Superior Optical Labs, Inc. v. United States

In the United States Court of Federal Claims

No. 20-1497C

(Originally Filed: January 22, 2021)

(Re-issued: February 2, 2021)1

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SUPERIOR OPTICAL LABS, INC.,

Plaintiff,

v.

Post-award bid protest;

THE UNITED STATES, Corrective action; GAO;

Lack of ambiguity; Injunctive

Defendant, factors.

and

PDS CONSULTANTS, INC.,

Intervenor.

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Robert J. Sneckenberg, Washington, DC, for plaintiff. Elizabeth H.

Connally, John E. McCarthy Jr., and Rina M. Gashaw, of counsel.

Nathanael B. Yale, Trial Attorney, United States Department of

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

with whom were Jennifer B. Dickey, Principal Deputy Assistant Attorney

General, Robert E. Kirschman, Jr., Director, Deborah A. Bynum, Assistant

Director, for defendant. Natica C. Neely, VA Office of General Counsel, of

counsel.

David S. Gallacher, Washington, DC, for intervenor. Emily S.

Theriault, Adam A. Bartolanzo, and Daniel J. Alvarado, of counsel.

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

opportunity to propose redactions. They have done so. Redactions appear

in brackets below.

ORDER AND OPINION

BRUGGINK, Judge.

This action is a challenge to the Department of Veterans Affairs’

decision to recompete a contract to provide eyeglasses to the VA. Plaintiff

was originally awarded the contract. Intervenor protested that award at the

Government Accountability Office. The agency took voluntary corrective

action in response to the protest, resulting in the cancellation of the award to

plaintiff and an announcement that the VA would allow proposal revisions

and make a new award decision. Plaintiff challenges the corrective action

decisions as arbitrary and capricious. The matter is fully briefed on cross-

motions for judgment on the administrative record. As more fully explained

below, because the agency lacked a rational basis for its corrective action,

we sustain the protest and enjoin the cancellation of the award.

BACKGROUND

On, May 11, 2020, the Department of Veterans Affairs (“VA”) issued

request for proposals 36C26220R0093 (“RFP” or “solicitation”) for a

contract to supply eyeglasses that the VA will provide to eligible

beneficiaries of its healthcare system in California, Nevada, and New

Mexico. The RFP called for a single award of a fixed-price, indefinite-

delivery, indefinite-quantity contract to the lowest-priced, technically

acceptable offeror. The contract was for one base year with four option

years.

The agency required offerors to provide a pricing worksheet with

prices for each year of the contract and “two (2) sample sets (labeled as Set

1 and Set 2) of the eyeglass frames offeror[s] propose[] to provide under the

contract.” Administrative Record (“AR”) 119. Offers were then ranked by

total evaluated price for all five potential years, and then the lowest price

offer was evaluated for technical acceptability first. The first technically

acceptable proposal would be awarded the contract. Id. at 120.

The VA received six separate bids from four offerors.2 The intervenor

here, PDS Consultants, Inc. (“PDS”), submitted three different offers. The

other offerors each submitted one proposal. The lowest priced offer, from

[ ], was evaluated first but found not to be technically acceptable

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The VA also received one late proposal and one proposal from an offeror

that was not properly registered with the VA as a service-disabled veteran

owned small business. Neither of these offers were considered.

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because it did not submit all the required frame samples. The second-lowest

bid was from PDS, its first of three offers, but it too was found not to be

technically acceptable due to missing frames in both sample sets. Plaintiff,

Superior Optical Labs, Inc. (“Superior”), offered the next lowest price. The

VA found Superior’s offer to be technically acceptable, and thus, on August

25, 2020, it awarded the contract to plaintiff. The other offerors were notified

of the award to Superior by debriefing letter dated August 24, 2020. In the

letter, plaintiff’s price was disclosed pursuant to FAR part 15.506.

On September 2, 2020, PDS filed a protest with the Government

Accountability Office (“GAO”), arguing, among other things, that the

solicitation was unclear with respect to whether offerors were required to

submit all of the required frames in each of the two sample sets, i.e., two

complete sets of the eyeglass frames being offered. PDS argued that the

VA’s rating of its first offer (“PDS #1”) as technically unacceptable was

arbitrary because the solicitation did not require that both sample sets of

frames each be complete. Alternatively, PDS argued that the RFP was

ambiguous with respect to what the agency expected and that the ambiguity

was latent. As required by the Competition in Contracting Act (“CICA”), 31

U.S.C. § 3553(d)(3)(A)(iii) (2018) (known as the “CICA stay”), the agency

issued a stop work notice to Superior pending the GAO protest.

