# Caddell Construction Co., Inc. v. United States

> United States Court of Federal Claims · May 22, 2013 · 111 Fed. Cl. 49

URL: https://www.frixlaw.com/law-library/cases/868705

## Case

- **Full name:** CADDELL CONSTRUCTION CO., INC., Plaintiff, v. UNITED STATES, Defendant, Desbuild Incorporated-REC International Joint Venture, Defendant-Intervenor
- **Court:** United States Court of Federal Claims
- **Decided:** May 22, 2013
- **Citations:** 111 Fed. Cl. 49; 2013 WL 2300330
- **Precedential status:** Published
- **Opinion:** Opinion by Horn
- **Judges:** Horn
- **Cited by:** 47 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/868705

## How later opinions describe it (automated extraction)

- recognizing that agency decision can be set aside for “‘offer[ing] an explanation for its decision that runs counter to the evidence before the agency’”

## Opinion text

REDACTED OPINION

In the United States Court of Federal Claims
No. 13-20C
Filed: April 30, 2013
Redacted Version Issued for Publication: May 22, 2013 1

* * * * * * * * * * * * * * * *
CADDELL CONSTRUCTION CO., INC., * Post-Award Bid Protest;
* Cross-Motions for Judgment
Plaintiff, * on the Administrative Record;
v. * Standing; Timeliness;
* Standard of Review; Pre-
UNITED STATES, * qualification; Percy
* Amendment; Best-Value
Defendant, * Trade-Off Analysis; Injunctive
* Relief; Bid Preparation and
DESBUILD INCORPORATED–REC * Proposal Costs.
INTERNATIONAL JOINT VENTURE, *
*
Defendant- Intervenor. *
*
* * * * * * * * * * * * * * *

Dirk D. Haire, Fox Rothschild, LLP, Washington, D.C., for plaintiff. With him was
Alexa Santora, Fox Rothschild, LLP, Washington, D.C.

Shari A. Rose, Trial Attorney, Commercial Litigation Branch, Civil Division,
United States Department of Justice, Washington, D.C., for defendant. With her were
Martin F. Hockey, Jr., Assistant Director, Jeanne F. Davidson, Director, Commercial
Litigation Branch and Stuart F. Delery, Principal Deputy Assistant Attorney General,
Civil Division.

Lawrence M. Prosen, Thomas Hine, LLP, Washington, D.C., for intervenor.

OPINION

HORN, J.

Plaintiff Caddell Construction Co., Inc. (Caddell) filed a post-award bid protest in
this court on January 10, 2013, challenging the United States Department of State’s

1
This opinion was issued under seal on April 30, 2013. 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. Where words
have been redacted, it is reflected with the following notation: “[redacted].”
award of a $156 million contract to intervenor Desbuild Incorporated-REC International
Joint Venture (Desbuild-REC) for the construction of a new annex building at the United
States Embassy in Moscow, Russia, pursuant to Solicitation No. SAQMMA-12-R-0117
(the Solicitation). Plaintiff alleges that, but for defendant’s arbitrary and capricious
evaluation of the proposals and violation of statutes and regulations in awarding the
construction project to Desbuild-REC, Caddell would have been evaluated as the
lowest-priced, technically acceptable offeror. Plaintiff seeks permanent injunctive relief,
as well as damages, including bid preparation and proposal costs. The parties have
filed, and fully briefed, cross-motions for judgment on the administrative record, and oral
argument was held.

FINDINGS OF FACT

On January 31, 2012, defendant issued a “Notice of Solicitation of Submissions
for Construction of the New Annex Office Building at U.S. Embassy in Moscow, Russia,”
(Pre-qualification Notice)2 via a posting on FedBizOpps.3 The Pre-qualification Notice
explained that defendant was requesting submissions to pre-qualify offerors to construct
an annex office building within the United States Embassy compound in Moscow. The
Pre-qualification Notice indicated that “[t]he project solicitation will consist of two
phases:” 1) Pre-Qualification of Offerors, and 2) Requests for Proposals from Pre-
Qualified Offerors. In Phase I, defendant would determine which offerors pre-qualified
for the contract, then, those firms which had pre-qualified would be invited to submit a
Phase II proposal. The Pre-qualification Notice also stated:

DOS [Department of State] anticipates that a tradeoff process (see FAR
15.101-1) is in the best interest of the Government. The Government will
consider award to other than the lowest price offer or other than the
highest technically rated offer. DOS anticipates that evaluation of technical
and past performance considerations will play a significant role in the
selection process.

Defendant’s January 31, 2012 posting on FedBizOpps listed Charles G. Krips4 as
defendant’s “Primary Point of Contact” for the procurement. The Pre-qualification
2
Plaintiff refers to this document as the “Solicitation” and defendant and intervenor refer
to it interchangeably throughout their briefs as the “Solicitation,” “Prequalification
Solicitation,” and “Prequalification Notice.” The court refers to this document as the
“Pre-qualification Notice” to distinguish between the Notice and the Solicitation, No.
SMQMMA-12-R-0117, which was issued after Phase I of the procurement was
completed.
3
FedBizOpps is the online database of all federal government contracting opportunities
over $25,000.00 in value. See Info. Scis. Corp. v. United States, 73 Fed. Cl. 70, 76
(2006), recons. in part, 75 Fed. Cl. 406 (2007).
4
Defendant refers to Mr. Krips as the “Contract Specialist” for the Moscow project. On
various documents in the record which Mr. Krips authored and signed, he listed his title

2
Notice instructed offerors to mail their Phase I submissions to “U.S. Department of
State: Attn: Charles G. Krips,” and to email Mr. Krips any requests for clarification.

The Pre-qualification Notice stated that three technical evaluation factors would
be considered in Phase I: Factor 1: Joint Venture Agreement/Signed Statement of JV
[Joint Venture] Intent and Description of Partnership (if applicable), Factor 2: Technical
Project Experience and Past Performance, and Factor 3: Business Management Plan
and Organization. Factor 2 was further broken down into two subfactors: Subfactor 2A:
Technical Project Experience, and Subfactor 2B: Past Performance. Each factor was to
be “evaluated on a pass/fail basis.” An offeror that received a failing mark on any of the
three technical factors would be disqualified from the competition, and would not be
allowed to submit a Phase II offer or receive the contract award. The Pre-qualification
Notice explained under Submission Requirements that offerors were responsible for
submitting sufficient documentation for defendant to evaluate the offer under each
technical factor, stating: “Only the information in the submission and any additional
information obtained concerning past performance will be considered during the
evaluation of the Offeror.”5

Under Factor 1, Joint Venture Agreement/Signed Statement of JV Intent and
Description of Partnership, offerors already organized as joint ventures, or who planned
to form a joint venture for the project, were instructed to submit either a Joint Venture
Agreement or a Statement of Intent to form a joint venture. Joint venture offerors were
asked to “[d]escribe the relationship of the JV parties,” “[i]dentify each JV party’s role,”
and “[i]dentify the type and percentage of work assigned to each JV party.” The Pre-
qualification Notice stated that, for Factor 1: “If the offeror is organized as a Joint
Venture, DOS will evaluate whether the roles and responsibilities of the JV parties
have been adequately described.” (emphasis in original). The Pre-qualification
Notice further indicated that receiving a passing score on Factor 1, Joint Venture
Agreement/Signed Statement of JV Intent and Description of Partnership, was required,
if applicable, in order for defendant to review the remainder of the offeror’s Phase I
submission.

According to the Pre-qualification Notice, Subfactor 2A, Technical Project
Experience, “is intended to evaluate the technical project experience of the Offeror and
its JV partners, if applicable.” Paragraph 2A.2 of the Pre-qualification Notice defined the

as “Senior Contracting Administrator, Bureau of Overseas Buildings Operations, Office
of Special Projects Coordination.” Mr. Krips seems to have been the main point of
contact for offerors throughout the procurement process, as well as the official within the
Department of State who coordinated the evaluation of offerors’ Phase I and Phase II
submissions. Mr. Krips also made a statement as part of the GAO proceedings, which
as discussed below, defendant argues the court should consider in ruling on the above
captioned protest.
5
Under Subfactor 2B, Past Performance, the Solicitation stated: “DOS may gather
information from other sources to assist in evaluating the quality of the Offeror’s past
performance.”

3
term “relevant projects” as “those projects similar in scope, complexity, and dollar value
(USD), in that order of importance.” Paragraph 2A.3 instructed offerors to “[s]ubmit
three examples of relevant projects, either on-going or completed within the past five
years, demonstrating the Offeror’s technical capabilities necessary to perform the
Project.” (emphasis in original). In Paragraph 2A.4, offerors organized as a Joint
Venture were instructed to “submit, for each partner, at least one, but no more than two,
example of projects that are relevant to demonstrate technical project experience for the
partners’ proposed role in the Project. Projects may be on-going or completed within
the past five years.” (emphasis in original). According to the Pre-qualification Notice,
because of applicable limits on subcontracting, project examples were intended to
“demonstrate the Offeror’s ability to self-perform at least 30-50% of the value of each
project example,” and, therefore, “[p]roject examples in which the Offeror only acted as
a General Contractor or did not self-perform at least 30% of the work will not be
considered relevant.” The Pre-qualification Notice also stated: “DOS will evaluate the
Offeror’s technical project experience in executing relevant projects. For
Offerors who do not have individual projects representative of the project scope
and complexity, DOS will evaluate the technical project experience demonstrated
by the combined project examples.” (emphasis in original).

Under Subfactor 2B, Past Performance, offerors were instructed, for any project
in which they had been involved over the past five years, to identify and explain any of
the following problems:

2B.2.1 Been terminated for default;
2B.2.2 Been issued a cure notice;
2B.2.3 Been issued a show cause notice;
2B.2.4 Been assessed liquidated damages;
2B.2.5 Had its performance and payment bond surety or bank notified that
the contractor was not fulfilling its contract obligations;
2B.2.6 Had its performance evaluated as unsatisfactory or unacceptable[.]

In addition, for any project listed under Subfactor 2A, Technical Project
Experience, offerors were asked to identify any other type of performance problems.
Offerors were also required to have three previous clients fill out “Past Performance
Questionnaire” forms and to submit those three forms as references. The Pre-
qualification Notice further indicated that defendant would gather information internally
regarding offerors’ compliance with Department of State criteria on previous projects.
The Pre-qualification Notice stated that for Subfactor 2B, Past Performance:

DOS will evaluate the quality of the Offeror’s past performance-
based on information submitted for Factors 2B.1. DOS will evaluate
the Offeror’s record of compliance with Industrial Security and
Construction Security requirements for Factor 2B.5 [Compliance with
DOS Criteria] if such experience exists. DOS will evaluate the
Offeror’s record of project completion and close-out, its approach to
problem and change resolution, and its responsiveness to issues

4
and problems raised by OBO [Bureau of Overseas Building
Operations] for Factor 2B.5 if applicable. Additionally, DOS may
gather information from other sources to assist in evaluating the
quality of the Offeror’s past performance.

(emphasis in original).

With regard to Factor 3, Business Management Plan and Organization, offerors
were told to “provide a brief description of its business management plan for this project
that addresses offeror’s methodology for decision making, personnel management,
team approach, quality assurance, etc. in the execution of the contract scope, schedule,
and cost.” In addition, offerors were instructed to “provide an organizational chart that
clearly depicts organizational structure and describes the relationship of key positions
for construction activities (including all consultants and QC [Quality Control] personnel).”
Offerors organized as joint ventures were to “clearly indicate the allocation of authority
within the JV” in their business plan. The Pre-qualification Notice stated: “DOS will
evaluate whether the Offeror’s proposed business management plan and
organization clearly demonstrate a comprehensive and effective approach for
management and coordination of decision making, project personnel and
development, and control of schedules and costs for this project.” (emphasis in
original).

The Pre-qualification Notice also indicated that Section 11 of the Foreign Service
Buildings Act of 1926, codified at 22 U.S.C. § 302 (Percy Amendment), applied to the
project. The Pre-qualification Notice stated:

Section 11 of the Foreign Service Buildings Act of 1926, as amended, (22
U.S.C. [sic] 302), known as the “Percy Amendment,” applies to this
project. The act provides a 10% price preference to U.S. firms on any
Department of State contract when the project is estimated to exceed
$5,000,000. The Percy Amendment also requires exclusion of firms from
countries that exclude U.S. firms from their diplomatic construction
projects. The requirements of the Act will be applied to all Phase II
proposals received. The Offeror must complete and submit as part of its
pre-qualification package the “Percy Amendment Certification Form.”
(The form is attached to this FEDBIZOPPS announcement and may be
obtained from the DOS Contract Specialist listed at the end of this notice.)
The form must be completed and included as part of the pre-qualification
package. If a joint venture is formed, the company having 51 percent or
greater interest in the JV must be the one completing the form.

(emphasis in original). Non-United States firms could still compete for the contract, but
were not eligible for the ten percent price preference.

The Percy Amendment Certification Form was attached to the Pre-qualification
Notice. Section (e) of the Percy Amendment Certification Form stated: “By signing this

5
form, the bidder/offeror certifies to the best of its knowledge, all of the representations
and certifications provided in this provision are accurate, current and complete.”
According to the Certification Form, to qualify as an American-owned firm, the offeror
must demonstrate evidence of:

(1) Performance of similar construction work in the United States or at a
United States diplomatic or consular establishment abroad; and

(2) Either --

(i) Ownership in excess of 50% by U.S. citizens or permanent residents; or

(ii) Incorporation in the United States for more than three (3) years and
employment of U.S. citizens or permanent residents in more than half of
the company’s permanent full-time professional and managerial positions
in the United States.

