires or debris scattered about the site.

38

Additionally, an ERD had been recently conducted at this site in July 2019

with a positive review. Below is a list of other documents available that not

[sic] included in this report.

- Business License

- Google map photos

- Responsible Recycling (R2) Assessment Report

- ADEQ Exit Debriefing with Notice of Inspection Rights

- Facility Permits and Registrations

- Tier II Reporting

- Lamb Employee Health and Safety training

- Employee Training Overview

- Lamb Depollution SPCC and Emergency Plans

- Fire Extinguisher Training and Log

- PPE Training and Certificate

- Log of Disposal Documentation

- Lamb Depollution R2 SOP

- Dave Powell Site Visit Assessment emails

Based on the information provided in this report, DLA Disposition Services

Environmental Branch finds Lamb fuels responsible and submits a

‘RECOMMENDED’ for this sale.

(capitalization in original; internal references omitted). On April 13, 2020, a “Notice of

Award, Statement, and Release Document” was issued with Lamb as the awardee of

Solicitation No. A0008025, for the bridge contract currently at issue.

DISCUSSION

As indicated above, the defendant and defendant-intervenor moved to dismiss the

above-captioned bid protest, Case No. 20-541, regarding the contract award pursuant to

the bridge contract Solicitation, Solicitation No. A0008025, for lack of subject-matter

jurisdiction. Both argue, similar to their arguments in the earlier bid protest brought by

HVF before Chief Judge Sweeney in HVF West I, that pursuant to 28 U.S.C. § 1491(b)(1),

the bridge contract Solicitation is one not for a government procurement because it is for

a sales contract, and, therefore, that this court does not have jurisdiction to review

protestor’s protest. Protestor responds in the current bridge contract case, as it did before

Chief Judge Sweeney in HVF West I with regard to the original contract, that the

Solicitation is for a “mixed-transaction,” because it involves services of removal,

demilitarization and mutilation of government property, in addition to the government’s

sale of the property. The defendant and defendant-intervenor state that the mixed-

transaction analysis, which was approved in Chief Judge Sweeney’s decision in HVF

West I, remains incorrect, and that it has never been upheld by the United States Court

of Appeals for the Federal Circuit. Alternatively, defendant and defendant-intervenor try

to argue that, even under the mixed-transaction analysis, the court still lacks jurisdiction

39

because the services provided to the government in the bridge contract at issue are not

“more than de minimis.”

It is well established that “‘subject-matter jurisdiction, because it involves a court’s

power to hear a case, can never be forfeited or waived.’” Arbaugh v. Y & H Corp., 546

U.S. 500, 514 (2006) (quoting United States v. Cotton, 535 U.S. 625, 630 (2002)).

“[F]ederal courts have an independent obligation to ensure that they do not exceed the

scope of their jurisdiction, and therefore they must raise and decide jurisdictional

questions that the parties either overlook or elect not to press.” Henderson ex rel.

Henderson v. Shinseki, 562 U.S. 428 (2011); see also Hertz Corp. v. Friend, 559 U.S. 77,

94 (2010) (“Courts have an independent obligation to determine whether subject-matter

jurisdiction exists, even when no party challenges it.” (citing Arbaugh v. Y & H Corp., 546

U.S. at 514)); Special Devices, Inc. v. OEA, Inc., 269 F.3d 1340, 1342 (Fed. Cir. 2001)

(“[A] court has a duty to inquire into its jurisdiction to hear and decide a case.” (citing

Johannsen v. Pay Less Drug Stores N.W., Inc., 918 F.2d 160, 161 (Fed. Cir. 1990)));

View Eng’g, Inc. v. Robotic Vision Sys., Inc., 115 F.3d 962, 963 (Fed. Cir. 1997) (“[C]ourts

must always look to their jurisdiction, whether the parties raise the issue or not.”). “The

objection that a federal court lacks subject-matter jurisdiction . . . may be raised by a party,

or by a court on its own initiative, at any stage in the litigation, even after trial and the

entry of judgment.” Arbaugh v. Y & H Corp., 546 U.S. at 506; see also Hymas v. United

States, 810 F.3d 1312, 1317 (Fed. Cir. 2016) (explaining that a federal court must satisfy

itself of its jurisdiction over the subject-matter before it considers the merits of a case);

Cent. Pines Land Co., L.L.C. v. United States, 697 F.3d 1360, 1364 n.1 (Fed. Cir. 2012)

(“An objection to a court's subject matter jurisdiction can be raised by any party or the

court at any stage of litigation, including after trial and the entry of judgment.” (citing

Arbaugh v. Y & H Corp., 546 U.S. at 506)); Rick’s Mushroom Serv., Inc. v. United States,

521 F.3d 1338, 1346 (Fed. Cir. 2008) (“[A]ny party may challenge, or the court may raise

sua sponte, subject matter jurisdiction at any time.” (citing Arbaugh v. Y & H Corp., 546

U.S. at 506; Folden v. United States, 379 F.3d 1344, 1354 (Fed. Cir.), reh’g and reh’g en

banc denied (Fed. Cir. 2004), cert. denied, 545 U.S. 1127 (2005); and Fanning, Phillips

& Molnar v. West, 160 F.3d 717, 720 (Fed. Cir. 1998))); Pikulin v. United States, 97 Fed.