On September 24, 2020, prior to the agency’s response to PDS’

protest, the VA informed GAO that it would take corrective action,

cancelling the award to Superior, amending the solicitation, and making a

new award decision after allowing proposal revisions. AR 925. The agency

detailed that it did indeed intend that each offeror would submit two complete

sets of all frames being offered due to the imposition of social distancing

requirements in response to the COVID outbreak in the United States. In

other words, members of the Technical Evaluation Board (“TEB”) would not

meet together in the same physical location. Thus, having multiple sets of

frames would make the evaluators’ process smoother and quicker. Id. at 926-

27. It further explained that this was akin to requiring bidders to submit

multiple copies of the same written proposal. Id. at 926. The notice

nevertheless went on to conclude that the VA “agrees that the section of the

solicitation about which Protester complains is subject to more than one

reasonable interpretation and that the language at issue is susceptible to both

VA’s interpretation of the language as well as the understanding that

Protester contends it reached.” Id. The notice went on to state that the “the

solicitation [did] not explicitly state[] that offerors were required to submit

two identical frame kits” nor did it “explicitly state that each sample set of

eyeglass frames must independently satisfy each of the technical

acceptability criteria described in solicitation.” Id. at 927. The VA

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reconsidered the language as a whole and found that it could reasonably be

read to require only that each offer contain, across two sets, all of the frames

necessary to meet the technical requirements. Id. at 927-28. The agency

relied on the fact that the solicitation used the plural word “sets” in one place,

but then later in the RFP referred to the singular words “sample” and “frame

mix.” It found this created a latent ambiguity requiring correction for a fair

competition.

Superior filed an objection on September 25, 2020, claiming that it

would be unduly prejudiced by this late correction of the supposed ambiguity

due to its price having already been disclosed to the other offerors. Despite

the objection, GAO dismissed the protest as academic.

On October 20, 2020, at plaintiff’s behest, VA disclosed all offerors’

prices in an attempt to ameliorate the prejudice to Superior from having its

price disclosed. Not satisfied, Superior filed the instant action on October

29, 2020. The agency agreed not to proceed with its reevaluation and award

in order to give the court time to consider the merits of the protest. The

matter is now fully briefed. Oral argument was held telephonically on

January 15, 2021.

DISCUSSION

We have jurisdiction to review actions taken by federal agencies in

connection with a procurement or proposed procurement. 28 U.S.C. §

1491(b) (2018). We review those actions pursuant to the standards set forth

in the Administrative Procedures Act, 5 U.S.C. § 706 (2018). 28 U.S.C. §

14941(b)(4) (stating that review under this section would be pursuant to the

standards set forth in the APA). In order to be successful, the protestor must

thus show that the challenged agency action was arbitrary, capricious, or

otherwise not in accordance with the law. Centech Group, Inc. v. United

States, 554 F.3d 1029, 1037 (Fed. Cir. 2009). This is rational basis review.

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

1324, 1332 (Fed. Cir. 2001).

The inquiry is unchanged in the corrective action context. See Dell

Fed. Sys., L.P. v. United States, 906 F3d. 982, 992 (Fed. Cir. 2018). This

means that a corrective action will not be set aside if there is a rational basis

for it, supported by a “coherent and reasonable explanation.” Id. The agency

need not admit an error before taking corrective action, ManTech

Telecomms. & Info. Sys. Corp. v. United States, 49 Fed. Cl. 57, 65 (2001),

and the corrective action need only be “reasonable under the circumstances.”

Sierra Nevada Corp. v. United States, 107 Fed. Cl. 735, 750 (2012).

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Plaintiff seeks an injunction to prevent the agency from carrying out

its corrective action and to reinstate the award to Superior. We consider four

factors in deciding whether the extraordinary relief of an injunction is

warranted under the circumstances: 1) whether plaintiff has succeeded on the

merits in showing that the agency acted irrationally or otherwise illegally, 2)

whether plaintiff will suffer irreparable harm absent the injunction, 3) the

balance of the hardships to the respective parties if an injunction is entered,

and 4) whether an injunction is in the public’s interest. PGBA, LLC . v.

United States, 389 F.3d 1219, 1228-29 (Fed. Cir. 2004). We begin with the

first factor.