As evidence of “similar construction work,” the Percy Amendment Certification
Form asked offerors to describe “similar construction work in the United States or at a
United States diplomatic or consular establishment abroad,” which must include “one or
more similar projects completed in the United States.” The form required offerors to list
the location, complexity, type of construction, and value of each listed project. If the
offeror was a partner or co-venturer on the previous project, the form asked the offeror
to “indicate the percentage of the project performed by the bidder/offeror: %.”

Plaintiff and Desbuild-REC were among the twenty-seven offerors that submitted
Phase I submissions in response to the Pre-qualification Notice. Phase I submissions
were evaluated by defendant’s Pre-qualification Review Panel, which reported its
findings to Mr. Krips. Defendant’s Legal Advisor, Dennis Gallagher, conducted the
initial evaluation of offerors’ eligibility for the Percy Amendment price preference and
directed the memorandum containing his findings to Mr. Krips.

In plaintiff’s Phase I submission, Caddell indicated that it did not plan to form a
joint venture for the Moscow project, so Factor 1, Joint Venture Agreement/Signed
Statement of JV Intent and Description of Partnership, was not applicable to plaintiff.
Plaintiff’s Phase I submission stated that Caddell “is one of the State Department’s most
experienced and proven prime contractors with more than $2.1 billion in current and
completed embassy and consulate projects (23), almost all design/build.” (emphasis
in original). To satisfy Subfactor 2A, Technical Project Experience, plaintiff submitted
three previous projects: 1) construction of a new office building at the United States
Embassy in [redacted], valued at [redacted], 2) the design/build of a United States
Embassy Complex in [redacted], valued at [redacted], and 3) the design/build of a new
Embassy compound in [redacted], valued at [redacted]. Plaintiff’s Phase I submission
also included a Percy Amendment Certification Form, which listed three previous
projects as evidence of “similar construction work:” 1) the design/build of a [redacted],

6
valued at [redacted], 2) the design/build of a [redacted], valued at [redacted], and 3)
new construction of a [redacted], valued at [redacted].

In compliance with Subfactor 2B, Past Performance, plaintiff’s Phase I
submission addressed performance issues on all of the projects listed in its submission,
indicating that it had no performance problems to report for the three “relevant projects”
submitted to satisfy Subfactor 2A, Technical Performance Experience. Plaintiff’s Phase
I submission stated that it did not include references because defendant, “[p]er an e-
mail response from Mr. Krips dated February 23, 2012,” had communicated to Caddell
that, because Caddell had submitted references for a different project in the same fiscal
year, defendant would “accept the previously submitted information.” Plaintiff’s Phase I
submission also included a Business Management Plan Narrative and an Organization
Chart in compliance with Factor 3, Business Management Plan and Organization.6

Intervenor and contract award winner, Desbuild-REC’s, Phase I proposal
included a Joint Venture Agreement, which indicated that Desbuild, Inc. (Desbuild) was
the [redacted] percent majority partner, and REC International (REC) was the [redacted]
percent junior partner in the Joint Venture. The Joint Venture Agreement also stated:

Desbuild, as the Leader of the Joint Venture, will be authorized for all
matters concerning the relations with the members of the JV Team. The
JV Members will be jointly and severally responsible and liable for fulfilling
the obligations and commitments related to the works which are within the
scope of works under the Project contract signed; and will not withdraw
from the Joint Venture before the expiration of the Project contract signed
with the U.S. Government.

The Joint Venture Members also agree that all correspondence and
notifications between the Joint Venture Members, and the Leader of the
Joint Venture will be deemed to have been sent to the Joint Venture and
binding for all companies in the Joint Venture.

The Joint Venture Agreement designated Mr. Sami Inanc Yurtbay, Proposal Manger for
REC, to handle pre-qualification and proposal documents on behalf of the Joint Venture.

To satisfy Subfactor 2A, Technical Project Experience, Desbuild-REC’s Phase I
proposal listed two projects for Desbuild, and three projects for REC as examples of
relevant past projects. For Desbuild, the Joint Venture submitted a [redacted], valued at
[redacted], for which Desbuild was the sole contractor. Under “Description of Project
Scope & Relevancy to Work Required for this Contract,” Desbuild wrote:

[redacted]

6
Neither defendant nor intervenor dispute plaintiff’s compliance with Factor 2 or
Factor 3.

7
Desbuild also submitted a “Design & Build” renovation project at the [redacted],
valued at [redacted], for which Desbuild was also the sole contractor. Under
“Description of Project Scope & Relevancy to Work Required for this Contract,”
Desbuild wrote:

[redacted]

Desbuild-REC’s Phase I submission listed three separate examples of relevant
past projects to satisfy Subfactor 2A, Technical Project Experience, for REC:
[redacted].7

The Desbuild-REC Joint Venture also submitted a Percy Amendment
Certification Form with its Phase I proposal. As evidence of “similar construction work,”
Desbuild listed three projects, one of which, the [redacted] project, which involved the
[redacted],8 Desbuild also had submitted as a “relevant project” to satisfy Subfactor 2A,
Technical Project Experience. Two other projects, however, were included only on
Desbuild’s Percy Amendment Certification Form: the design/build of a new consulate
building in [redacted], valued at [redacted], and an interior/exterior renovation of an
office building in [redacted], valued at [redacted]. Desbuild’s Percy Amendment
Certification Form stated: “Desbuild Inc. was [redacted] JV partner on the project in
[redacted]. On all other projects, Desbuild Inc. was [redacted] owner.” To meet the
statutory requirements, Desbuild’s Percy Amendment Certification Form also indicated
that Desbuild was owned in excess of fifty percent by United States citizens or
permanent residents, and had been incorporated in the United States for more than
three years. Desbuild-REC’s Percy Amendment Certification form was signed by
Desbuild’s Director, Ananth Badrinath, indicating, as stated above, that Desbuild
certified the information provided as “accurate, current, and complete.”

In compliance with Subfactor 2B, Past Performance, Desbuild-REC’s Phase I
proposal also included information on past performance problems associated with four
of the five projects submitted under Subfactor 2A, Technical Project Experience,
including REC’s [redacted] project in St. Petersburg, Russia, and [redacted] project in
Moscow, Russia, as well as Desbuild’s [redacted] and [redacted] projects. Desbuild-
REC also submitted Past Performance questionnaires for one project previously
performed by Desbuild, and two projects previously performed by REC. Furthermore,
Desbuild-REC’s Phase I submission included a Business Management Plan in
compliance with Factor 3, Business Management Plan and Organization, which detailed
7
As indicated below, defendant found that REC demonstrated sufficient Technical
Project Experience based on the three submitted projects and plaintiff does not
challenge defendant’s decision that REC submitted projects that were relevant to the
Moscow project to pre-qualify under Subfactor 2A, Technical Project Experience.
8
In the section of Desbuild-REC’s Phase I submission where the [redacted] project was
listed as a “relevant project” under Subfactor 2A, intervenor called the project a “Design
& Build” contract, but on its Percy Amendment Certification Form, intervenor labeled the
[redacted] project a “Design/Build” project.

8
the organizational structure of the Desbuild-REC Joint Venture. According to the
Business Management Plan, the Desbuild-REC Joint Venture would have an Executive
Committee with [redacted] representatives from each partner firm, which would be
responsible for overseeing the project. The Business Management Plan indicated that
Desbuild-REC would have a Head Office in Washington, D.C., in Desbuild’s existing
office space, while REC’s existing regional headquarters in Moscow would serve as the
Project Support Office, and a Project Site Office would be established at the job site in
Moscow. The Business Management Plan stated that the Head Office in Washington:

[redacted]

The Business Management Plan indicated that the Project Support Office in Moscow:

[redacted]

The Business Management Plan indicated that the Project Site Office:

[redacted]

The Business Management Plan explained that the Project Site Office would be
managed by [redacted]. The Business Management Plan also provided resumés for
[redacted] Senior Project Managers, [redacted] Project Managers, and a [redacted], all
of whom were Desbuild employees, and provided credentials for six REC employees.9

The administrative record contains conflicting information about how many
offerors pre-qualified in Phase I of the procurement. On April 30, 2012, defendant
posted on FedBizOpps a List of PreQualified Firms-Moscow Annex able to proceed to
Phase II, which indicated that six “U.S. Firms,” and nine “Non-U.S. Firms” had been pre-
qualified. Defendant’s Recommendation for Contract Award, issued after defendant’s
evaluation of Phase II offers, however, stated that only five out of the ten “U.S. Firms”
that submitted Phase I proposals had been pre-qualified, while an additional seven of
the seventeen “non-U.S. firms” that had submitted Phase I proposals had been pre-
qualified. The FedBizOpps List of PreQualified Firms-Moscow Annex listed, 1) AICI-SP,
2) B.L. Harbert International, LLC, 3) Caddell Construction Company, 4) Desbuild-REC
International JV, 10 5) Framco-Kolin-Epik (FKE JV), and 6) Walsh Pernix JV, as “U.S.
Firms” that were permitted to move on to Phase II. The Recommendation for Contract
Award authored by Mr. Krips after the Phase II proposals were submitted, however,
indicated that AICI-SP had submitted a Phase I proposal, but had not been pre-
qualified. Similarly, the FedBizOpps List of PreQualified Firms-Moscow Annex listed the
following nine “Non-U.S. Firms” as pre-qualified firms: 1) Ant Yapi Sanayi ve Ticaret Ltd.
Sti., 2) Kayi Construction Inc., 3) Nurol-Kuanta JV, 4) Rizzani de Eccher, 5) Rasen Story
9
The specific roles for the six REC employees for the Moscow project were not clearly
delineated in Desbuild-REC’s Phase I Business Management Plan.
10
As discussed below, Desbuild-REC was originally determined not to be pre-qualified
to move on to Phase II of the contract solicitation.

9
LLC/Rasen Construction/Rasen International Joint Venture, 6) Summa Turizm
Yatirimciligi, 7) TACA Construction Inc., 8) Yuksel Insaat A.S., and 9) Zafer Taahhut
Insaat ve Ticaret. Defendant’s Recommendation for Contract Award, however, showed
that Nurol-Kuanta JV and Yuksel Insaat A.S. had submitted Phase I offers, but had not
pre-qualified. It appears, therefore, that at least five, and possibly six, “U.S. Firms,” and
at least seven, but possibly nine, “Non-U.S. Firms” were allowed to move on to Phase II
of the procurement.

Caddell received a passing score on each technical factor and an overall rating
of “PASS” for its Phase I submission, pre-qualifying Caddell to submit a Phase II
proposal. Caddell also was found to qualify for the Percy Amendment price preference.

Desbuild-REC received a “PASS” on Factor 1 of the pre-qualification criteria,
Joint Venture Agreement/Signed Statement of JV Intent and Description of Partnership,
but received a “FAIL” rating on Factor 2, Technical Project Experience and Past
Performance, and thus an overall rating of “FAIL.” Desbuild-REC also did not initially
qualify for the Percy Amendment price preference.

The story of how, after reviewing Desbuild-REC’s Phase I submission,
defendant’s Pre-qualification Review Panel assigned Desbuild-REC a failing mark for
Factor 2, Technical Project Experience and Past Performance, but Desbuild-REC,
nonetheless, was found to qualify for Phase II and the Percy Amendment price
preference, is far from transparent in the record before the court. In the Initial
Recommendation of defendant’s Pre-qualification Review Panel, addressed to Mr.
Krips, and dated April 4, 2012, the review panel members failed Desbuild-REC on
Factor 2 and stated:

REC has done projects of similar and greater complexity than the Moscow
NOX. However, the panel was concerned that Desbuild does not show
sufficient experience in handling a project of this size based upon the
examples provided in the prequalification package (examples provided
include [redacted]. Contractor mentioned some performance problems
that were, apparently, caused by the client. Initially, three of the 4 team
members gave the JV a “passing mark” in this category. During the
consensus meeting there was much discussion about whether or not to
pass the JV based upon REC International’s experience or not. Also,
team members were aware of the ongoing project in [redacted] being
constructed by the [redacted] JV, but no information was provided by the
contractor in the prequalification package. Even though the [redacted]
project 11 is in excess of [redacted], it was not evaluated. After much
discussion, the panel finally decided to not qualify the JV.
11
The [redacted] project was included in Desbuild-REC’s Phase I submission as an
example of “similar construction work” on Desbuild’s Percy Amendment Certification
Form, but not as a “relevant project” for the purposes of Subfactor 2A, Technical Project
Experience. Mr. Gallagher, therefore, reviewed the [redacted] project for eligibility for
the Percy Amendment price preference, but the [redacted] project was not supposed to

10
The Pre-qualification Review Panel determined that Desbuild-REC did not pre-qualify
for the contract and stated that Desbuild-REC received an overall “FAIL” because
“Desbuild does not have relevant experience.”