Cl. 71, 76, appeal dismissed, 425 F. App’x 902 (Fed. Cir. 2011). In fact, “[s]ubject matter

jurisdiction is an inquiry that this court must raise sua sponte, even where . . . neither

party has raised this issue.” Metabolite Labs., Inc. v. Lab. Corp. of Am. Holdings, 370

F.3d 1354, 1369 (Fed. Cir.) (citing Textile Prods., Inc. v. Mead Corp., 134 F.3d 1481,

1485 (Fed. Cir.), reh’g denied and en banc suggestion declined (Fed. Cir.), cert. denied,

525 U.S. 826 (1998)), reh’g and reh’g en banc denied (Fed. Cir. 2004), cert. granted in

part sub. nom Lab. Corp. of Am. Holdings v. Metabolite Labs., Inc., 546 U.S. 975 (2005),

cert. dismissed as improvidently granted, 548 U.S. 124 (2006)).

The Tucker Act, 28 U.S.C. § 1491, grants jurisdiction to this court as follows:

The United States Court of Federal Claims shall have jurisdiction to render

judgment upon any claim against the United States founded either upon the

Constitution, or any Act of Congress or any regulation of an executive

40

department, or upon any express or implied contract with the United States,

or for liquidated or unliquidated damages in cases not sounding in tort.

28 U.S.C. § 1491(a)(1).

Additionally, regarding bid protests, the Tucker Act provides that this court has

jurisdiction 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.

28 U.S.C. § 1491(b)(1). The Administrative Dispute Resolution Act of 1996 (ADRA),

codified at 28 U.S.C. § 1491(b)(1)–(4), amended the Tucker Act to establish a statutory

basis for bid protests of federal government procurements in the United States Court of

Federal Claims. See Acetris Health, LLC v. United States, 949 F.3d 719, 728 (Fed. Cir.

2020); Hymas v. United States, 810 F.3d at 1317; Palladian Partners, Inc. v. United

States, 783 F.3d 1243, 1252 (Fed. Cir. 2015); Systems Application & Technologies, Inc.

. United States, 691 F.3d 1374, 1381 (Fed. Cir. 2012); Distributed Solutions, Inc. v. United

States, 539 F.3d 1340, 1345 (Fed. Cir. 2008); Impresa Construzioni Geom. Domenico

Garufi v. United States, 238 F.3d 1324, 1330–32 (Fed. Cir. 2001).

Jurisdiction for Mixed-Transaction Contracts

Defendant and defendant-intervenor argue that the bridge contract currently

before the court for removal, demilitarization, mutilation, and sale of government property

should be governed by the United States Court of Appeals for the Federal Circuit’s ruling

in Resource Conservation Group, LLC v. United States, 597 F.3d 1238 (Fed. Cir. 2010).

In Resource Conservation Group, the protestor, Resource Conservation Group, brought

a protest of the government’s solicitation of bids to lease real property owned by the

United States Naval Academy. See id. at 1240–41. According to the discussion in the

Federal Circuit’s opinion, the United States Court of Federal Claims trial court judge “held

that it lacked jurisdiction under 28 U.S.C. § 1491(b)(1) to adjudicate bid protests involving

leases of land where the government is the lessor, because such an action is not ‘in

connection with a procurement or proposed procurement,’” and the trial court dismissed

the bid protest. See Res. Conservation Grp., v. United States, 597 F.3d at 1242 (quoting

28 U.S.C. § 1491(b)(1)). Upon appeal, the United States Court of Appeals for the Federal

Circuit considered “whether RCG’s [Resource Conservation Group’s] claim falls within

the jurisdiction conferred by section 1491(b)(1), the new jurisdictional provision enacted

by the ADRA,” and concluded that “the Court of Federal Claims correctly held that it does

not.” Res. Conservation Grp., LLC v. United States, 597 F.3d at 1243. The Federal Circuit

in Resource Conservation Group stated that 28 U.S.C. § 1491(b)(1) “expanded the

jurisdiction of the Court of Federal Claims to hear bid protest cases, ultimately giving the

court exclusive jurisdiction to review ‘the full range of procurement protest cases

previously subject to review in the federal district courts and the Court of Federal Claims.’”

41

See Res. Conservation Grp., LLC v. United States, 597 F.3d at 1243 (quoting H.R. Rep.

No. 104–841, at 10 (1996) (Conf. Rep.)). Although 28 U.S.C. § 1491(b)(1) does not define

the term “procurement,” the Federal Circuit in Resource Conservation Group applied the

definition of “procurement” as the term was defined in 41 U.S.C. § 403(2), now codified

at 41 U.S.C. § 111 (2018), as including “all stages of the process of acquiring property or

services, beginning with the process for determining a need for property or services and

ending with contract completion and closeout.’” 41 U.S.C. § 111; Res. Conservation Grp.,

LLC v. United States, 597 F.3d at 1244 (quoting 41 U.S.C. § 403(2) (2006)). The Federal

Circuit concluded that “the Court of Federal Claims was correct in holding that relief under

1491(b)(1) is unavailable outside the procurement context,” and affirmed that portion of

the lower court’s decision. See Res. Conservation Grp., LLC v. United States, 597 F.3d

at 1245. The United States Court of Appeals for the Federal Circuit in Resource

Conservation Group reversed the portion of the Court of Federal Claims’ decision which

had found that the enactment of 28 U.S.C. § 1491(b)(1) removed the United States Court

of Federal Claims’ jurisdiction for nonprocurement-based protests under 28 U.S.C. §

1491(a)(1). See Res. Conservation Grp., LLC v. United States, 597 F.3d at 1247 (“We

conclude that the Court of Federal Claims did not have jurisdiction under 28 U.S.C. §

1491(b)(1), but had jurisdiction under section 1491(a)(1) because the implied-in-fact

contract jurisdiction in nonprocurement cases that existed prior to 1996 survived the

enactment of the ADRA.”).4

Although the Federal Circuit affirmed the lower court’s decision that the solicitation

at issue in Resource Conservation Group could not be protested under 28 U.S.C.