I. The Corrective Action Was Not Merited

We agree with the plaintiff that the corrective action here is irrational

because there was no ambiguity in the solicitation nor does the record support

the agency’s conclusion that PDS, or any other offeror, was misled. We start

by turning to the language of the RFP in question.

A. The Solicitation Was Not Ambiguous

The RFP at Section E.2.3, “Required Submittal for Proposal

Evaluations,” instructed offerors to submit “two (2) sample sets (labeled as

Set 1 and Set 2) of the eyeglass frames offeror proposed to provide under the

contract.” It further required that each “Offeror’s submittal shall separate

men’s frames, women’s frames, and unisex frames into separate containers

with each container clearly marked to identify” what was contained therein.

Id. Bidders were warned that, if they “fail[ed] to submit these samples with

their proposals in the manner specified in this paragraph,” their proposals

might be rejected. Id.

The next section, E.3, contained the technical evaluation factor,

“Proposed Frame Mix.” It stated, “To be found technically acceptable for

this evaluation factor, the sample of frames the offeror submitted with its

proposal must meet ALL of the following criteria.” Id.

Frame sample must contain:

• Minimum of 25 men’s frames

• Minimum of 25 women’s frames

• Minimum of 15 unisex frames

• Minimum of 5 large frame sizes for men’s frames (size 54 to

60)

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• Minimum of 3 frames with short bow lengths for men’s

frames (size 125 to 130)

• Minimum of 5 large frame sizes for women’s frames (size 54

to 60) • Minimum of 3 frames with short bow lengths for

women’s frames (size 125 to 130)

Id. The RFP continued with instructions for specific numbers of metal

frames and plastic frames. It used the following language to introduce those

requirements: “Metal frame mix must include:” and “Plastic frame mix must

include:”. Id. at 119-20. A list of the number of each type of frame required

followed.

From these statements, PDS and the agency contrast, as they did to

GAO, the use of the plural in Section E.2.3 (“sets”) with the use of the

singular in Section E.3 (“mix” and “sample”). PDS points out that the word

“identical” does not appear in the first section to refer to the sets, but instead

the word “submittal” was used thereafter in reference to the sample sets. The

use of the singular (“frame sample” and “frame mix”) in the following

section buttresses the confusion, according to defendant and intervenor.

Thus, in their view, the VA could have been asking for two identical,

complete sets or it could have been asking for one complete sample broken

into two sets.

They argue that this ambiguity was latent because it did not become

apparent until after evaluation. Defendant argues in the alternative that, even

if patent, the agency was well within its wide discretion to correct that error

after the fact. It is of no note, defendant and intervenor argue, that PDS’

protest of a patent ambiguity would have come too late under the Federal

Circuit’s rule in Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308

(Fed. Cir. 2007), because agencies are not so constrained when they take

voluntary corrective action. We need not reach that question, however,

because we find no ambiguity in the RFP.

The required “submittal” referenced in E.2.3 was to consist of two

sample sets, independently labeled as such, containing “the eyeglass frames

offeror proposes to provide under the contract.” AR 119. Thus, an offeror’s

submittal was required to contain two sets of the frames it was offering to the

VA. The combination of a single submittal and plural sets is thus not only

not confusing, it is necessitated by what the agency wanted. There is no

reasonable interpretation of this language other than that the VA required two

complete sets of frames within a single submittal.

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Contrary to the VA’s explanation to GAO, the terms “submittal,”

“sample” and “mix” do not interject any ambiguity. First, because those

terms do not modify the phrase “two (2) sample sets.” Second, the word

submittal clearly refers to the entire proposal to be submitted. It is in the

singular because there is only one proposal, although it includes two sample

sets. Third, the use of the singular word “sample” or the phrase “sample set”

is fully consistent with the agency’s expectation that the “sample,” or

“sample set” be complete, although duplicated within the proposal. Indeed,

the singular terms confirm that the agency expected the individual sample

sets to be complete.

There is no rational reason, nor has any been proffered, why offerors

would have thought that the agency was asking for incomplete sample sets,

even if the two, when combined, might have contained all the required

frames. Such a requirement is contrary to the plain reading of the RFP and

would only introduce confusion into the process. Moreover, as explained

below, PDS’ proposal belies any notion that it actually thought it was

submitting a complete proposal by providing two incomplete sample sets.