Regarding the Percy Amendment price preference, defendant’s Legal Advisor,
Dennis Gallagher, initially reviewed the pre-qualification packages of ten United States
firms 12 that submitted Phase I proposals to determine if the firms qualified as
“American-owned” under the Percy Amendment. On April 3, 2012, Mr. Gallagher sent a
Review of Percy Qualifications memorandum 13 to Mr. Krips, detailing Mr. Gallagher’s
findings. Mr. Gallagher stated that Desbuild-REC’s eligibility for the Percy Amendment
was a “close call.” He placed a question mark on the line labeled “Yes” for “Qualifies
under Percy,” and wrote under “Comments:” “Desbuild ([redacted]) is U.S. firm and was
minority ([redacted]) partner in [redacted] project, which is similar in size and type of
construction. Other projects not similar. Close call if minority JV partner should be
credited with completion of project, but guess so.” Mr. Gallagher indicated that the
[redacted] project qualified as “similar construction work” for the Moscow project, but
was unsure whether Desbuild should be credited with the [redacted] project for Percy
Amendment purposes, because Desbuild was only a [redacted] joint venture partner.
Mr. Gallagher concluded, that he “guess[ed]” Desbuild-REC should qualify for a Percy
Amendment price preference.

On April 6, 2012, Mr. Krips sent a letter notifying Desbuild-REC’s representative,
Mr. Yurtbay, that Desbuild-REC did not qualify to submit a Phase II proposal. Mr. Krips’
April 6, 2012 letter explained that Desbuild-REC did not qualify because it had received
a failing mark on Factor 2, Technical Project Experience and Past Performance, stating:

While REC International produced evidence of performing a project similar
in scope, complexity, and dollar value of the Moscow NOX [New Office
Annex] project, Desbuild Inc. did not. Evaluation factor 2A.4 (JV Project
examples) requires that each partner must show examples of project(s)
that are similar in scope, complexity and dollar value of the Moscow
project. The Desbuild projects in [redacted] do not qualify as relevant
projects.

be reviewed by defendant’s Pre-qualification Review Board while determining whether
Desbuild-REC had sufficient Technical Project Experience to satisfy Subfactor 2A.
12
The administrative record does not explain why the ten firms were evaluated for
Percy Amendment eligibility, but it seems that all offerors that represented themselves
as United States firms were considered for the Percy Amendment price preference.
13
The copy of Mr. Gallagher’s memorandum initially submitted in the administrative
record was illegible. The court issued numerous Orders before defendant submitted a
more legible copy and a certified transcription of Mr. Gallagher’s comments regarding
Desbuild-REC.

11
On April 9, 2012, Desbuild-REC replied to Mr. Krips, requesting a pre-award
debriefing in accordance with Federal Acquisition Regulation (FAR) 15.505 (2012). 14
Desbuild-REC’s April 9, 2012 letter cited to the provision of the Pre-qualification Notice
that stated that defendant could consider offerors’ “combined project examples” and
asked defendant to explain why Desbuild and REC did not collectively meet the
requirements Subfactor 2A, Technical Project Experience. Desbuild-REC also included
a series of fourteen questions it posed to defendant, regarding how defendant had
conducted its evaluation. In addition, Desbuild-REC’s April 9, 2012 letter stated that
Desbuild’s role in the Moscow project would be “limited” and that Desbuild did not intend
to have any United States citizens posted on-site.

Four days after Desbuild-REC’s letter was sent to defendant, defendant’s
Contracting Officer, Robert Powell, 15 responded to Desbuild-REC. Mr. Powell’s April
13, 2012 letter stated:

Upon receipt of your letter dated April 9th, our prequalification panel went
through an extensive reevaluation of the package that you have
submitted. Following careful consideration, the panel has determined that
the Desbuild-REC JV is qualified to continue on to the bidding process
due to the cumulative experience of the JV members.

However, we have also determined that Desbuild-REC does not qualify
for the price advantage denoted in the Percy Amendment. The
amendment specifically requires that the American-owned firm must have
performance of similar construction work in the United States or at a
United States diplomatic or consular establishment abroad. While the
14
In the briefs and at oral argument, plaintiff characterized both the April 9, 2012 and
the April 19, 2012 letters, discussed below, each sent to the defendant, as being sent
solely by REC. At oral argument, however, plaintiff conceded that the letters came from
the joint venture. The letters were on Desbuild-REC Joint Venture letterhead and were
signed by Mr. Yurtbay, who was designated in Desbuild-REC’s Joint Venture
Agreement as the individual responsible for handling all pre-qualification and proposal
documents on behalf of the Joint Venture. Desbuild-REC’s Joint Venture agreement
also stated that “all correspondence and notifications between the Joint Venture
Members, and the Leader of the Joint Venture will be deemed to have been sent to the
Joint Venture and binding for all companies in the Joint Venture.”
15
Defendant refers to Robert Powell as the Contracting Officer for the Moscow project
and Mr. Powell’s name was listed on the Phase II Solicitation as the Contracting Officer.
The title stated on Mr. Powell’s April 13, 2012 letter was Director, Facilities Design and
Construction Division, Office of Acquisitions Management. This is the first document in
the administrative record to mention Mr. Powell. It is not clear from the record why Mr.
Powell responded to Desbuild-REC instead of Mr. Krips, who, up until that point, had
been the agency’s point of contact for offerors and who authored defendant’s first letter
to Desbuild-REC on April 6, 2012.

12
[redacted] project is of similar size, scope and dollar value, the fact that
Desbuild was only a [redacted] partner on the project causes this to not be
relevant. Therefore, any bid submitted by your firm will be evaluated at the
price given only.

(emphasis in original). There are no documents included in the administrative record
between Desbuild-REC’s April 9, 2012 letter and Mr. Powell’s April 13, 2012 response.
In the record before the court, therefore, there is no documentation to explain Mr.
Powell’s answers to Desbuild-REC’s questions or why the defendant reevaluated the
intervenor’s submission. There also is no analysis, justification or explanation in the
record for the Department of State’s reversal of its earlier decision to fail Desbuild-REC
on Phase I Factor 2, Technical Project Experience and Past Performance. Moreover,
defendant’s indication in its April 13, 2012 letter that Desbuild did not qualify for the
Percy Amendment price preference because it was not credited with the [redacted]
project differs from the initial, albeit tentative, recommendation by defendant’s Legal
Advisor, Mr. Gallagher. Mr. Gallagher had concluded that he “guess[ed]” Desbuild
should be credited with the [redacted] project and had indicated that Desbuild-REC may
have been able to qualify for the Percy Amendment price preference by placing a
question mark on the line labeled “Yes” under “Qualifies for Percy.” Mr. Powell’s April
13, 2012 letter makes no mention of Mr. Gallagher’s recommendation, therefore making
it unclear who within the Department of State made the determination that Desbuild-
REC should not qualify for the Percy Amendment price preference.

On April 19, 2012, Desbuild-REC responded to Mr. Powell’s April 13, 2012 letter,
arguing that the “Percy Amendment determination is based on inadvertent errors and a
misunderstanding of Desbuild’s role and the relevant considerations,” and requesting
reconsideration of defendant’s Percy Amendment price preference decision. With
respect to the [redacted] project, Desbuild-REC’s letter stated:

It is correct that Desbuild was a [redacted] partner on that project.
However, the [redacted] referred to Desbuild’s overall profit share, not
Desbuild’s day-to-day role. On that project, Desbuild had a substantial
staff and had significant responsibilities for numerous highly relevant
areas including design coordination; project management; onsite
supervision; material procurement and shipping and selection of local
vendors and subcontractors.

Under the prequalification solicitation, project examples for which the
offeror self-performed at least 30% of the work are considered relevant.
See Factor 2, ¶ 2A.5 (“Project examples in which the Offeror only acted as
a General Contractor or did not self-perform at least 30% of the work will
not be considered relevant.”). This indicated a 30% relevancy test,
Desbuild meets that requirement for the [redacted] project.

In the April 19, 2012 letter, Desbuild-REC also argued that crediting Desbuild
with the [redacted] project would be consistent with United States Government

13
Accountability Office (GAO) precedent, as well as prior conduct by defendant on other
projects. For example, Desbuild-REC stated:

Desbuild - Larsen and Toubro Limited JV was prequalified for the New
Delhi NOX project in 2011 based on similar past performance where
Desbuild had served as a [redacted] JV member (Reference -Mumbai
Project). There is no reason for a different approach here. We believe
there are many other instances of OBO crediting the prime offeror with the
past performance of a JV member where the JV member performed
substantial work, but less than 50%.

Desbuild-REC continued: “Here, the solicitation indicated that past performance would
be considered if the contractor had 30% or more involvement. See Factor 2, ¶ 2A.5.
Certainly, the solicitation did not prohibit consideration and reliance on Desbuild’s
significant [redacted] performance.” Desbuild-REC asserted that Desbuild-REC should
qualify for the Percy Amendment price preference because Desbuild was responsible
for a significant portion of the [redacted] project and because the Pre-qualification
Notice provided that thirty percent was a threshold for being credited with a previous
project. The section of the Pre-qualification Notice that Desbuild-REC cited to, Factor 2,
¶ 2A.5, however, pertained to examples of “relevant projects” under Subfactor 2A,
Technical Project Experience, not to the examples of “similar construction work” for the
purposes of the Percy Amendment.

Mr. Powell responded to Desbuild-REC four days later on April 23, 2012,
reversing the previous negative Percy Amendment decision. Mr. Powell’s April 23,
2012 letter stated in its entirety: “In discussions with OBO’s legal advisor and under
further review by the pre-qualification panel, we have determined that your Desbuild-
REC is qualified to receive the price advantage denoted in the Percy Amendment.”
(emphasis in original). Similar to the defendant’s unexplained reversal of its
determination to fail Desbuild-REC on Phase I Factor 2, Technical Project Experience,
Mr. Powell’s April 23, 2012 letter did not give any explanation or justification of why
defendant reversed its initial Percy Amendment decision. There are no documents
whatsoever in the administrative record documenting any intervening discussions with
defendant’s legal advisor or contracting officer, nor any “further review by the
prequalification panel.”

As mentioned above, on April 30, 2012, defendant issued a list of pre-qualified
offerors for the Moscow Project on FedBizOpps entitled “List of PreQualified Firms-
Moscow Annex.” Caddell and Desbuild-REC were both listed as pre-qualified “U.S.
Firms,” although the listing did not mention Percy Amendment eligibility or that
Desbuild-REC was initially rejected for pre-qualification. The “List of PreQualified
Firms-Moscow Annex” indicated that six “U.S. Firms” and nine “Non-U.S. Firms” had
been pre-qualified for the contract.

Defendant subsequently issued Solicitation No. SAQMMA-12-R-0117 on May 18,
2012. The Solicitation instructed offerors to address offers to Mr. Krips and to contact

14
Mr. Krips for any additional information. Section M of the Solicitation listed the
“Evaluation Factors for Award.” Section M began by explaining the relationship
between Phase I and Phase II of the procurement process, stating: “Offerors have been
prequalified during Phase I of this acquisition. During the prequalification process,
many areas of technical qualifications were evaluated and analyzed. This section
describes additional evaluation factors and procedures.” The Solicitation reiterated that
the contract would be awarded on a best-value basis, stating: “The contract award will
be made to the acceptable, responsible Offeror based on that Offeror’s proposal
which offers to the Government the best value in terms of technical and price
factors.” (emphasis in original). The Solicitation described the trade-off process that
would be used to determine which offer represented the best value to the government,
as follows:

The Government may consider award to other than the lowest priced
offeror or other than the highest technically rated offeror based upon the
evaluation factors and sub factors stated in the solicitation. This source
selection will be based upon Best Value and may result in an award being
made to a higher rated, higher priced offeror where the decision is
consistent with the evaluation factors and where it is deemed by the
Government that the technical superiority, overall business approach,
and/or the past performance of the higher priced offer outweighs the
benefits of any price difference. The Government, using sound business
judgment, will base the source selection decision on a trade-off analysis of
the proposals submitted in response to this solicitation in accordance with
the evaluation factors established for this solicitation.

(emphasis added).

There were two evaluation factors included in the Phase II Solicitation:
Cost/Price, which was to be addressed in Volume I of offerors’ Phase II proposals, and
Management/Technical, which was to be addressed in Volume 2. The Solicitation
ranked the Management/Technical factor more highly than the Cost/Price factor, stating:
“Proposals shall be evaluated in business management and cost/price areas. The
business management/technical proposal (Volume 2 of proposal) is ranked as
significantly more important than the price proposal (Volume 1 of proposal).”
(emphasis in original). In terms of Cost/Price, the Solicitation stated that “[a] fixed price
is required.” The Solicitation also indicated that six factors would be considered in price
negotiations, if negotiations were required, including: 1) price reasonableness, 2) price
completeness, 3) the government’s evaluation of price proposals, and 4) Percy
Amendment price preferences.16 The Solicitation explained that the Cost/Price factor

16
The two other factors listed in the Solicitation at sections M.3.1.1.2 and M.3.1.1.5 are
marked “Reserved” in the copy of the Solicitation provided to the court.