§ 1491(b)(1) because it did not meet the definition of a procurement for the purposes of

determining jurisdiction, nowhere in Resource Conservation Group did the Federal Circuit

state that any government contract which involves a lease, or sale, of property by the

United States is outside of the jurisdiction conferred to this court by 28 U.S.C.

§ 1491(b)(1). The solicitation at issue in Resource Conservation Group only involved the

lease of United States’ real property, and did not also involve services received by the

United States. The Federal Circuit in Resource Conservation Group did not address the

4

Some judges of the United States Court of Federal Claims, however, have found that

injunctive relief is unavailable under 28 U.S.C. § 1491(a)(1). See Eco Tour Adventures,

Inc. v. United States, 114 Fed. Cl. 6, 41 (2013) (“Although the Federal Circuit has not had

occasion to rule on the issue of whether the Court of Federal Claims has authority, post-

ADRA, to grant equitable relief in implied contract bid protests pursued under section

1491(a), this court has consistently answered that question in the negative.” (citing Terry

v. United States, 96 Fed. Cl. 131, 153 (2010) (“Under section 1491(a)(1), plaintiff is

precluded from obtaining equitable relief, which is only available for a section 1491(b)(1)

protest, and is limited to a recovery of monetary damages that comprise the costs she

incurred while preparing her proposal.”, vacated in part on other grounds, 98 Fed. Cl. 736

(2011)); FAS Support Servs., LLC v. United States, 93 Fed. Cl. 687, 694 (2010);

Overstreet Elec. Vo v. United States, 47 Fed. Cl. 728, 731 n.5 (2000); W & D Ships Deck

Works, Inc. v. United States, 39 Fed. Cl. 638, 641 (1997)). Protestor in the above-

captioned protest does not invoke this court’s implied-in-fact jurisdiction under 28 U.S.C.

§ 1491(a)(1), and only seeks injunctive relief.

42

issue of whether a mixed-transaction contract that involves the sale of government

property, but also involves the United States’ acquisition of services to its benefit, falls

within this court’s jurisdiction under 26 U.S.C. § 1491(b)(1). Therefore, although the

defendant and defendant-intervenor argue that Resource Conservation Group excludes

all sales contracts from this court’s protest jurisdiction under 28 U.S.C. § 1491(b)(1),

including the one at issue in the above-captioned protest, the Federal Circuit’s decision

in Resource Conservation Group does not resolve the issue.

Defendant and defendant-intervenor further argue that the United States Court of

Appeals for the Federal Circuit addressed this issue in the unreported, nonprecedential

decision of Creation Upgrades, Inc. v. United States, 417 F. App’x 957 (Fed. Cir. 2011).

The court notes that the contract at issue in Creation Upgrades involved the sale of

government real property, and, similar to the contract at issue in Resource Conservation

Group, did not appear to have involved significant services to be delivered to the United

States as part of the contract.5 The unreported Federal Circuit decision in Creation

Upgrades stated:

In Resource Conservation, we construed “procurement” to mean “the

process of acquiring property or services.” 597 F.3d at 1244 (quoting 41

U.S.C. § 403(2)) (emphasis omitted). Therefore, we held that a solicitation

5

Although neither the unreported Federal Circuit decision in Creation Upgrades, nor the

unreported trial court decision, see Creation Upgrades v. United States, Case No. 09-

00788C, 2010 WL 1255684 (Fed. Cl. Mar. 24, 2010), discussed any conditions of sale

which were required to be met by the awardee in connection with the solicitation that was

at issue, the defendant-intervenor in the above-captioned protest cites to the filing of the

Creation Upgrades solicitation when the case was before the trial court, and requests the

court to take “judicial notice” that the solicitation “attached conditions to the sale” of the

real property, and tries to argue a similarity between the Creation Upgrades solicitation

and the bridge contract Solicitation currently at issue. (emphasis omitted). Defendant-

intervenor in the above-captioned protest states:

Importantly, like the Solicitation in this matter, the invitation for bid in

Creation Upgrades (“IFB”) attached conditions to the sale of the Navy’s

land. . . . [A]s a condition of sale and “conveyance of title to Sale Parcel I,

the Winning Bidder [was] required to enter into a LIFOC [Lease in

Furtherance of Conveyance] . . .” (IFB at p. 5, Doc. 7-6 at p. 7.) Through the

LIFOC and sale of its land, the Navy acquired certain “protection and

maintenance services” from the awardee as a condition of the sale. (IFB at

p. 41, LIFOC at ¶ 12.1; Doc. 7-6 at p. 43.) Moreover, the LIFOC required

the awardee to provide and/or arrange for “housekeeping . . . security

protection . . . fire protection” and “other services . . .” (IFB at p. 42 at ¶

12.2.1-5; Doc. 7-6 at p. 44.) Title to the land – either in full or carve-out areas

within the parcel – would pass to the IFB awardee only after the

environmental remediation was complete. (IFB at p. 5; Doc 7-6 at p. 7.)

(first ellipses added; emphasis and alterations in original; footnotes omitted).

43

for the lease of government property was not a “procurement” under

§ 1491(b)(1) because the government was not “acquiring property or

services.” Id.

Creation Upgrades, Inc. v. United States, 417 F. App’x at 959. The Federal Circuit in

Creation Upgrades further stated that it saw “no meaningful distinction between the lease”

of government property in Resource Conservation, “and sale of government property” at

issue in Creation Upgrades, and that “Resource Conservation governs this case.” See id.