B. Offerors Were Not Misled

An examination of the record reveals that the “interpretation” offered

after the fact by PDS to GAO and now to the court was not the basis of its

bid. Indeed, none of the unsuccessful offeror’s evaluated proposals support

the notion that they were led to believe that they could spread out a single

frame mix across two independently incomplete sets. PDS’ first proposal

(PDS #1) contained two sets that were largely identical, but neither was

complete. One set was missing [ ]. AR 584

(Source Selection Decision Memorandum). The solicitation required three,

but PDS provided [ ]. The other set was missing [

]. Id. The TEB

also found [ ].3 Id. The fact that

intervenor provided two samples of virtually a complete set of its offered

frames is inconsistent with the idea that it believed that the solicitation

allowed the sample mix to be spread across the two sets. What possible

reason could there be for creating a second set with only one pair or a small

handful of glasses? PDS’ second offer (PDS #2) further belies the notion.

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Intervenor has not explained why it provided two [ ].

This provides further support for the conclusion that PDS simply made errors

in its submission.

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The first set evaluated for PDS #2 contained all of the required frames.4 Id.

at 585. PDS did not split its frames across the two sets for its second offer.

Rather than indicate that PDS was misled by an ambiguous

requirement, the errors and omissions in PDS #1 indicate a lack of care, not

an attempt to spread out a single set of frames across two sets. PDS’ only

explanation, citing its three distinct offers of differing frames, was that it was

trying to show the agency its many offerings by using non-identical sample

sets, something it argues it was induced to do by the agency’s lack of clarity.

Offering the same frames but spread over two sets does not display more

wares. however. Further, the record does not support that this was

intervenor’s intention. Its first offer contained duplicates of most of its

frames, and its second offer contained a complete set. It makes no sense to

have done either of these things had PDS intended to split its frame mix

across two sets and/ or attempted to present a wider sample of offerings.

Instead, intervenor’s odd presentation suggests only that an error was made

unintentionally in the first offer; it does not demonstrate confusion about the

terms of the solicitation.

We also note that, with respect to the proposal of the lowest priced

offeror, [ ], which was evaluated first and found technically

unacceptable, its two sample sets each failed the requirement of containing

three men’s and three women’s short bow frames. AR 583-84. Even

combined, [ ]’s two sets would not have met the VA’s required frame

mix. [ ] would have been short at least two women’s short bow

frames. This suggests, like PDS #1, that it simply erred and was thus

properly not awarded the contract despite its low price.

The unsuccessful offers do not confirm an ambiguity in the

solicitation. Rather, the bidding errors appear random, not the product of a

considered reading of the solicitation. Defendant and intervenor have

provided no explanation that supports an alternative reading of particular

terms in any sort of coherent way that explains the way intervenor put

together its submissions. This means that we cannot agree that there were

any facts supporting an assumption of bidder confusion sufficient to warrant

setting aside the award. It appears that the VA simply took PDS’ protest

allegations at face value without any consideration of whether they were

supported by the record. This constitutes irrational conduct.

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It was not selected for award, however, because plaintiff’s offer was lower

in price than PDS #2. It is not clear why the agency examined this offer at

all, as it was higher in price than Superior’s.

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C. There Is No Other Independent Rationale

Defendant also suggests that its corrective action was reasonable

because it was taken to “foster competition” as required by CICA of all

federal procurements. Per defendant, because PDS’ submission “would have

been acceptable under PDS’s reasonable interpretation,” corrective action

was independently justified as taken in pursuit of maximum competition.

Def.’s Mot. for J. on the AR 12. This is apparently enough, in defendant’s

view, to undergird the VA’s decision. We disagree.

It was not until after award and disclosure of the winning bidder’s

price to its competitors that the agency now discovered this rationale for

altering its reading of the RFP. Although competition in federal

procurements is crucial, agencies are not at liberty to reject a compliant

proposal in a fair competition simply to generate a lower price, absent some

independent rationale for doing so. Here, the agency requirements remain

unchanged and no additional offers will be solicited.

We find no reasonable basis for the correction adopted by the agency

because there was no error that needed correcting. The RFP was not

ambiguous and Sections E.2 and E.3 are not in conflict. Offerors were

plainly instructed to offer submittals containing two sample sets. It simply

makes no sense for those samples to have been different.