15
“will be evaluated based on the total price proposed for performance as specified in
Section B” of the Solicitation.17

Under the Management/Technical factor, the Solicitation instructed offerors to
include a Management Plan, which was to contain “a general summary outlining your
understanding of the overall scope for construction services.” In addition, the
Management Plan was intended to:

convincingly demonstrate[] that team members are able to successfully
perform within the parameters and requirements of the project and to
resolve problems as they develop during the work. This Plan should
identify the anticipated overall challenges, such as site, local conditions,
environmental, personnel, housing, security, shipping, and materials, and
the like and the plan for adequately managing these challenges.

Although defendant’s Pre-qualification Notice required offerors to include “a brief
description of its business management plan” in their Phase I submissions, the
Solicitation set forth more detailed requirements for offerors’ Phase II Management
Plan. Specifically, the Solicitation required offerors to address six subfactors in their
Phase II Management Plan: 1) Organization and Staffing Plan, 2) Executive/Supervisory
Personnel, 3) Subcontractor Management Program, 4) Project Execution Plan, 5)
Safety and Health Plan, and 6) Security Plan. The Solicitation explained how defendant
would evaluate each of the subfactors under the Management/Technical factor. With
regard to the Organization and Staffing Plan and Executive/Supervisory Personnel
subfactors, the Solicitation stated:

The Government’s evaluation will be based on the merit of the
contractor’s plan for organization and staffing including: (1) having
key personnel with credentials required for the project including
relevant experience and skills; (2) having well defined lines of
authority, responsibility and communication; (3) having the ability to
quickly respond to changes and mobilize to resolve problems; (4)
having a sound recruitment plan when additional or replacement
personnel are needed and a housing plan that addresses the
requirements of L.24.3.

(emphasis in original).

The Solicitation stated that defendant’s evaluation of the Subcontractor
Management Program subfactor “will be based on a review of the contractor’s
subcontracting plan and how well the contractor will implement and maintain
surveillance over Subcontractors to ensure performance is consistent with

17
Section B of the Solicitation set forth a formula for calculating the contract price.
Plaintiff contests only defendant’s determination that Desbuild-REC was eligible for a
Percy Amendment price preference. Therefore, the court does not describe Section B
of the Solicitation in detail.

16
contract requirements.” (emphasis in original). The Project Execution Plan subfactor
would be evaluated “based on appropriateness, realism, comprehensiveness, and
technical soundness of the planned activities that are needed to accomplish the
objectives of the delivery schedule.” (emphasis in original). As to the Safety and
Health Plan subfactor, the Solicitation stated: “The Government shall evaluate
Offeror’s safety, health and sanitation policy in the workplace, and compliance
with U.S. Army Corps of Engineers Safety & Health Requirements Manual EM385-
1-1 and compliance with OSHA [Occupational Safety and Health Administration]
construction industry standards. Comprehensiveness of safety and health
program management elements and safety/health training program content will
be evaluated.” (emphasis in original). The Solicitation also indicated that defendant’s
evaluation of the Security Plan subfactor would be based on “the feasibility of the
Contractor’s Security Plan to assure compliance with contract security
requirements. Evaluation includes comprehensiveness of plan in covering all
facets of security requirements and adequacy of staffing.” (emphasis in original).

Plaintiff Caddell and Desbuild-REC both submitted Phase II proposals, as did five
other offerors.18 Plaintiff’s and Desbuild-REC’s Phase II submissions were both broken
up into two volumes, as required by the Solicitation, with Volume I addressing the
Cost/Price factor and Volume II addressing the Management/Technical factor. Plaintiff’s
Phase II Cost/Price submission indicated that the “Total Evaluated Price,” which the
Solicitation stated should include the costs for “all elements of the project” except Value
Added Taxes (VAT), was [redacted], and that the “Grand Total Price,” which the
Solicitation indicated should be the “Total Evaluated Price” plus the VAT, was
[redacted]. In addition, plaintiff’s Phase II Cost/Price submission stated that, if plaintiff
were awarded the Moscow contract, plaintiff intended to employ [redacted] United
States citizens, [redacted], and [redacted]. Caddell’s Phase II Cost/Price submission
also included a Percy Amendment Certification Form, which included different project
information than plaintiff’s Phase I Percy Amendment Certification Form. Caddell’s
Phase II Percy Amendment Certification Form listed three projects as evidence of
“similar construction work:” 1) the design/build of a New Embassy Compound in
[redacted], valued at [redacted],19 2) the design/build of a New Embassy Consulate in
[redacted], valued at [redacted], and 3) the design/build of a New Embassy Compound
in [redacted], valued at [redacted].20

18
The five other offerors included Ant Yapi Sanayi ve Ticaret Ltd., TACA Construction
Inc., Zafer Taahhut Insaat A.S., B.L. Harbert International, LLC, and FKE JV.
19
The [redacted] project was included in plaintiff’s Phase I submission, but as a
“relevant project” to satisfy Subfactor 2A, Technical Project Experience, rather than on
plaintiff’s Phase I Percy Amendment Certification Form.
20
As indicated above, plaintiff’s Phase I Percy Amendment Certification Form listed a
design/build project in [redacted], and a design/build and new construction project in
[redacted], as evidence of “similar construction work.”

17
Plaintiff’s Phase II Management/Technical submission began with a General
Summary Narrative, which indicated that, for the Moscow project, Caddell would be
working with “long-time Caddell project consultant ENKA Construction, based in
Istanbul, Turkey. Caddell has worked with ENKA on 14 major OBO embassy projects.
Most importantly, ENKA is one of the most experienced contractors in Russia and has
had a continual presence in the Moscow market for more than 20 years.” The General
Summary Narrative section of Plaintiff’s Phase II Management/Technical submission
also described plaintiff’s understanding of the scope of the Moscow project and
addressed “Anticipated Challenges & Risks.” Plaintiff’s Phase II Management/Technical
submission went on the address each of the other subfactors required by the
Solicitation, including plaintiff’s Organization and Staffing Plan, Executive/Supervisory
Personnel, Subcontractor Management Program, Project Execution Plan, Safety and
Health Plan, and Security Plan.

Desbuild-REC’s Phase II Cost/Price submission stated that the “Total Evaluated
Price” of its proposal was [redacted], but that, when including a [redacted] “VAT
Reimbursement Provisional Sum,” the “Grand Total Price” was [redacted]. Desbuild-
REC’s Phase II Cost/Price submission also included a Percy Amendment Certification
Form, which matched the Percy Amendment Certification Form submitted with
Desbuild-REC’s Phase I submission.

Desbuild-REC’s Phase II Management/Technical submission included a
Management Plan that addressed the “Technical Scope & Risk” of the Moscow project,
as well as the organization of the Desbuild-REC Joint Venture. Desbuild-REC’s Phase
II Management Plan included a list of personnel who would sit on the Joint Venture’s
Executive/Supervisory Panel, as well as a “Staff/Key Personnel (Project Management)
Replacement List,” but it is unclear from the two lists whether the individuals named
were Desbuild or REC employees. Desbuild-REC’s Phase II Management Plan further
stated that REC had [redacted] employees located in Russia, but that head office
personnel would be located in Desbuild’s Washington, D.C. office. In addition, the
Phase II Management Plan indicated that the Joint Venture would hire a minimal
number of United States citizens to work on site because of security clearance
requirements, stating:

[redacted]

Desbuild-REC’s Phase II Management Plan also addressed each of the other
subfactors required by the Solicitation, including an Organizational and Staffing Plan,
Subcontractor Management Plan, Safety and Health Plan, and Security Plan.

Defendant first evaluated the seven offerors’ initial Phase II Cost/Price proposals.
Defendant’s Evaluation of the Contractors’ Price Proposals indicated that Caddell’s
initial Phase II proposal had a “Grand Total Contract Price” of [redacted], while
Desbuild-REC’s “Grand Total Contract Price” was evaluated at the higher price of
[redacted]. The Evaluation of Contractors’ Price Proposals noted, however, that
Desbuild-REC’s “Grand Total Contract Price” included a [redacted] VAT reimbursement,

18
while plaintiff “failed to enter VAT number.”21 Defendant’s Office of Cost Management
performed a cost analysis, which it forwarded to Mr. Krips, and which found that,
excluding the Percy Amendment price preference, Ant Yapi’s, Desbuild-REC’s, and
TACA’s offers had the lowest prices.22 The cost analysis stated that, without the VAT,
plaintiff also had one of the lowest prices, but that plaintiff needed to confirm whether its
price included the VAT. The cost analysis then explained that, applying the ten percent,
Percy Amendment price preference for eligible offerors, “DES BUILD [sic] is then
considered best value, provided that CADDELL confirms the inclusion/exclusion of the
VAT cost.”

Defendant’s Technical Evaluation Board conducted an evaluation of the seven
offerors’ Management/Technical proposals and reported its findings to Mr. Krips. With
regard to plaintiff Caddell’s Phase II Management/Technical submission, the Technical
Evaluation Board gave plaintiff a very positive review, but questioned Caddell’s
[redacted] and its possible impact on completion and price, stating:

The management plan demonstrates that Caddell has a very good
understanding of the scope of the project and therefore has developed a
sound and well thought out approach to managing the various phases of
the project. The management plan reflects clean lines of authority for the
team and expresses awareness and firsthand knowledge of the
challenges posed by undertaking a project in Moscow. Caddell developed
a very detailed and comprehensive set of anticipated challenges and risks
and outlined the measures that would be taken to mitigate same. They
also provided examples of projects with similar circumstances. Caddell
used good examples to demonstrate how to mitigate subcontractor issues.
Their proposal was very responsive to the requested details on Project
Management Manpower resources. Caddell’s familiarity with OBO
requirements is quite evident in their proposal. The PES [Project
Execution Schedule] is fairly well thought out. Caddell provided a good
project schedule narrative and an accompanying Primavera PES as
required by the RFP. The safety plan included and addressed all OBO
requirements and proposed the use of a good safety manager. The
security plan provided is comprehensive and well articulated. Caddell
21
In its Best and Final Offer, plaintiff corrected its exclusion of a VAT amount in its initial
Phase II proposal. When evaluating price proposals for the offerors’ initial Phase II
offers, however, defendant sometimes compared Caddell’s price exclusive of the VAT
to other offerors’ price including the VAT, which affected the rankings of the offerors’
price proposals. At [redacted], plaintiff’s initial Phase II proposal, excluding the VAT,
was lower than Desbuild-REC’s initial price proposal, excluding the VAT, which was
[redacted].
22
As indicated above, at this point in the procurement, Caddell’s price was lower than
Ant Yapi’s, Desbuild-REC’s, and TACA’s. Defendant considered Caddell separately for
the purposes of this analysis, however, because of Caddell’s failure to include an
amount for the VAT in its price proposal.

19
obviously knows our security requirements. The panel has one primary
concern with the Caddell proposal and its Project Execution Plan
contained therein. The concern involves the [redacted].

Caddell is teamed with [redacted]. Caddell has worked on numerous OBO
projects and has [redacted] of experience working with [redacted].
[redacted] has a database of skilled workers.

Both the recruitment and housing plan proposals were considered to be
acceptable.

In summary, Caddell and [redacted] have put together a good and
thorough proposal that clearly meets the intent of the RFP requirements.
As indicated above their assumption regarding the [redacted] needs to be
clarified.

As to Desbuild-REC’s Phase II Management/Technical proposal, the Technical
Evaluation Board also gave the Joint Venture a generally positive review, but
questioned the proposed Project Manager’s previous experience and the location of key
personnel, as well as the citizenship of a key person required to be a United States
citizen. The review stated:

The proposal reflects a good understanding of the project scope and the
commissioning requirements. The joint venture developed an impressive
and very detailed set of anticipated challenges and risks and outlined the
measures that would be taken to address same. The joint venture partner
(REC) is a firm licensed in Russia with a vast amount of experience doing
construction in Russia and in particular, Moscow. The joint venture
provided a good description of how it will integrate subcontractor work.
The safety program proposed is more than adequate for a contractor who
would be self performing all of the work. The security plan is somewhat in
compliance with OBO procedures.

The joint venture needs to furnish a few more details regarding the
projects on which the proposed Project Manager has worked in the past.
There is no indication of the size, complexity or relevance of those past
projects. The Organization Chart shows participants located in numerous
areas. The Deputy Procurement Manager is to be in [redacted] while the
Procurement Manager is in [redacted]. The Program Manager is to be in
[redacted] while the Program Manager [sic] is shown in [redacted]. This
arrangement would appear to be a source of complication during project
execution.

Contractor needs to clarify the citizenship of the Safety and Health
Manager since the Health Plan specifies that the designated manager is to
be a U.S. citizen.

20
Clarification is also needed for what the contractor describes as an
[redacted]. Is this a contractor operated facility and if so what medical
personnel are going to work there?

Contractor indicates under the Security Plan that they will “operate” the
ACF [Access Control Facility]. Their responsibility is only to build and
maintain the ACF.

Both the recruitment and housing plan proposals were considered to be
acceptable.

The proposal confirms that the Joint Venture fully understands project
requirements and its complexity. The joint venture has all facilities and
personnel required and essentially in place. Contractor has full
understanding of all local codes, laws, regulations and procurement
logistics.

Joint venture plans to staff project with a strong team. Proposal displays a
superior subcontractor management process/program. The proposal
clearly met RFP requirements.