Therefore, neither Resource Conservation Group nor Creation Upgrades addresses the

issue in the case currently before the court of a mixed-transaction contract in which the

government also receives substantial services in addition to a sale of property by the

government, and therefore, neither case answers whether the current mixed-transaction,

sales contract is a “procurement” for the purposes of this court’s jurisdiction under 28

U.S.C. § 1491(b)(1).

Defendant and defendant-intervenor also try to rely on the United States Court of

Appeals for the Federal Circuit’s 2016 decision in Hymas v. United States, 810 F.3d 1312,

which held that the United States Court of Federal Claims did not have jurisdiction to

review a disappointed bidder’s protest of cooperative farming agreements (CFAs) with

the United States Department of the Interior’s Fish and Wildlife Service (FWS). In

describing the CFAs, the Federal Circuit in Hymas stated:

Beginning in the 1970s, the [Fish and Wildlife] Service entered into CFAs

with farmers to manage public lands in the National Wildlife Refuge System

for the conservation of migratory birds and wildlife, including at the Umatilla

and McNary Refuges in the Pacific Northwest. Most CFAs share identical

terms, through which the Service permits a “cooperator” to farm specific

parcels of public land with specific crops that benefit the wildlife. No

payment occurs for the performance of the CFAs; instead, cooperators

typically retain 75 percent of the crop yield for their efforts. The remaining

25 percent is left to feed migratory birds and other wildlife. The Service

continues its involvement once cooperators begin to perform the CFAs,

advising on decisions related to (1) crop selection; (2) farming methods; (3)

pesticide and fertilizer use; and (4) crop harvest.

Hymas v. United States, 810 F.3d at 1314–15 (footnote, internal citation and reference

omitted). The protestor, Mr. Hymas, “through his business Dosmen Farms, sought to

secure a CFA” with the Fish and Wildlife Service “in 2013 and 2014,” but after the FWS

considered Mr. Hymas’ offers, he was not selected. Id. at 1315-16.

The Federal Circuit in Hymas found that the CFAs issued by the FWS did not

constitute procurements for the purposes of the United States Court of Federal Claims’

jurisdiction pursuant to 28 U.S.C. § 1491(b)(1), and, therefore, Mr. Hymas could not bring

his protest in the United States Court of Federal Claims. See Hymas v. United States,

810 F.3d at 1324–30. The Hymas court “relied upon the definition of ‘procurement’ in 41

44

U.S.C. § 111,” the same provision which the Federal Circuit applied in Resource

Conservation Group. The Hymas court, however, also stated:

The definition of “procurement” in 41 U.S.C. § 111 is not the only provision

relevant to our inquiry, nor does a “procurement contract” encompass the

entire universe of instruments at executive agencies’ disposal. In 1978,

Congress passed the FGCAA [Federal Grant and Cooperative Agreement

Act] in light of its findings that there was “a need to distinguish [f]ederal

assistance relationships from [f]ederal procurement relationships,” as well

as “uncertainty as to the meaning of . . . ‘cooperative agreement.’” FGCAA,

sec. 2, 92 Stat. at 3. In its current form, the FGCAA “prescribe[s] criteria for

executive agencies in selecting appropriate legal instruments to achieve (A)

uniformity in their use by executive agencies; (B) a clear definition of the

relationships they reflect; and (C) a better understanding of the

responsibilities of the parties to them.” 31 U.S.C. § 6301(2). Congress

intends the FGCAA to “eliminate unnecessary administrative requirements

on recipients of Government awards by characterizing the relationship

between executive agencies and contractors, States, local governments,

and other recipients in acquiring property and services and in providing

United States Government assistance.” Id. § 6301(1).

Hymas v. United States, 810 F.3d at 1324–25 (first alteration added; ellipses in original).

The Hymas court pointed out that the FGCAA “distinguished ‘procurement contract[s]

from ‘cooperative agreements,’” and explained:

In particular, the FGCAA requires that “[a]n executive agency shall use a

procurement contract” when “the principal purpose of the instrument is to

acquire (by purchase, lease, or barter) property or services for the direct

benefit or use of the United States Government.” Id. § 6303. By contrast,

“[a]n executive agency shall use a cooperative agreement” when (1) “the

principal purpose of the relationship is to transfer a thing of value” to the

recipient “to carry out a public purpose of support or stimulation authorized

by a law of the United States instead of acquiring (by purchase, lease or

barter) property or services for the direct benefit or use of the United States

Government” and (2) “substantial involvement” is “expected between the

executive agency and the State, local government, or other recipient when

carrying out the activity contemplated in the agreement.” Id. § 6305.

Hymas v. United States, 810 F.3d at 1325 (alterations in original; emphasis added). The

Hymas court further explained that “under the FGCAA, whether an instrument reflects a

‘procurement contract’ or a ‘cooperative agreement’ turns upon the principal purpose of

the relationship.” Id. at 1327.

Applying the provisions of the FGCAA to the cooperative farming agreements at

issue in Hymas, the Federal Circuit stated that

45

if the Service principally intended to “transfer a thing of value” to the private

farmers “to carry out a public purpose of support or stimulation authorized

by a law of the United States instead of acquiring (by purchase, lease, or

barter) property or services for the direct benefit of or use of the United

States Government,” then the instrument is a cooperative agreement. 31

U.S.C. § 6305(1). The Service must also remain “substantial[ly] involve[d]”

in the activity. Id. § 6305(2).