Errors were made, but not by Superior. It was thus lawfully awarded

the contract. At that point, the parties’ legal rights viz-a-viz one another

changed. Although the government had the right to terminate the award for

convenience or if its needs changed, here that was not the case. The asserted

justification for correction was in error. The agency had made an award to a

qualified bidder; that fact should have been taken into consideration before

exposing the awardee to the unfairness of reopening competition after

revealing its bid amount. See Sys. Application & Techs., Inc. v. United

States, 691 F.3d 1374, 1382-83 (Fed. Cir. 2012) (affirming the finding that a

new competition after the contract had been awarded and price disclosed

was, absent some independent justification, arbitrary and prejudicial). Here,

we find no justification for the agency to have done so. Plaintiff having

established success on the merits, we turn to the other factors relevant to

whether the status quo ante should be restored via an injunction.

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II. Plaintiff Will Be Irreparably Harmed

We find that plaintiff will be irreparably harmed if the corrective

action is allowed because it was the lawful awardee of the contract. Absent

an injunction, it will be forced to compete both against the offerors that it

already bested and, in essence, itself. Because its price was disclosed to the

losing bidders, in a recompete, plaintiff must lower its price or risk the other

offerors lowering theirs to beat plaintiff’s disclosed price. Here, in fact,

plaintiff would likely be forced to lower its price below each of the other

offeror’s prices because all offeror’s prices have been revealed, and it was

not the lowest priced offer.

The government argues that the disclosure of all of the offerors’ initial

prices, at plaintiff’s request, obviates this concern. We disagree. This is a

lowest-price, technically acceptable procurement. If the agency action has

the effect of making more offers technically acceptable, the rational bidder

knows that it must now beat those offerors’ disclosed prices. The agency’s

decision thus has the effect of artificially lowering proposed prices to the

detriment of a successful awardee.

Defendant is correct that its disclosure of plaintiff’s price to the

unsuccessful awardees was lawfully done pursuant to FAR part 15.506(d)(2),

which instructs the agency to disclose the evaluated price of the successful

offer, but that does not end the inquiry. No risk of the harm faced now was

assumed by plaintiff when it bid. It is the imposition of an unlawful

corrective action that turns what would have been a benign disclosure—

absent the corrective action, plaintiff would be performing at the price it

offered—to one that is highly detrimental to the plaintiff because of the redo.

In this context, that is irreparable harm. See Sheridan Corp. v. United States,

95 Fed. Cl. 141, 155 (2010); see also Sys. Application, 691 F.3d at 1383

(“The risk of recompeting for a contract after revelation of one's price

calculations to competitors, however, does not extend to a contract fairly

competed and won on the first solicitation.”).

III. The Balance of the Hardships Favors Plaintiff

The irreparable harm to plaintiff established, we consider the balance

of harms. Defendant has not suggested any independent harm that the VA

will suffer should the corrective action be set aside. Although it mentions in

passing that it may acquire the contract at a lower price after a new award

decision, to its credit, defendant does not argue that it will be harmed

monetarily if its corrective action is set aside. PDS would not be harmed

because its lowest priced offer was rightfully found to be technically

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unacceptable. It has no rightful expectation that it be allowed a chance to

correct its error. Absent an injunction, only plaintiff is harmed. The balance

of the hardships favor plaintiff.

IV. The Public’s Interest

As always, the public has an interest in the fair and lawful

procurement of goods and services by the government. Absent a reasonable

rationale for corrective action, an offeror may not be forced to compete

against itself and other offerors again when it has already won the contract.

The public interest favors an injunction.

CONCLUSION

The VA erred when it accepted intervenor’s implausible protest at

GAO. The RFP is not amenable to reasonable interpretations other than the

one the agency admittedly intended: “two (2) sample sets . . . of the eyeglass

frames offeror proposes to provide.” AR 119. The solicitation provided no

reason to think that the individual sets could be incomplete. There was no

ambiguity, latent or patent, nor do the offerors’ proposals suggest otherwise.

Plaintiff, on the other hand, was harmed by the VA’s corrective action, and

absent an injunction, its injury will be irreparable. The balance of harms

likewise favors relief. The public interest weighs in favor of not allowing an

unduly prejudicial do-over for no valid reason. Plaintiff’s motion for

judgment on the administrative record is thus granted. Defendant’s and

intervenor’s cross-motions are denied. Accordingly, the following is

ordered:

1. The Department of Veterans Affairs is hereby enjoined from the

corrective action that it announced to GAO in its September 24,

2020 notice of corrective action.

2. The agency must reinstate the award to plaintiff and is prohibited

from recompeting the contract absent a lawful reason to do so.

3. The Clerk of Court is directed to enter judgment for plaintiff.

4. Costs to plaintiff.

s/ Eric G. Bruggink

ERIC G. BRUGGINK

Senior Judge

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