The Technical Evaluation Board’s overall evaluation of the offerors’ Phase II
Management/Technical submissions was as follows:

It is the consensus of the TEB [Technical Evaluation Board] that while
Caddell’s technical proposal is rated slightly higher than Desbuild-REC
JV’s technical proposal, the TEB feels that these two proposals are
superior to the other technical proposals and stand in a category of their
own. It is noted that these two firms are the only ones who are firmly
established in Moscow and have ongoing construction projects similar in
scope to the Moscow NOX.

Defendant established a competitive range for the Moscow project consisting of
three offerors: Caddell, Desbuild-REC, and FKE JV. Defendant determined that
Caddell, Desbuild-REC, and FKE JV should be included in the competitive range
because they each “submitted acceptable technical proposals and competitive prices.”
Mr. Krips prepared defendant’s Competitive Range Determination, which was also
“cleared by” Ezel Silver, “Chair, Technical Evaluation Board,” PK Bagchi, “Project
Manager, Moscow NOX,” and Jamie E. Salcedo, “Director, OBO/PDCS/SPC,” and was
“approved by” Mr. Powell, “Contracting Officer.” The Competitive Range Determination
indicated that the competitive range was established after a meeting was held with
members of the Technical Evaluation Board, during which the offerors’ technical and
price evaluations were discussed.23 Defendant’s Competitive Range Determination
23
The Competitive Range Determination does not indicate who attended that meeting.

21
stated that, after taking into account the Percy Amendment price preference for
qualifying offerors, plaintiff Caddell’s price was evaluated as the lowest, while Desbuild-
REC’s price was evaluated as the second-lowest. 24 Caddell also received the highest
technical rating, with Desbuild-REC coming in second. The Competitive Range
Determination stated: “Caddell’s technical proposal was rated slightly better than
Desbuild-FKE [sic] JV’s25 technical proposal.” Defendant invited plaintiff, Caddell,
Desbuild-REC, and FKE JV to submit Best and Final Offers, which, after several rounds
of negotiations, all three firms did on September 12, 2012.

Defendant’s Technical Evaluation Board evaluated the final proposals from the
three offerors included in the competitive range, and reported to Mr. Krips that it had
come to a consensus opinion that Desbuild-REC’s and Caddell’s proposals earned a
rating of “excellent,” while FKE JV’s proposal was rated “satisfactory.” The Technical
Evaluation Board recommended Desbuild-REC for contract award, explaining:

The consensus report of the initial proposals indicated that Caddell’s
proposal was rated ever so slightly higher than Desbuild-REC Int’l JV’s
proposals. However, after holding discussions with the firms in the
competitive range and evaluating the BAFO [Best and Final Offers]
technical proposals, both firms are rated equally qualified from the
technical standpoint. The TEB is confident that both Desbuild-REC Int’l
JV and Caddell have the technical capability to successfully construct the
NOX contract and any differences in their technical proposals are
insignificant. After reviewing the BAFO prices, the TEB recommends that
the Contracting Officer select Desbuild-REC Int’l JV for contract award
because it offers the best value to the Government.

Defendant’s Summary of Cost Proposals, issued on September 13, 2012, listed
the initial proposal amounts and Best and Final Offers for each of the three offerors in
the competitive range, all exclusive of the VAT and the Percy Amendment price
preference. The Summary of Cost proposals indicated that Desbuild-REC JV’s initial
proposal had been [redacted], but its Best and Final Offer was [redacted] lower, 26 giving
Desbuild-REC the lowest final price of [redacted]. Plaintiff [redacted] its initial proposal,

24
The Competitive Range Determination used for its price evaluation the offerors’ prices
excluding the VAT and the Percy Amendment price preference, such that Caddell’s
offer was priced at [redacted] and Desbuild-REC’s offer was priced at [redacted]. Once
the Percy Amendment price preference was applied, Caddell’s price fell to [redacted]
and Desbuild-REC’s price was [redacted].
25
The reference to “FKE” appears to be an error. The document includes the correct
name for Desbuild-REC in the line above, and listed FKE JV as the third and separate
offeror in the competitive range.
26
In fact, the difference between Desbuild-REC’s initial and its best and final offer prices
was [redacted].

22
making plaintiff’s final price [redacted]. Finally, FKE JV’s offer was priced higher than
both plaintiff’s and Desbuild-REC’s, with a final price of [redacted].

The Director of the Office of Cost Management sent a Memorandum to Mr. Krips,
containing a cost analysis of the three Competitive Range offerors’ Best and Final
Offers. The Office of Cost Management’s cost analysis used the offerors’ prices
including the VAT, but did not take into account the Percy Amendment price preference.
Desbuild-REC’s Best and Final Offer, including the VAT, was [redacted], making it the
lowest-priced final offer. Caddell’s Best and Final Offer, including the VAT, was
[redacted] and FKE JV’s Best and Final Offer, including the VAT, was the highest-priced
at [redacted]. Based on these numbers, the Office of Cost Management found: “the
proposal submitted by the lowest bidder, DESBUILD REC at [redacted] represents the
best value offer and therefore recommends acceptance.”

Mr. Krips then authored an “ACTION MEMORANDUM FOR ROBERT R.
POWELL - SOURCE SELECTION AUTHORITY,” which was titled “Recommendation
for Contract Award - Construction of New Annex Office Building, Moscow, Russia.”
(emphasis in original). Mr. Krips’ Recommendation for Contract Award is undated. Mr.
Krips’ Recommendation for Contract Award indicated that defendant should select
Desbuild-REC for award of the contract because its submission represented the best
value to the government. Mr. Krips’ Recommendation for Contract Award included a
section on “Background Information,” which summarized defendant’s evaluation of
proposals. Significantly, the Background Information section did not mention
defendant’s initial decision not to pre-qualify Desbuild-REC, or defendant’s initial denial
of a Percy Amendment price preference to Desbuild-REC, but instead listed Desbuild-
REC as one of the “U.S. Firms” that pre-qualified for the contract. Regarding
defendant’s evaluation of the Phase II submissions, Mr. Krips’ Recommendation for
Contract Award indicated that a competitive range consisting of three firms had been
established and that each of the three firms had submitted final proposals. Describing
the Technical Evaluation Board’s review of the offerors’ final proposals, Mr. Krips’
Recommendation for Contract Award stated:

Going into the final round, Caddell’s and Desbuild-REC JV’s technical
proposal were rated almost equal [sic] with Caddell’s technical proposal
receiving a very slight higher rating. FKE JV was rated somewhat lower
than Caddell and Desbuild-REC JV. After the review of the final proposals,
the TEB found that Caddell and Desbuild were rated almost equal.

Mr. Krips’ Recommendation for Contract Award explained that the contract would be
awarded on a best-value basis with technical criteria being “significantly more important
than price criteria.” Mr. Krips’ Recommendation for Contract Award stated that Caddell
and Desbuild-REC were both ranked number one on technical rankings, with FKE JV
ranked number two, and that Desbuild-REC had the lowest price once the offerors
made their Best and Final Offers. Mr. Krips’ Recommendation for Contract Award used
the offerors’ Best and Final Offers including the VAT, but excluding the Percy
Amendment price preference, for its price analysis. Therefore, it listed Desbuild-REC’s

23
price as [redacted], Caddell’s as [redacted], and FKE JV’s as [redacted]. Mr. Krips’
Recommendation for Contract Award also indicated that defendant had used a trade-off
process27 to determine which proposal represented the best value to the government,
and had found:

In this instance, the contractor that submitted the highest rated technical
proposal also submitted the most reasonable price. Therefore, it is
recommended that a fixed price contract be awarded to Desbuild-REC JV
in the amount of [redacted] (inclusive of VAT). Desbuild-REC Int’l JV’s
proposal represents the best value to the U.S. Government.

Based on the recommendations of both the Technical Evaluation Board and the Office
of Cost Management, Mr. Krips recommended that the Contracting Officer, Mr. Powell,
select Desbuild-REC for contract award.

The top of the first page of Mr. Krips’ Recommendation for Contract Award reads
“ACTION MEMORANDUM FOR ROBERT R. POWELL - SOURCE SELECTION
AUTHORITY.” The summary recommendation is next and followed by two side by side
lines, one preceded by the word Approve , and the second Disapprove . Next
to the words “ROBERT R. POWELL - Source” (“Selection Authority” is on the next
line) the initials “RRP” (presumably Robert R. Powell) are initialed. Similarly, the initials
“CK” are written in above the line that reads “FROM: OBO/PDCS/SPC – Charles G.
Krips.” It, therefore, appears that Mr. Powell and Mr. Krips each initialed Mr. Krips’
Recommendation for Contract Award. There also is a box checked “Approve,” which
seems to be in the same writing as the “RRP.” There are no documents included in the
record between Mr. Krips’ Recommendation for Contract Award and the signed contract
awarded to Desbuild-REC on September 26, 2012, nor any narrative which indicated
why Mr. Powell approved Mr. Krips’ Recommendation or decided why Desbuild-REC
should be selected for the contract award. The only documented rationale for
defendant’s decision to award the contract to Desbuild-REC was the recommendation
authored by Mr. Krips.

The signed contract between the government and Desbuild-REC, dated
September 26, 2012, suggests a further wrinkle. Under section “31a. NAME OF
CONTRACTING OFFICER,” the contract lists “Robert Powell.” One line below,
however, a different name, David W. Vivian, was signed in section 31b., as the
signatory for the United States of America. This is the first mention of David W. Vivian
in the chronology of events regarding the selection process for the contract.
Defendant’s subsequent September 26, 2012 letter to Desbuild-REC, informing
Desbuild-REC that it had been awarded the contract, was also signed by “David W.
27
It is unclear why defendant engaged in a best-value, trade-off process when Mr. Krips
concluded that Desbuild-REC was both the lowest-priced and highest technically rated
offeror. Applicable regulations incorporated into the Pre-qualification Notice state: “A
tradeoff process is appropriate when it may be in the best interest of the Government to
consider award to other than the lowest priced offeror or other than the highest
technically rated offeror.” 48 C.F.R. § 15.101-1 (2012).

24
Vivian, Contracting Officer.” These are the only two items in the administrative record in
which Mr. Vivian’s name appears. Moreover, defendant’s letters to FKE JV and
Caddell, informing them that they had not been awarded the contract, were signed by
“Robert R. Powell, Contracting Officer.” The record before the court does not explain
the relationship between, or decisional responsibilities of, Mr. Powell and Mr. Vivian or
why Mr. Vivian signed the contract at issue in this case.

Defendant awarded the contract to Desbuild-REC on September 26, 2012, and
plaintiff was notified of the award on the same day. Plaintiff and defendant held a
telephone debriefing on October 1, 2012, with Mr. Krips and Project Manager for the
Moscow project, PK Bagchi, representing the Department of State. Mr. Krips authored
a memorandum for the file summarizing the phone call. During the debriefing, Caddell’s
CEO, Eddie Stewart, asked about Desbuild-REC’s past experience and questioned how
Desbuild-REC pre-qualified for the contract. Mr. Krips’ memorandum stated: “I told him
that the Desbuild-Renaissance28 JV was prequalified, not Desbuild alone.” Caddell also
raised questions about Desbuild-REC’s “similar construction work” for the purposes of
Percy Amendment qualification. Mr. Krips’ memorandum stated: “I told him that the
Department of State Office of the Legal Advisor made all Percy qualifications, and that
the technical panel had no input on this.”

On October 5, 2012, plaintiff protested the award of the contract to Desbuild-
REC at the GAO. Plaintiff raised four specific grounds in its protest at the GAO: 1)
Desbuild-REC had not performed “similar construction work” for purposes of meeting
the Percy Amendment requirements, 2) the award was made to a different entity than
the entity that submitted the proposal,29 3) Desbuild-REC did not have sufficient
technical experience to perform the contract, and 4) defendant misapplied the
evaluation criteria by using adjective ratings as opposed to making a pass/fail
determination for Phase I. 30 Desbuild-REC intervened in the GAO proceedings.
28
REC is the parent company of two subsidiaries, 1) Renaissance Construction and
Investment ZAO/Moscow, and 2) Renaissance Construction ZAO/St. Petersburg. Mr.
Krips’ reference to Renaissance, therefore, appears to be to REC.
29
Plaintiff claimed that Desbuild-REC listed its address in its Phase I submission as
Refik Galendir Sokak No: 110/1, Ankara, Turkey, but that defendant’s September 26,
2012 letter to Desbuild-REC, awarding the contract to Desbuild-REC, was sent to 4744
Baltimore Avenue, Hyattsville, Md. 20781-2225. Plaintiff suggested that this established
that award was made to a different entity than that which was pre-qualified in Phase I.
30
Plaintiff argued that the Pre-qualification Notice stated that the pre-qualification
factors would be evaluated on a pass/fail basis, but that, during plaintiff’s debriefing,
defendant indicated that Desbuild-REC’s Phase I submissions “contributed to Desbuild -
Renaissance’s ‘Excellent’ rating for Phase II.” Plaintiff argued that “[b]ecause Percy
Amendment requirements and ‘relevant project’ information from Phase I was to be
evaluated on a pass/fail basis only, any further comparison between the offerors’
experience or assigning an adjective rating based on prior experience violates the
Solicitation’s stated evaluation criteria.”

25
As part of the GAO record, defendant submitted a Department of State Agency
Report dated November 5, 2012. The Department of State Agency Report tried to
address the issue of defendant’s initial determinations that Desbuild-REC failed Phase I
Factor 2, Technical Project Experience, and was not eligible for the Percy Amendment
price preference, as well as its subsequent reversals of both decisions.