Hymas v. United States, 810 F.3d at 1327 (alterations in original; emphasis added). The

Hymas court found that “the [Fish and Wildlife] Service properly construed the CFAs as

cooperative agreements, rather than procurement contracts,” and reasoned that “the

Service principally intended the CFAs to transfer a thing of value (i.e., the right to farm

specific refuge lands and retain a share of the crop yield) to carry out a public purpose

authorized by law (i.e. to conserve wildlife on the refuges).” Id. at 1327. The Hymas court

reasoned:

The CFAs cannot be construed as procurement contracts because the

agency did not intend to acquire farming “services” for the “direct benefit or

use of the United States Government.” 31 U.S.C. § 6305(1); see 41 U.S.C.

§ 111 (defining “procurement” as encompassing “all stages of the process

of acquiring property or services”). True, the CFAs indirectly benefit the

Service since the private farmers’ activities advance the agency’s overall

mission, but that is true for nearly all cooperative agreements. More

importantly, the Service does not directly benefit from the farming services

provided pursuant to the CFAs because (1) it does not receive payment

from the farmers pursuant to the agreements; and (2) “[r]efuge crop shares

are all used by wildlife in the field” or retained by the farmers, such that

“[t]here are no excess crops for disposition” by the Service.

Hymas v. United States 810 F.3d at 1328 (alterations in original; internal references

omitted).

The bridge contract currently at issue before the court calls for the awardee to

assist the United States to remove, demilitarize and mutilate an estimated total of

19,000,000 pounds of government “scrap” in the possession of the United States

government. The bridge contract critically requires the awardee to remove, demilitarize

and mutilate the property so as to prevent sensitive material and information from being

used against United States by preventing it from falling into the wrong hands. Indeed,

every pound of government property that is removed, demilitarized and mutilated by the

awardee under the government’s strict supervision is a pound of property on which the

government need not expend its own resources to remove, demilitarize and mutilate. Only

after approval by the government can what is left in its destroyed form be turned over to

the contractor for subsequent sale. The removal, demilitarization and mutilation of the

government property are significant and essential services needed by the government.

The bridge contract at issue is unlike the CFA in Hymas, in which the principal purpose

of the CFA was found by the Federal Circuit to be for the preservation of wildlife, and, as

pointed out by the Federal Circuit in Hymas, the direct beneficiary was not the United

46

States. See Hymas v. United States, 810 F.3d at 1328 (“[T]here is no serious dispute that

assisting private farmers to promote wildlife conservation is the sine qua non of the

CFAs.”). That the bridge contract currently at issue contemplates the sale and transfer of

title to the government property to the contract awardee in exchange for first providing

essential services to the government, as opposed to the traditional method of acquiring

services through payment to the contractor, does not diminish the critical and necessary

services that the government is to acquire pursuant to the bridge contract. The court in

the above-captioned bid protest, No. 20-541C, finds that the acquisition of services for

removal, demilitarization and mutilation of government property to be received by the

government pursuant to the bridge contract are essential and critical services to the

government, and are the principal purposes of the mixed-transaction contract, even under

the “principal purpose” analysis applied in Hymas. See Hymas v. United States, 810 F.3d

at 1327 (“[U]nder the FGCAA, whether an instrument reflects a ‘procurement contract’ or

a ‘cooperative agreement’ turns upon the principal purpose of the relationship.”). The

mixed-transaction bridge contract currently at issue before the court, therefore, is a

procurement contract sufficient to establish jurisdiction in this court under 28 U.S.C. §

1491(b)(1) to entertain protestor’s bid protest.

Similarly, the “concession contracts” entered into by the United States Park

Service in Jordan Pond Co., LLC v. United States, 115 Fed. Cl. 623 (2014), and Eco Tour

Adventures, Inc. v. United States, 114 Fed. Cl. 6, cited to by defendant and defendant-

intervenor in this protest, are distinguishable from the current mixed-transaction contract

protested by HVF. In both Jordan Pond and Eco Tour, the concession contracts involved

the grant of the right to offer goods and/or services to the public in various United States

national parks in exchange for paying the government a franchise fee. See Jordan Pond

Co., LLC v. United States, 115 Fed. Cl. at 626 (stating that the solicitation was for a “ten-

year concession contract to provide various concession services at Acadia National

Park”); see also Eco Tour Adventures, Inc. v. United States, 114 Fed. Cl. at 11 (stating

that the solicitation was for “two concession contracts to provide guided cross-country ski

tours, including associated transportation and food services, in Grand Teton National

Park”). In both cases, the court found that the concession contracts were not procurement

contracts for the purposes of this court’s jurisdiction under 28 U.S.C. § 1491(b)(1). The

Judge in Eco Tour noted that that the concession contracts were “unlike traditional

government procurement contracts insofar as the government does not make payments

to the contractor in exchange for the provision of goods or services to the government;

instead, concessioners pay the government a fee for the privilege of charging the public

for services provided to the public.” Eco Tour Adventures, Inc. v. United States, 114 Fed.

Cl. at 6. The Judge in Eco Tour concluded that the “essence of NPS [National Park

Service] concession contracts is not the acquisition of goods or services by the

government, but the grant, for a fee, of certain rights to private contractors.” Id. In Jordan

Pond, the concession contract required the awardee, in addition to paying the government

a franchise fee, to conduct maintenance of Acadia National Park’s concession buildings

where it would be providing its concession services to the public. See Jordan Pond Co.,

LLC v. United States, 115 Fed. Cl. at 629. The Judge in Jordan Pond noted, however,

that such maintenance was “better characterized as a condition of the opportunity to

operate the concession rather than as separate services provided to the Park Service.”

47

Id. Additionally, the Judge in Jordan Pond stated that “to the extent that plaintiff argues

that the concession contract in Acadia National Park is a ‘mixed transaction’

encompassing both a procurement of services for the government as well as a

concession contract which provides funding to the Park Service, the court disagrees.” Id.

As was the case with the cooperative agreements in Hymas, the Jordan Pond and

Eco Tour concession contracts served a limited benefit to the government, and the

principal purpose was to allow the awardee to carry out the awardee’s profit-making

concessions. As indicated as part of the discussion above regarding the Hymas case, in

contrast, the services of removal, demilitarization and mutilation of government property

in bridge contract pursuant to Solicitation No. A0008025 currently at issue before the court

are critical services the government seeks to acquire, which provide significant benefits

to the government, and are at the center of the contract’s principal scope. Because of the

substantial and critically important nature of the services to be performed directly for the

benefit of the government, the court finds that the bridge contract currently under review

is a mixed-transaction contract in which the services to be acquired by the government

are consistent with the “principal purpose” analysis outlined in Hymas by the United

States Court of Appeals for the Federal Circuit. Moreover, the extensive conditions of

government-imposed restrictions attached to the bridge contract during the contract’s

removal, demilitarization and mutilation phases of the contract, including the detailed

monitoring by the government of the awardee’s removal, demilitarization and mutilation

processes, and the requirement that the government must certify that all phases,

including destruction, have been conducted properly before title of any property passes

to the contractor, highlight the importance the government attaches to the services it is

contracting for when it picks an awardee. The importance of these services to be acquired

is also emphasized by the fact that government retained the right to deny the award to

the apparent high bidder if the government perceived that these services of removal,

demilitarization and mutilation would not be performed in a satisfactory, and responsible

manner. The court, therefore, finds that this court has jurisdiction to review HVF’s protest

of the award of the bridge contract.

The defendant and defendant-intervenor also argue that, in the bid protest of the

original contract before Chief Judge Sweeney, which preceded the issuance and

subsequent protest of the bridge contract currently at issue, Chief Judge Sweeney erred

by relying on a “more than de minimis” test for determining this court’s jurisdiction over

mixed-transaction contracts, and that this judge should not do the same. The defendant

and defendant-intervenor argue that the “more than de minimis” test, which was derived

from a Government Accountability Office (GAO) decision, has never been endorsed by

the United States Court of Appeals for the Federal Circuit, and is otherwise inappropriate

because of the differences in the jurisdictional mandate between this court and the GAO.

In Chief Judge Sweeney’s decision in HVF West I, Chief Judge Sweeney found

that there was jurisdiction over mixed-transaction contracts as follows:

A procurement, for the purposes of the court’s jurisdiction, is “the process

of acquiring property or services.” Res. Conservation Grp., 597 F.3d at

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1245. The mere disposition of property, however, is not a procurement.

Creation Upgrades, Inc. v. United States, 417 F. App’x 957, 959 (Fed. Cir.

2011); see also Res. Conservation Grp., 597 F.3d at 1244–45 (holding that

a solicitation of bids to lease government property is not a procurement).

But the court may have jurisdiction over a solicitation for a mixed

transaction, which occurs when the government is seeking a contractor to

buy government property and provide a service. Cf. NASA-

Reconsideration, B-408823.2, 2014 CPD ¶ 147 (Comp. Gen. May 8, 2014).

Specifically, the court has jurisdiction over such mixed transactions if “the

agency receives a concrete tangible benefit that involves the delivery of

goods and/or services to the government that are of more than a de

minim[i]s value.” Id.

HVF West I, 146 Fed. Cl. at 328. Chief Judge Sweeney continued in HVF West I that “the

mixed-transaction analysis has two parts; the court must determine whether the agency

is (1) procuring a service while attempting to sell goods/property and (2) seeking a service

that has more than de minimis value to the government.” Id. In HVF West I, Chief Judge

Sweeney then applied the mixed-transaction analysis to the original contract, stating:

With respect to the first prong, the solicitation contemplates the awardee

buying property after first providing a service: the removal and destruction

of military weapons and equipment. Indeed, the awardee was required to

supply that service before any sale could occur; the DLA only transferred

title to the scrap materials after certifying that the awardee adequately

destroyed the weapons and equipment. As to the second prong, the

significant value the DLA attributed to the demilitarization and mutilation

service is reflected in its detailed explanation of the requisite procedures

and decision to condition any title transfer on the complete destruction of

the property. This is understandable given that the dangerous or secretive

nature of military equipment likely precludes the agency from disposing of

the property without such processing. In short, the resulting contract is a

textbook case of a mixed transaction.

Id. (footnote omitted) (alteration in original).

The “principal purpose” analysis articulated in Hymas and which the undersigned

has found above is met by the mixed-transaction contract pursuant to Solicitation No.