Also contained in the GAO Record is a statement drafted after contract award,
for the GAO proceedings, by defendant’s Contract Specialist, Mr. Krips, regarding
defendant’s procurement process. Mr. Krips stated:

The prequalification process is not the competitive RFP phase. The whole
intent of this phase is to identify qualified potential offerors to promote
competition. The prequalification process involves give and take and
sometimes communications with potential offerors to seek clarifications or
additional information. It is common and is not prohibited by the terms of
our solicitations for the Department to consider information outside the
prequalification submission in determining offeror eligibility under the
Omnibus Diplomatic Security Act (22 U.S.C. [sic] 4852) and offeror
eligibility for the Percy Amendment price preference.

Mr. Krips further indicated:

It is also common for the Department [of State] to reconsider decisions to
deny eligibility under 22 U.S.C. [sic] 4852 or price preference under the
Percy Amendment when an adversely affected potential offeror requests
reconsideration and supplies additional information.

In the present case, the Department first reconsidered the experience of
the Desbuild-REC International joint venture based on the overall
experience of both joint venture partners, then reconsidered the Percy
Amendment price preference eligibility of the joint venture based on
Desbuild’s performance on the [redacted] project. The [redacted] project
is itself clearly a similar project and we determined that Desbuild’s work on
that project was substantial. As indicated in the [redacted] example, 31
there is absolutely no requirement that work as a minority joint venture
partner be excluded from consideration.

At the GAO, defendant argued that plaintiff’s GAO protest should be dismissed
as untimely because plaintiff knew no later than April 30, 2012, before defendant issued
the Phase II Solicitation, that Desbuild-REC had been pre-qualified and been
designated a “U.S. Firm,” and, thus, was eligible for a Percy Amendment price
preference. Defendant argued that any protest challenging Desbuild-REC’s eligibility for
31
Elsewhere in his statement, Mr. Krips indicated that [redacted] was determined to be
eligible for a construction project at the [redacted] based on its performance as a
minority joint venture partner in a construction project at the [redacted].

26
Phase II had to be filed before submission of Phase II proposals. The GAO agreed and
on January 7, 2013, the GAO issued a decision, finding that plaintiff’s protest was
untimely. The GAO stated: “Where a solicitation provides notice than an agency
considers a particular firm to be eligible to compete, and a potential protestor believes
the firm is ineligible, a protest must be filed before the next due date for submission of
proposals.” The GAO found that, because defendant had issued a list of pre-qualified
“U.S. Firms” in April 2012, it should have been clear to plaintiff that Desbuild-REC would
qualify for the Percy Amendment price preference. The GAO determined that publicly
available information “(which was available to Caddell in April 2012) was sufficient to put
Caddell on notice of its ground of protest.” The GAO stated: “Because the agency
announced that Desbuild-REC was considered to be a prequalified ‘U.S. Firm’ prior to
the due date for phase 2 proposals, Caddell was required to protest Desbuild-REC’s
status as an American-owned firm under the Percy Amendment prior to this due date.”
The GAO dismissed plaintiff’s protest as untimely because it was not filed until after the
contract had been awarded to Desbuild-REC and because plaintiff’s other grounds for
protesting the contract award were, in the words of the GAO, “variations” of its Percy
Amendment argument, or had been waived.

Plaintiff’s counsel made several conflicting statements at oral argument before
this court about when plaintiff found out that defendant had reversed its initial decisions
to deny Desbuild-REC pre-qualification and a Percy Amendment price preference.
Initially, plaintiff’s counsel stated that plaintiff learned about its arguments regarding
defendant’s reversals at plaintiff’s debriefing. Plaintiff’s counsel then stated that plaintiff
did not learn about defendant’s reversal decisions “until we filed the GAO protest.” From
the record before the court, it appears that the first time plaintiff was informed that
defendant had reversed itself on both Desbuild-REC’s pre-qualification and Percy
Amendment determinations was when it received the Department of State’s Agency
Report, dated November 5, 2012, as part of the GAO proceedings. Although it appears
that Caddell asked defendant about Desbuild-REC’s prequalification and Percy
Amendment eligibility during plaintiff’s debriefing, Mr. Krips indicated in his
memorandum summarizing the debriefing that he only told Caddell that “Desbuild-
Renaissance JV was pre-qualified, not Desbuild alone,” and that “the Department of
State Office of the Legal Advisor made all Percy qualifications.” In addition, plaintiff did
not raise the issue of defendant’s reversal decisions before the GAO, which,
presumably, it would have, had Caddell been aware of the Department of State’s rapid
reversals of two initial, eligibility determinations regarding the winning offeror.

Plaintiff filed a post-award bid protest in this court on January 20, 2013. Plaintiff
challenges three decisions made by defendant during the procurement process as
arbitrary, capricious, an abuse of discretion, and not in accordance with law and
prejudicial to Caddell: 1) defendant’s decision to pre-qualify Desbuild-REC, 2)
defendant’s decision to apply a ten percent, Percy Amendment price preference to
Desbuild-REC’s Phase II price proposal, and 3) defendant’s decision to award the
contract to Desbuild-REC. Plaintiff seeks: 1) injunctive relief,32 2) a declaratory
32
Plaintiff’s complaint seeks a preliminary injunction “requiring the United States to
issue a stop work order on Desbuild-REC’s performance of the Contract.” Plaintiff’s

27
judgment that awarding the contract to Desbuild-REC was contrary to law, 3) a
declaratory judgment that defendant should terminate the existing contract with
Desbuild-REC, 4) a declaratory judgment that plaintiff should be awarded the contract,
5) bid preparation and proposal costs, attorneys fees, and other costs, as well as 6)
other relief that the court deems proper. Defendant argues that the administrative
record demonstrates that: 1) defendant reasonably determined that Desbuild-REC was
pre-qualified to submit a Phase II proposal, 2) defendant reasonably determined that
Desbuild-REC was eligible for a Percy Amendment price preference, and 3) defendant’s
award of the contract to Desbuild-REC was rational and supported by the record, as
well as applicable law.

DISCUSSION

Standing

The Tucker Act 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 (a)(1) (Supp.
V 2011). In order to have standing to sue as an “interested party” under this provision,
a disappointed bidder must show that it suffered competitive injury or was “prejudiced”
by the alleged error in the procurement process. See 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); see also 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 1577, 1580–81 (Fed. Cir. 1996); 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, 619 F.2d 892, 896 (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; 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 1312, 1319 (Fed. Cir.), reh’g and reh’g en banc denied (Fed.
Cir. 2003); Statistica, Inc. v. Christopher, 102 F.3d at 1581; Lab. Corp. of Am. v. United

motion for judgment on the administrative record, however, states that “the Court should
permanently enjoin Desbuild-REC’s performance of the Contact.”

28
States, 108 Fed. Cl. 549, 557 (2012). Because standing is a jurisdictional issue, this
showing of prejudice is a threshold issue. See Info. Tech. & Applications Corp. v.
United States, 316 F.3d at 1319; Myers Investigative & Sec. Servs., Inc. v. United
States, 275 F.3d 1366, 1370 (Fed. Cir. 2002).

In the above captioned protest, defendant and intervenor do not challenge
plaintiff’s standing. Because it is a jurisdictional issue, however, the court briefly
addresses whether plaintiff is an “interested party” to this contract. See USfalcon, Inc.
v. United States, 92 Fed. Cl. 436, 451 (2010) (“Even though the government does not
challenge USfalcon’s standing, the Court finds it advisable that this jurisdictional
question be explicitly determined.”). Plaintiff was one of three offerors included in the
final competitive range for the Moscow contract because, defendant found, each of
those three offerors had “submitted acceptable technical proposals and competitive
prices.” Defendant’s Technical Evaluation Board found that plaintiff’s and Desbuild-
REC’s final proposals both earned a rating of “excellent,” while the third offeror, FKE JV
submitted a proposal that was rated “satisfactory.” Defendant’s Recommendation for
Contract Award stated that plaintiff’s and Desbuild-REC’s offers were equally rated on
technical factors, and that together they stood apart from the rest of the Phase II offers,
although the Technical Evaluation Board had also stated Caddell’s technical proposal
should be rated slightly higher than Desbuild-REC’s technical proposal. The
Recommendation for Contract Awarded indicated that the reason Desbuild-REC’s
proposal was selected for contract award was its lower price. Stating that the
Consensus Technical Rankings put Caddell and Desbuild-REC both at number one,
with FKE JV ranked number two, the Recommendation for Contract Award concluded:

In this instance, the contractor that submitted the highest rated technical
proposal also submitted the most reasonable price. Therefore, it is
recommended that a fixed price contract be awarded to Desbuild-REC JV
in the amount of [redacted] (inclusive of VAT). Desbuild-REC Int’l JV’s
proposal represents the best value to the U.S. Government.

From the record, it is clear that plaintiff’s proposal was rated equally with, if not
slightly better than, Desbuild-REC’s on the technical criteria and that plaintiff’s had the
second-lowest, and relatively close, price of [redacted]. Had Desbuild-REC not been
pre-qualified and, therefore, not been allowed to submit a Phase II proposal, or had
Desbuild-REC not been eligible for a Percy Amendment price preference, plaintiff’s
Phase II offer likely would have been both the highest-rated and lowest-priced offer.
Based on these facts, there was a substantial chance that plaintiff would have received
the contract for the Moscow project, but for defendant’s alleged procurement errors.

Timeliness

Desbuild-REC argues that plaintiff’s claims should be dismissed as untimely
because every claim plaintiff has filed with the court could have been raised as of April
30, 2012, the date on which defendant published a list of offerors that pre-qualified for
the procurement and for a Percy Amendment price preference on FedBizOpps.

29
Intervenor asserts that, in Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308, the
United States Court of Appeals for the Federal Circuit established a waiver rule, under
which a party who had the opportunity to object to an alleged flaw in an agency’s
solicitation before the close of the bidding process, but failed to do so, waives its ability
to raise that same objection later in a bid protest in this court. Id. at 1313. Intervenor
also argues that, in subsequent cases, this waiver rule has been extended to
circumstances similar to those presented by the present case, citing CRAssociates, Inc.
v. United States, 102 Fed. Cl. 698, 712 (2011), aff’d, 475 F. App’x 341 (Fed. Cir. 2012).
According to intervenor, as of April 30, 2012, the date the List of PreQualified Firms-
Moscow Annex was published on FedBizOpps, plaintiff knew that Desbuild-REC had
been pre-qualified and had been granted a Percy Amendment price preference.
Intervenor argues that plaintiff had sufficient information to either request a debriefing or
file a protest at that time, but plaintiff chose to proceed to Phase II, and, thereby, waived
its ability to raise its claims in this court subsequent to the award of the contract.

Plaintiff responds that when the FedBizOpps List of PreQualified Firms-Moscow
Annex was published it did not know that both Desbuild-REC’s past performance
negative decision and Percy Amendment price preference denial had been reversed by
the Department of State. Moreover, plaintiff argues that the waiver rule established in
Blue & Gold Fleet, L.P. v. United States is limited to circumstances in which the party
objects to “the terms of a government solicitation containing a patent error.” Citing to
J.C.N. Construction, Inc. v. United States, 107 Fed. Cl. 503, 516 (2012), plaintiff argues
that CRAssociates v. United States does not create a broader waiver rule than Blue &
Gold Fleet, L.P. v. United States. Plaintiff argues that the waiver rule cited by intervenor
does not apply in this case because plaintiff is not challenging defendant’s Solicitation,
but rather challenges defendant’s evaluation of Desbuild-REC’s Phase I submission and
defendant’s award decision. Plaintiff maintains that it had no knowledge of, and could
not have obtained, information that defendant had reversed its initial decisions on
Desbuild-REC’s pre-qualification or Desbuild-REC’s Percy Amendment price preference
eligibility until after plaintiff filed a protest at the GAO and received the Department of
State’s Agency Report, dated November 5, 2012. Also according to plaintiff, Caddell
could not have requested a debriefing prior to the close of bidding because Caddell was
still in consideration for the contract, and defendant could not have made available
necessary information about Desbuild-REC’s confidential proposal information.
Therefore, according to plaintiff, it was impossible for plaintiff to challenge the agency’s
decisions any earlier than it did.

In Blue & Gold Fleet, L.P. v. United States, the plaintiff challenged the National
Park Service’s award of a contract to Hornblower Yachts, Inc. (Hornblower) for ferry
services to Alcatraz Island. See Blue & Gold Fleet, L.P. v. United States, 492 F.3d at
1310-11. The plaintiff argued that Hornblower’s proposal did not include employee
wage and benefits information required by the Service Contract Act, thus making the
Park Service’s evaluation of the cost of Hornblower’s proposal flawed. See id. at 1312.
The solicitation, however, “did not include any requirement that the bidders consider the
Service Contract Act,” id. at 1313, and the plaintiff had not raised any objection to the
exclusion of Service Contract Act requirements from the Solicitation prior to the

30
submission of proposals. Therefore, the United States Court of Appeals for the Federal
Circuit found that the plaintiff actually was challenging the terms of the solicitation, not
the agency’s evaluation of Hornblower’s proposal. See id. The Federal Circuit wrote:

[A] party who has the opportunity to object to the terms of a government
solicitation containing a patent error and fails to do so prior to the close of
the bidding process waives its ability to raise the same objection
subsequently in a bid protest action in the Court of Federal Claims.