A0008025 currently under review, is even more stringent than the “more than de minimis”

test embraced by Chief Judge Sweeney. Both the earlier contract reviewed by Chief

Judge Sweeney and the bridge contract currently under review required the contractor to

remove, demilitarize and mutilate government property under strict conditions and

required certification “before any sale could occur,” given the “dangerous or secretive

nature” of the equipment to be destroyed. See HVF West I, 146 Fed. Cl. at 328. Although

neither of the parties, nor the court, have identified a decision by the United States Court

of Appeals for the Federal Circuit which articulates a specific test to determine whether a

mixed-transaction contract qualifies as a procurement contract for the purposes of this

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court’s jurisdiction, the undersigned concludes that the sensitive nature and significance

of the services to be provided to the government pursuant to the mixed-transaction bridge

contract currently at issue satisfies both the “principal purpose” test outlined in Hymas, or

the more relaxed, “more than de minimis” test outlined in HVF West I. In conclusion, the

court finds that the mixed-transaction bridge contract before the court constitutes a

procurement for purposes of this court’s bid protest jurisdiction pursuant to 28 U.S.C. §

1491(b)(1). The court also notes that conferring jurisdiction in this court over mixed-

transaction contracts such as the bridge contract currently at issue, which involves

significant services to the benefit of the government, comports with the goals outlined in

the legislative history leading up to the enactment of 28 U.S.C. § 1491(b)(1). As described

in Resource Conservation Group, the United States Court of Appeals for the Federal

Circuit stated:

The legislative history of the ADRA indicates that the enactment [of]

§ 1491(b)(1) was motivated by a concern with forum shopping and

fragmentation of government contract law. As the original sponsor of the

jurisdictional provision (Senator Cohen) stated, “It is my belief that having

multiple judicial bodies review bid protests of Federal contracts has resulted

in forum shopping as litigants search for the most favorable forum.

Additionally, the resulting disparate bodies of law between the circuits has

created a situation where there is no national uniformity in resolving these

disputes.” See 142 Cong. Rec. S11848 (daily ed. Sept. 30, 1996)

(statement of Sen. Cohen).

Res. Conservation Grp., 597 F.3d at 1242–43. The services that are required to be

performed in the contract at issue in the above-captioned protest, i.e., the removal,

demilitarization and mutilation of an estimated total of 19,000,000 pounds of government

property, are services for which the United States would otherwise have to expend

significant financial resources to accomplish. In the bridge contract now under review,

acquisition of the services to the benefit of the government were combined with the

passage of title to the contractor in exchange for the services performed for the

government, whether calling it a “barter,” or a “sales” or mixed-transaction” contract, with

title ultimately passed to the contractor, but only after the required, supervised services

are performed. The principal purpose of the contract is for the removal, demilitarization

and mutilation of no longer useful, sensitive government property. In this mixed-

transaction contract, the nature and extent of the services which the United States is to

receive in connection with the contract determines that the contract is a “procurement” for

purposes of this court’s jurisdiction pursuant to 28 U.S.C. § 1491(b)(1). Therefore, this

court finds this court has subject-matter jurisdiction over the protestor’s protest.

DLA DS’ Non-Responsibility Determination of HVF’s Proposed Site

In protestor’s motion for judgment on the administrative record, protestor argues

that DLA DS “fail[ed] to consider important evidence before the agency” when DLA DS

determined that HVF was a non-responsible bidder, and that the agency’s actions

constituted “arbitrary and capricious decision-making.” Protestor also asserts that there

50

was disparity in DLA DS’ treatment of HVF when finding that HVF was a non-responsible

bidder in contrast to how DLA DS later treated defendant-intervenor, Lamb, when finding

that Lamb was a responsible bidder and eligible to be awarded the bridge contract.

Protestor alleges that “DLA DS engaged in unequal treatment” when DLA DS: (1)

“extrapolated from the test results of samples taken at HVF’s facility to find a ‘probable’

violation, but concluded there was no issue as to substantially similar test results of

samples taken at Lamb’s facility,” (2) “assumed that HVF would not remove tires before

the requested deadline, but then assumed that Lamb would receive all requisite permits

before performance,” and (3) “labeled HVF as uncooperative for not allowing the agency

to take photographs, but declined to criticize Lamb for managing the photographs of its

facility.” (capitalization and emphasis omitted). In defendant’s and defendant-intervenor’s

cross-motions for judgment on the administrative record, defendant and defendant-

intervenor argue that DLA DS treated both HVF and Lamb appropriately and that there is

no merit to HVF’s criticisms of DLA DS’ non-responsibility determination of HVF.

Defendant and defendant-intervenor also moved to dismiss the protest, arguing that

protestor lacks standing to challenge the award to Lamb. Protestor responds, however,

that it “is not challenging the award to Lamb. Rather, HVF is arguing that DLA DS applied

arbitrary standards when it evaluated HVF — and that the arbitrariness of those standards

is made clear by the different standards DLA DS applied to Lamb.” (emphasis in original).

As discussed above, the Tucker Act, as amended by the ADRA, grants the United

States Court of Federal Claims “jurisdiction 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.” 28 U.S.C. § 1491(b)(1). In order to have standing to sue as an “interested

party,” a disappointed bidder must show that it suffered competitive injury or was

“prejudiced” by the alleged error in the procurement process. In describing the prejudice

requirement, the Federal Circuit has held that:

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

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

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

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

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

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

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

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

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

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

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

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

consideration.’” (citation omitted)).

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

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

51

901, 912 (Fed. Cir.), reh’g en banc denied (Fed. Cir. 2013); Allied Tech. Grp., Inc. v.

United States, 649 F.3d 1320, 1326 (Fed. Cir.), reh’g en banc denied (Fed. Cir. 2011);

Todd Constr., L.P. v. United States, 656 F.3d 1306, 1315 (Fed. Cir. 2011) (To prevail, a

bid protester must first “‘show that it was prejudiced by a significant error’ (i.e., ‘that but

for the error, it would have had a substantial chance of securing the contract).’” (quoting

Labatt Food Serv., Inc. v. United States, 577 F.3d 1375, 1378, 1380 (Fed. Cir. 2009));

Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308, 1317 (Fed. Cir. 2007); Info. Tech.

& Applications Corp. v. United States, 316 F.3d 1312, 1319 (Fed. Cir.), reh’g and reh’g

en banc denied (Fed. Cir. 2003); Impresa Construzioni Geom. Domenico Garufi v. United

States, 238 F.3d at 1332-33; OMV Med., Inc. v. United States, 219 F.3d 1337, 1342 (Fed.

Cir. 2000); Advanced Data Concepts, Inc. v. United States, 216 F.3d 1054, 1057 (Fed.

Cir.), reh’g denied (Fed. Cir. 2000); Stratos Mobile Networks USA, LLC v. United States,

213 F.3d 1375, 1380 (Fed. Cir. 2000); CR/ZWS LLC v. United States, 138 Fed. Cl. 212,

222 (2018) (“In post-award protests, like this one, a plaintiff may demonstrate competitive

injury or prejudice by showing that it would have had a “substantial chance” of winning

the award “but for the alleged error in the procurement process.” (quoting Weeks Marine,

Inc. v. United States, 575 F.3d at 1359)); Sci. Applications Int’l Corp. v. United States,

108 Fed. Cl. 235, 281 (2012); Linc Gov’t Servs., LLC v. United States, 96 Fed. Cl. 672,

693 (2010) (“In order to establish standing to sue, the plaintiff in a bid protest has always

needed to demonstrate that it suffered competitive injury, or ‘prejudice,’ as a result of the

allegedly unlawful agency decisions.” (citing Rex Serv. Corp. v. United States, 448 F.3d

1305, 1308 (Fed. Cir. 2006); Statistica, Inc. v. Christopher, 102 F.3d at 1580–81; Vulcan

Eng’g Co. v. United States, 16 Cl. Ct. 84, 88 (1988); Morgan Bus. Assocs., Inc. v. United

States, 223 Ct. Cl. 325, 332 (1980))). In order to establish what one Judge on this court

has called “allegational prejudice” for the purposes of standing, the bidder must show that

there was a “substantial chance” it would have received the contract award, but for the

alleged procurement error. See Linc Gov’t Servs., LLC v. United States, 96 Fed. Cl. at

675; Hyperion, Inc. v. United States, 115 Fed. Cl. 541, 550 (2014) (“The government

acknowledges that proving prejudice for purposes of standing merely requires

“allegational prejudice,” as contrasted to prejudice on the merits . . . .”); Bannum, Inc. v.

United States, 115 Fed. Cl. 148, 153 (2014); see also Bannum, Inc. v. United States, 404

F.3d 1346, 1358 (Fed. Cir. 2005); Galen Med. Assocs., Inc. v. United States, 369 F.3d

1324, 1331 (Fed. Cir.), reh’g denied (Fed. Cir. 2004); Info. Tech. & Applications Corp. v.

United States, 316 F.3d at 1319; Statistica, Inc. v. Christopher, 102 F.3d at 1581; Archura

LLC v. United States, 112 Fed. Cl. 487, 497 (2013); Lab. Corp. of Am. V. United States,

108 Fed. Cl. 549, 557 (2012). Because standing is a jurisdictional issue, this showing of

prejudice is a threshold issue. See Corus Grp. PLC. V. Int’l Trade Comm’n, 352 F.3d

1351, 1357 (Fed. Cir. 2003); Myers Investigative & Sec. Servs., Inc. v. United States, 275

F.3d 1366, 1370 (Fed. Cir. 2002).

As described above, HVF submitted the highest purchase price in response to the

bridge contract Solicitation, No. A0008025, for the removal, demilitarization, mutilation,

and then sale of government property. After the close of bids, DLA DS contacted HVF,

informing HVF that it was the “apparent high bidder.” In accordance with the Solicitation,

HVF submitted the required documentation to DLA DS, and the agency began to conduct

reviews of the HVF facility in Tucson, Arizona where HVF proposed that it would be

52

performing the removal, demilitarization and mutilation of the government property. In

accordance with the bridge contract Solicitation, DLA DS’ pre-award activities included

conducting an environmental responsibility determination of the HVF facility. DLA DS

engaged in a number of communications with HVF and conducted site visits to the HVF

facility. In addition to DLA DS’ communications and site visits, the State of Arizona

agency, ADEQ, also conducted a site visit of HVF’s facility in response to an anonymous

complaint, and communicated with DLA DS regarding their findings on HVF. After the

reviews of the site proposed by HVF for the performance of the bridge contract were

conducted, HVF was determined to be environmentally non-responsible in DLA DS’ Tim

Cronk’s Final Environmental Responsibility Determination of HVF, completed on March

12, 2020. DLA DS did not begin to review defendant-intervenor, Lamb, for the award of

the bridge contract until after HVF was eliminated from the competition due to HVF’s non-

responsibility determination by DLA DS.

In the bid protest of the bridge contract currently before the court, protestor HVF

alleges that DLA DS acted arbitrarily and capriciously when finding HVF non-responsible

and declining to award the bridge contract to HVF. HVF disputes the reasonableness of

the decision in DLA DS’ Final Environmental Responsibility Determination on HVF, written

by Mr. Cronk of DLA DS’ Environmental Office, recommending to the Sales Contracting

Officer that HVF not be awarded the bridge contract. The parties do not argue that

protestor was otherwise ineligible for the award of the bridge contract at issue. Because

HVF was the highest bidder, and because no other allegations of insufficiency are before

the court, the record suggests that there was a substantial chance that, in accordance

with the bridge contract Solicitation, DLA DS would not have gone on to consider Lamb

for the award of the bridge contract had the agency found HVF to be environmentally

responsible. Therefore, regarding the issue of protestor’s standing, protestor has

sufficiently established that it had a direct economic interest, and therefore, protestor has

stan

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