Id. The court reasoned that such a waiver rule, “requir[ing] that a party object to
solicitation terms during the bidding process,” furthered the mandate in 28 U.S.C.
§ 1491(b) that “the courts shall give due regard to the interests of national defense and
national security and the need for expeditious resolution of the action.” Id. (citing 28
§ 1491(b)(3)) (emphasis in original). Therefore, Blue & Gold Fleet, L.P. v. United States
established a waiver rule, but one that only clearly applied to plaintiffs’ challenges to the
terms of a solicitation, not to challenges to alleged errors in an evaluation of offerors’
submissions.

Intervenor argues that a subsequent case, CRAssociates, Inc. v. United States,
102 Fed. Cl. 698, extends the waiver rule established in Blue & Gold Fleet, L.P. v.
United States to the instant circumstances. In CRAssociates, Inc. v. United States, the
plaintiff challenged the Army’s award of a contract for health care services to Spectrum
HealthCare Resources (Spectrum). See id. at 700. The Army initially awarded the
contract to Spectrum and Spectrum began performance. Three months later, however,
the plaintiff successfully challenged the contract award in this court. Id. at 705-06. The
Army issued a stop work order, re-opened negotiations, both the plaintiff and Spectrum
re-competed for the contract, and the Army selected Spectrum for contract award for a
second time. See id. at 706-09. The plaintiff then filed a second bid protest, arguing
that Spectrum had gained an unfair advantage in the second award competition from its
three-month partial performance of the first contract. See id. at 711. The court
explained that, when the plaintiff decided to re-compete for the contract, the plaintiff had
requested that the Army amend the Request for Proposals to address Spectrum’s
alleged unfair advantage resulting from its partial performance of the contract. The
Army amended the Request for Proposals, but did not address plaintiff’s request to
reduce Spectrum’s price by the amount it had already been paid. The plaintiff, however,
did not object to the Army’s failure to adopt its suggested amendments to the Request
for Proposals at the time, instead waiting until the contract had been awarded for a
second time, then raising the Army’s failure to modify Spectrum’s price in the Court of
Federal Claims. Id. at 712. The court found that the Blue and Gold Fleet, L.P. v. United
States waiver rule applied in those circumstances because the plaintiff was essentially
challenging the Army’s failure to change the terms of the Request for Proposals. The
court stated: “Blue and Gold thus prevents a protester from raising post-hoc objections
to the terms of a solicitation. Yet, that is precisely what CRA seeks to do here.”
CRAssociates, Inc. v. United States, 102 Fed. Cl. at 712 (emphasis in original). “[B]y
holding its fire until after the contract was awarded to its competitor,” the court ruled, the

31
plaintiff “waived its opportunity to raise issues concerning Spectrum’s prior performance
of the enjoined contract.” Id. at 713.

CRAssociates, Inc. v. United States, therefore, did not expand the waiver rule
established in Blue & Gold Fleet, L.P. v. United States; rather, the court found that, like
the plaintiff in Blue & Gold Fleet, L.P. v. United States, the plaintiff in CRAssociates, Inc.
v. United States actually was challenging the terms of the solicitation, rather than the
agency’s evaluation of proposals, and that a challenge to the terms of the solicitation
had to be raised prior to the close of bidding. See CRAssociates, Inc. v. United States,
102 Fed. Cl. at 713. Moreover, the plaintiff in CRAssociates Inc. v. United States had
knowledge of the issues regarding the Army’s award of the contract to Spectrum before
the award took place. As plaintiff argues, a subsequent case in the Court of Federal
Claims also found that CRAssociates Inc. v. United States “concerned an offeror who
failed to raise ‘objections to the terms of a solicitation.’” See J.C.N. Constr., Inc. v.
United States, 107 Fed. Cl. at 516 (quoting CRAssociates Inc. v. United States, 102
Fed. Cl. at 712). In J.C.N. Construction, Inc. v. United States, the court did not apply
the waiver rule because “[u]nlike the offeror in CRAssociates, who had specific
concerns about the terms of a second solicitation,” the plaintiff’s “claim that the Postal
Service breached its duty to consider offerors’ proposals fairly and honestly does not
relate to patently inaccurate terms of Solicitation II.” Id. This court agrees that
CRAssociates, Inc. v. United States applied the waiver rule established in Blue & Gold
Fleet, L.P. v. United States without broadening that rule in the way that intervenor
argues.

In the above captioned case, defendant posted a List of PreQualified Firms–
Moscow Annex on FedBizOpps on April 30, 2012. The list of pre-qualified offerors was
divided into “U.S. Firms,” and “Non-U.S. Firms.” Plaintiff, Caddell, and Desbuild-REC
were both included among six “U.S. Firms.” Nine “Non-U.S. Firms” were also included
on the list. Although designation as a U.S. Firm perhaps implied that those offerors had
qualified for the Percy Amendment price preference, defendant’s April 30, 2012 posting
on FedBizOpps did not mention the Percy Amendment or indicate whether “U.S. Firms”
had submitted “similar construction work” to qualify for the Percy Amendment price
preference. More significantly, defendant’s List of PreQualified Firms–Moscow Annex
gave no indication that defendant had initially rejected, but subsequently reconsidered,
Desbuild-REC’s qualifications to proceed to Phase II of the procurement. Nor was there
any indication at the time that defendant initially had found Desbuild-REC ineligible for
the Percy Amendment price preference, but that the Department of State also had
reconsidered the Percy Amendment determination. Instead, the “List of PreQualified
Firms–Moscow Annex” posted on FedBizOpps simply listed Desbuild-REC International
JV as a pre-qualified “U.S. Firm[].”

Defendant issued the Solicitation on May 18, 2012. After evaluating seven
offerors’ proposals, defendant established a competitive range and requested final
proposals from three offerors: Caddell, Desbuild-REC, and FKE JV. Defendant notified
plaintiff that Desbuild-REC had been awarded the contract on September 26, 2012.
Plaintiff and defendant held a telephone debriefing on October 1, 2012. Mr. Krips

32
indicated in a memorandum summarizing the debriefing phone call that plaintiff asked
about Desbuild-REC’s pre-qualification. Mr. Krips wrote: “I told him [Caddell Chief
Executive Officer Eddie Stewart] that the Desbuild-Renaissance JV was prequalified,
not Desbuild alone.” Plaintiff also raised questions about Desbuild-REC’s Percy
Amendment qualification, but Mr. Krips told plaintiff “that the Department of State Office
of the Legal Advisor made all Percy qualifications, and that the technical panel had no
input on this.”

On October 5, 2012, four days later, plaintiff protested the award of the contract
to Desbuild-REC at the GAO, and Desbuild-REC intervened. Defendant successfully
argued at the GAO that plaintiff’s protest should be dismissed as untimely because
plaintiff allegedly knew before defendant issued the Solicitation that Desbuild-REC had
pre-qualified and been found eligible for a Percy Amendment price preference.
According to the GAO, from defendant’s April 30, 2012 posting on FedBizOpps,

it should have been clear to Caddell that the designated “U.S. Firms,”
including Desbuild-REC, would receive Percy Amendment price
preferences under the solicitation. Caddell admits in its protest that
publicly available information indicates that Desbuild-REC would not
qualify as American-owned under the Percy Amendment and thus the firm
should not have received the price preference. We find that this public
information (which was available to Caddell in April 2012) was sufficient to
put Caddell on notice of its ground of protest. The fact that Caddell
learned of other information during a post-award debriefing to further
demonstrate Desbuild-REC’s ineligibility for the Percy Amendment price
preference does not convert an otherwise untimely protest to a timely one.
Because the agency announced that Desbuild-REC was considered to be
a prequalified “U.S. Firm” prior to the due date for phase 2 proposals,
Caddell was required to protest Desbuild-REC’s status as an American-
owned firm under the Percy Amendment prior to this due date. Because
Caddell waited to file its protest until after award, we dismiss the protest
as untimely.

This court respects the expertise of the GAO, and considers GAO decisions
instructive. GAO decisions, however, are not binding on this court. See, e.g.,
Kingdomware Techs., Inc. v. United States, 107 Fed. Cl. 226, 230 n.2 (2012) (“GAO
decisions are not binding authority, but may be ‘instructive in the area of bid protests.’”
(quoting Centech Grp., Inc. v. United States, 554 F.3d 1029, 1038 n.4 (Fed. Cir.
2009))); see also Grunley Walsh Int’l, LLC v. United States, 78 Fed. Cl. 35, 39 (2007)
(“Decisions by the GAO are traditionally treated with a high degree of deference,
especially in bid protest actions.” (citing E.W. Bliss Co. v. United States, 33 Fed. Cl.
123, 135 (1995), aff’d, 77 F.3d 445 (Fed. Cir. 1996))). In the case currently before the
court, the record does not establish that plaintiff had sufficient information to raise its
claims prior to the submission of Phase II proposals. Moreover, plaintiff is not just
challenging defendant’s final decisions to qualify Desbuild-REC for Phase II and to
award Desbuild-REC the Percy Amendment price preference. Plaintiff also is

33
challenging defendant’s decision to reverse its initial determinations regarding Desbuild-
REC’s pre-qualification and Desbuild-REC’s Percy Amendment price preference
eligibility, as well as how defendant evaluated its final decision to award the contract to
Desbuild-REC. Plaintiff did not know about defendant’s initial determinations regarding
Desbuild-REC’s Phase I submission and defendant’s reversal of both decisions until
after plaintiff filed its protest at the GAO and received defendant’s Agency Report on
November 5, 2012. According to the administrative record filed in this court,
defendant’s November 5, 2012 Agency Report was the first document that addressed
the fact that defendant initially had assigned Desbuild-REC a failing mark on Factor 2 of
the pre-qualification submission, Technical Project Experience and Past Performance,
and initially had told Desbuild-REC that it did not qualify for the Percy Amendment price
preference, but subsequently reversed both of those determinations. Because
defendant’s reversal of its initial determinations regarding Desbuild-REC’s pre-
qualification for Phase II and Desbuild-REC’s Percy Amendment eligibility, as well as
defendant’s trade-off analysis, are at issue in the case before the court, and because
plaintiff was not aware of defendant’s reversals until November 2012, the court finds
that plaintiff did not have all of the necessary information to raise its claims as of April
2012, as alleged by defendant.

The court also notes that plaintiff is not challenging the terms of defendant’s Pre-
qualification Notice or Solicitation. Unlike in Blue & Gold Fleet, L.P. v. United States,
plaintiff does not object to the contents of defendant’s Pre-qualification Notice or
Solicitation. See Blue & Gold Fleet, L.P. v. United States, 492 F.3d at 1310. In
addition, unlike in CRAssociates, Inc. v. United States, which also included a challenge
to the terms of a solicitation, plaintiff did not have knowledge of the basis for its claims
until after contract award. See CRAssociates, Inc. v. United States, 102 Fed. Cl. at 712.
Plaintiff instead challenges decisions that defendant made in evaluating Desbuild-REC’s
Phase I submission and in awarding the contract to Desbuild-REC. Because plaintiff is
not challenging the terms of defendant’s Pre-qualification Notice or the Solicitation, but
rather defendant’s evaluation of Desbuild-REC’s pre-qualification submissions and
defendant’s award decision based on those submissions, the Blue & Gold Fleet, L.P. v.
United States waiver rule and CRAssociates, Inc. v. United States interpretation of that
rule do not apply. Plaintiff’s protest filed in this court is timely.

Standard of Review

Pursuant to Rule 52.1(c) of the Rules of the United States Court of Federal
Claims (RCFC) (2012), which governs motions for judgment on the Administrative
Record, the court’s inquiry is directed to “whether, given all the disputed and undisputed
facts, a party has met its burden of proof based on the evidence in the record.” DMS
All-Star Joint Venture v. United States, 90 Fed. Cl. 653, 661 (2010) (citing Bannum, Inc.
v. United States, 404 F.3d at 1356-57).

The Administrative Dispute Resolution Act of 1996 (ADRA), Pub. L. No. 104-320,
§§ 12(a), 12(b), 110 Stat. 3870, 3874 (1996) (codified at 28 U.S.C. § 1491(b)(1)-(4)
(2006)), amended the Tucker Act to establish a statutory basis for bid protests in the

34
United States Court of Federal Claims. See Impresa Construzioni Geom. Domenico
Garufi v. United States, 238 F.3d 1324, 1330-32 (Fed. Cir. 2001). The statute provides
that protests of agency procurement decisions are to be reviewed under Administrative
Procedure Act (APA) standards, making applicable the standards outlined in Scanwell
Laboratories, Inc. v. Shaffer, 424 F.2d 859 (D.C. Cir. 1970), and the line of cases
following that decision. See, e.g., Galen Med. Assocs., Inc. v. United States, 369 F.3d
at 1329 (citing to Scanwell Laboratories, Inc. v. Shaffer for its reasoning that “suits
challenging the award process are in the public interest and disappointed bidders are
the parties with an incentive to enforce the law”); Banknote Corp. of Am., Inc. v. United
States, 365 F.3d 1345, 1351 (Fed. Cir. 2004) (“Under the APA standard as applied in
the Scanwell line of cases, and now in ADRA cases, ‘a bid award may be set aside if
either (1) the procurement official’s decision lacked a rational basis; or (2) the
procurement procedure involved a violation of regulation or procedure.’” (quoting
Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d at 1332));
Info. Tech. & Applications Corp. v. United States, 316 F.3d at 1319; Am. Fed’n of Gov’t
Emps. v. United States, 258 F.3d 1294, 1302 (Fed. Cir. 2001) (“Congress intended to
extend the jurisdiction of the Court of Federal Claims to include post-award bid protest
cases brought under the APA by disappointed bidders, such as the plaintiff in
Scanwell.”), cert. denied, 534 U.S. 1113 (2002). The United States Court of Appeals for
the Federal Circuit has stated that the Court of Federal Claims’ jurisdiction over “any
alleged violation of statute or regulation in connection with a procurement or a proposed
procurement,” 28 U.S.C. § 1491(b)(1), “provides a broad grant of jurisdiction because
‘[p]rocurement includes 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.’” Sys. Application & Techs., Inc. v. United
States, 691 F.3d 1374, 1381 (Fed. Cir. 2012) (emphasis in original) (quoting Res.
Conservation Grp., LLC v. United States, 597 F.3d 1238, 1244 (Fed. Cir. 2010) (quoting
41 U.S.C. § 403(2))); see also Distrib. Solutions, Inc. v. United States, 539 F.3d 1340,
1345 (Fed. Cir.) (“[T]he phrase, ‘in connection with a procurement or proposed
procurement,’ by definition involves a connection with any stage of the federal
contracting acquisition process, including ‘the process for determining a need for
property or services.’”), reh’g denied (Fed. Cir. 2008); RAMCOR Servs. Grp., Inc. v.
United States, 185 F.3d 1286, 1289 (Fed. Cir. 1999) (“The operative phrase ‘in
connection with’ is very sweeping in scope.”).

Agency procurement actions should be set aside when they are “arbitrary,
capricious, an abuse of discretion, or otherwise not in accordance with law,” or “without
observance of procedure required by law.” 5 U.S.C. § 706(2)(A), (2)(D) (2006); 33 see

33
The language of 5 U.S.C. § 706 provides:

To the extent necessary to decision and when presented, the reviewing
court shall decide all relevant questions of law, interpret constitutional and
statutory provisions, and determine the meaning or applicability of the
terms of an agency action. The reviewing court shall—

35
also Orion Tech., Inc. v. United States, 704 F.3d 1344, 1347 (Fed. Cir. 2013); COMINT
Sys. Corp. v. United States, 700 F.3d 1377, 1381 (Fed. Cir. 2012); Savantage Fin.
Servs. Inc., v. United States, 595 F.3d 1282, 1285-86 (Fed. Cir. 2010); Weeks Marine,
Inc. v. United States, 575 F.3d 1352, 1358 (Fed. Cir. 2009); Axiom Res. Mgmt., Inc. v.
United States, 564 F.3d 1374, 1381 (Fed. Cir. 2009) (noting arbitrary and capricious
standard set forth in 5 U.S.C. § 706(2)(A), and reaffirming the analysis of Impresa
Construzioni Geom. Domenico Garufi v. United States, 238 F.3d at 1332); Blue & Gold
Fleet, L.P. v. United States, 492 F.3d at 1312 (“[T]he inquiry is whether the
[government’s] procurement decision was ‘arbitrary, capricious, an abuse of discretion,
or otherwise not in accordance with law.’” (quoting 5 U.S.C. § 706(2)(A) (2000)));
Bannum, Inc. v. United States, 404 F.3d at 1351; Contracting, Consulting, Eng’g LLC v.
United States, 104 Fed. Cl. 334, 340 (2012). “In a bid protest case, the agency’s award
must be upheld unless it is ‘arbitrary, capricious, an abuse of discretion, or otherwise
not in accordance with law.’” Turner Constr. Co. v. United States, 645 F.3d 1377, 1383
(Fed. Cir.) (quoting PAI Corp. v. United States, 614 F.3d 1347, 1351 (Fed. Cir. 2010)),
reh’g and reh’g en banc denied (Fed. Cir. 2011); see also PlanetSpace, Inc. v. United
States, 92 Fed. Cl. 520, 531–32 (2010) (“Stated another way, a plaintiff must show that

(1) compel agency action unlawfully withheld or unreasonably delayed;
and

(2) hold unlawful and set aside agency action, findings, and
conclusions found to be—

(A) arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with law;

(B) contrary to constitutional right, power, privilege, or immunity;

(C) in excess of statutory jurisdiction, authority, or limitations, or
short of statutory right;

(D) without observance of procedure required by law;

(E) unsupported by substantial evidence in a case subject to
sections 556 and 557 of this title or otherwise reviewed on the
record of an agency hearing provided by statute; or

(F) unwarranted by the facts to the extent that the facts are subject
to trial de novo by the reviewing court.

In making the foregoing determinations, the court shall review the whole
record or those parts of it cited by a party, and due account shall be taken
of the rule of prejudicial error.

5 U.S.C. § 706.

36
the agency’s decision either lacked a rational basis or was contrary to law.” (citing
Weeks Marine, Inc. v. United States, 575 F.3d at 1358)).

In discussing the appropriate standard of review for bid protest cases, the United
States Court of Appeals for the Federal Circuit specifically has addressed subsections
(2)(A) and (2)(D) of 5 U.S.C. § 706, see Impresa Construzioni Geom. Domenico Garufi
v. United States, 238 F.3d at 1332 n.5, but the Federal Circuit has focused its attention
primarily on subsection (2)(A). See NVT Techs., Inc. v. United States, 370 F.3d 1153,
1159 (Fed. Cir. 2004) (“Bid protest actions are subject to the standard of review
established under section 706 of Title 5 of the Administrative Procedure Act (‘APA’), 28
U.S.C. § 1491(b)(4) (2000), by which an agency’s decision is to be set aside only if it is
‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,’ 5
U.S.C. § 706(2)(A) (2000).”) (citations omitted); Banknote Corp. of Am., Inc. v. United
States, 365 F.3d at 1350 (“Among the various APA standards of review in section 706,
the proper standard to be applied in bid protest cases is provided by 5 U.S.C.
§ 706(2)(A): a reviewing court shall set aside the agency action if it is ‘arbitrary,
capricious, an abuse of discretion, or otherwise not in accordance with law.’” (citing
Advanced Data Concepts, Inc. v. United States, 216 F.3d 1054, 1057-58 (Fed. Cir.),
reh’g denied (Fed. Cir. 2000))); Info. Tech. & Applications Corp. v. United States, 316
F.3d at 1319 (“Consequently, our inquiry is whether the Air Force’s procurement
decision was ‘arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with law.’ 5 U.S.C. § 706(2)(A) (2000).”).

The United States Supreme Court has identified sample grounds which can
constitute arbitrary or capricious agency action:

[W]e will not vacate an agency’s decision unless it “has relied on factors
which Congress has not intended it to consider, entirely failed to consider
an important aspect of the problem, offered an explanation for its decision
that runs counter to the evidence before the agency, or is so implausible
that it could not be ascribed to a difference in view or the product of
agency expertise.”

Nat’l Ass’n of Home Builders v. Defenders of Wildlife, 551 U.S. 644, 658 (2007) (quoting
Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983));
see also Ala. Aircraft Indus., Inc.-Birmingham v. United States, 586 F.3d 1372, 1375
(Fed. Cir. 2009), reh’g and reh’g en banc denied (Fed. Cir. 2010); In re Sang Su Lee,
277 F.3d 1338, 1342 (Fed. Cir. 2002) (“The agency must present a full and reasoned
explanation of its decision . . . . The reviewing court is thus enabled to perform a
meaningful review . . . .”), aff’d on subsequent appeal, 262 F. App’x 275 (Fed. Cir.
2008); Textron, Inc. v. United States, 74 Fed. Cl. 277, 285-86 (2006), appeal dismissed
sub nom. Textron, Inc. v. Ocean Technical Servs., Inc., 222 F. App’x 996 (Fed. Cir.),
and dismissed per stipulation sub nom. Textron, Inc. v. Ocean Technical Servs., Inc.,
223 F. App’x 974 (Fed. Cir. 2007). The United States Supreme Court has also
cautioned, however, that “courts are not free to impose upon agencies specific

37
procedural requirements that have no basis in the APA.” Pension Benefit Guar. Corp. v.
LTV Corp., 496 U.S. 633, 654 (1990).

A disappointed bidder has the burden of demonstrating the arbitrary and
capricious nature of the agency decision by a preponderance of the evidence. See
Grumman Data Sys. Corp. v. Dalton, 88 F.3d 990, 995-96 (Fed. Cir. 1996); Contracting,
Consulting, Eng’g LLC v. United States, 104 Fed. Cl. at 340; Textron, Inc. v. United
States, 74 Fed. Cl. at 285; Labat-Anderson Inc. v. United States, 50 Fed. Cl. 99, 106
(2001); Emery Worldwide Airlines, Inc. v. United States, 49 Fed. Cl. 211, 222, aff’d, 264
F.3d 1071 (Fed. Cir.), reh’g and reh’g en banc denied (Fed. Cir. 2001); Dynacs Eng’g
Co. v. United States, 48 Fed. Cl. 614, 619 (2001); Ellsworth Assocs., Inc. v. United
States, 45 Fed. Cl. 388, 392 (1999), dismissed, 6 F. App’x 867 (Fed. Cir. 2001). The
Federal Circuit has made clear that “[t]his court will not overturn a contracting officer’s
determination unless it is arbitrary, capricious, or otherwise contrary to law. To
demonstrate that such a determination is arbitrary or capricious, a protester must
identify ‘hard facts;’ a mere inference or suspicion . . . is not enough.” PAI Corp. v.
United States, 614 F.3d at 1352 (citing John C. Grimberg Co. v. United States, 185 F.3d
1297, 1300 (Fed. Cir. 1999); C.A.C.I., Inc.-Fed. v. United States, 719 F.2d 1567, 1581
(Fed. Cir. 1983); Filtration Dev. Co., LLC v. United States, 60 Fed. Cl. 371, 380 (2004)).

Furthermore, to prevail in a bid protest case, the protestor not only must show
that the government’s actions were arbitrary, capricious, or otherwise not in accordance
with the law, but the protestor also must show that it was prejudiced by the
government’s actions, see 5 U.S.C. § 706 (“[D]ue account shall be taken of the rule of
prejudicial error.”), perhaps duplicative, although this analysis is technically different
from the standing analysis. See Linc Gov’t Servs., LLC v. United States, 96 Fed. Cl. at
694-96 (2010). Recognizing the two-step analysis of bid protest cases, the Federal
Circuit has stated that:

A bid protest proceeds in two steps. First . . . the trial court determines
whether the government acted without rational basis or contrary to law
when evaluating the bids and awarding the contract. Second . . . if the
trial court finds that the government’s conduct fails the APA review under
5 U.S.C. § 706(2)(A), then it proceeds to determine, as a factual matter, if
the bid protester was prejudiced by that conduct.

Bannum, Inc. v. United States, 404 F.3d at 1351. In describing the prejudice
requirement, the Federal Circuit also 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

38
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) (citation omitted in original); see also Allied Tech. Grp., Inc. v.
United States, 649 F.3d 1320, 1326 (Fed. Cir.), reh’g en banc denied (Fed. Cir. 2011);
Info. Tech. & Applications Corp. v. United States, 316 F.3d at 1319; 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 at 1057; Stratos Mobile Networks USA, LLC
v. United States, 213 F.3d 1375, 1380 (Fed. Cir. 2000).

In Data General Corp. v. Johnson, the United States Court of Appeals for the
Federal Circuit wrote:

We think that the appropriate standard is that, to establish prejudice, a
protester must show that, had it not been for the alleged error in the
procurement process, there was a reasonable likelihood that the protester
would have been awarded the contract . . . . The standard reflects a
reasonable balance between the importance of (1) averting unwarranted
interruptions of and interferences with the procurement process and (2)
ensuring that protesters who have been adversely affected by allegedly
significant error in the procurement process have a forum available to vent
their grievances. This is a refinement and clarification of the “substantial
chance” language of CACI, Inc.-Fed. [v. United States], 719 F.2d at 1574.

Data Gen. Corp. v. Johnson, 78 F.3d 1556, 1562 (Fed. Cir.), reh’g denied, en banc
suggestion declined (Fed. Cir. 1996); see also Bannum, Inc. v. United States, 404 F.3d
at 1353, 1358 (“The trial court was required to determine whether these errors in the
procurement process significantly prejudiced Bannum . . . . To establish ‘significant
prejudice’ Bannum must show that there was a ‘substantial chance’ it would have
received the contract award but for the [government’s] errors” in the bid process. (citing
Info. Tech. & Applications Corp. v. United States, 316 F.3d at 1319; Alfa Laval
Separation, Inc. v. United States, 175 F.3d at 1367; Statistica, Inc. v. Christopher, 102
F.3d at 1581; Data Gen. Corp. v. Johnson, 78 F.3d at 1562)); see also Advanced Data
Concepts, Inc. v. Un

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/868705. Public record. Not legal advice.