Command Management Services, Inc. v. United States

In the United States Court of Federal Claims

No. 12-463

Filed under seal: May 31, 2013

Reissued for publication: June 4, 2013

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

* Bid protest;

* Conflicts Of Interest;

* Federal Acquisition Regulations

COMMAND MANAGEMENT SERVICES, Inc., * 3.101-1 (avoiding conflicts of

* interest)

Plaintiff, * 3.104-2(b)(3) (post-employment

* restrictions)

v. * 3.104-7(e)(1) (“proprietary or source

* selection sensitive information”)

* 9.504(c) (“organization conflict of

THE UNITED STATES, * interest, unequal access”);

* Procurement Integrity Act, 41

Defendant, * U.S.C. § 423, now cited as 41 U.S.C.

* §§ 2101-06 (prohibitions against

and * disclosing procurement information

* and restrictions on employment);

HOTEL CONTRACTING SERVICES, Inc., * RCFC 24(a)(2) (intervention as a matter

* of right);

Defendant-Intervenor. * RCFC 52.1 (Judgment on the

* Administrative Record);

* Supplementation of the Administrative

* Record.

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

Victor Aronoff Kubli, Grayson Law Center, P.C., Germantown, Maryland, Counsel for

Plaintiff.

Austin Marshall Fulk, United States Department of Justice, Civil Division, Washington, D.C.,

Counsel for the Government. CPT Anthony V. Lenze, United States Army Legal Services

Agency, Contract and Fiscal Law Division, Fort Belvoir, Virginia, Counsel for the United States

Army.

James Harold Roberts, III, Van Scoyoc Kelly & Roberts, PLLC, Washington, D.C., Counsel

for Defendant-Intervenor.



On May 31, 2013, the court filed a sealed copy of this Memorandum Opinion and Order and

provided the parties the opportunity to suggest redactions from the public version any

confidential and/or privileged information and to suggest any other changes or edits. The court

has corrected or clarified certain portions herein.

MEMORANDUM OPINION AND ORDER

BRADEN, Judge.

This case concerns a post-award bid protest regarding the United States Department of

the Army’s Mission and Implementation Contracting Command Center’s (“MICC” or “Army”)

procurement of meals, lodging, and transportation services for applicants who process through

the Military Entrance Processing Station (“MEPS”) in Phoenix, Arizona. Before the court are

pending cross-motions for Judgment On The Administrative Record, pursuant to Rule 52.1 of the

Rules of the United States Court of Federal Claims.

I. RELEVANT FACTUAL BACKGROUND.1

A. The Solicitation.

On December 11, 2011, MICC issued Solicitation No. W9124D-12-R-0008 (the

“Solicitation”) to identify a contractor to provide meals, lodging, and transportation for

applicants processing though the Phoenix MEPS, beginning July 1, 2012. AR Tab 3 at 46, 49.

The Solicitation stated that MICC would evaluate proposals based on three evaluation

factors: “Mission Capability”; offeror’s past performance; and “best overall value to the

Government, price and other factors considered.” AR Tab 3 at 55, 58. First, under “Evaluation

Factor 1 – Mission Capability,” MICC would consider several elements, including

“sanitation/cleanliness/condition/quality control,” “security/safety,” “meals,” “facility location,”

and “transportation.” AR Tab 3 at 55-58. The Solicitation defined Mission Capability adjectival

ratings as:

Outstanding – Proposal (written and on-site evaluation considered) meets

requirements and indicates an exceptional approach and understanding of the

requirements. Strengths far outweigh any weaknesses. Risk of unsuccessful

performance is very low.

Good – Proposal (written and on-site evaluation considered) meets

requirements and indicates a thorough approach and understanding of the

requirements. Proposal contains strengths which outweigh any weaknesses. Risk

of unsuccessful performance is low.

Acceptable – Proposal (written and on-site evaluation considered) meets

requirements and indicates an adequate . . . understanding of the requirements.

Strengths and weaknesses are offsetting or will have little or no impact on

1

The relevant facts discussed herein were derived from: the August 9, 2012

Administrative Record (“AR 1-2629”); the July 24, 2012 Complaint (“Compl.”); and depositions

allowed by the court’s October 23, 2012 Order and included in exhibits to Command

Management Inc.’s (“Command”) November 21, 2012 Motion For Judgment On The

Administrative Record (“Pl. Mot. JAR Ex.”).

2

contract performance. Risk of unsuccessful performance is no worse than

moderate.

Marginal – Proposal (written and on-site evaluation considered) does not

clearly meet requirements and has not demonstrated an adequate approach and

understanding of the requirements. The proposal has one or more weaknesses

which are not offset by strengths. Risk of unsuccessful performance is high.

Unacceptable – Proposal (written and on-site evaluation considered) does

not meet requirements and contains one or more deficiencies. Proposal is

unawardable.

AR Tab 3 at 60.

Second, under “Evaluation Factor 2 – Past Performance,” MICC would consider an

offeror’s written descriptions of its “past performance on similar contracts it has held within the

last three (3) years which are of similar scope, magnitude, or complexity to that which is

contained in the solicitation.” AR Tab 3 at 58. Each offeror’s past performance was to be rated:

“Very Relevant”; “Relevant”; “Somewhat Relevant”; or “Not Relevant.” AR Tab 3 at 60. In

addition, the Solicitation provided for “Performance Confidence Assessment” ratings, defined as:

Substantial Confidence: Based on the offeror’s recent/relevant

performance record, the Government has a high expectation that the offeror will

successfully perform the required effort.

Satisfactory Confidence: Based on the offeror’s recent/relevant

performance record, the Government has a reasonable expectation that the offeror

will successfully perform the required effort.

Limited Confidence: Based on the offeror’s recent/relevant performance

record, the Government has a low expectation that the offeror will successfully

perform the required effort.

No Confidence: Based on the offeror’s recent/relevant performance

record, the Government has no expectation that the offeror will be able to

successfully perform the required effort.

Unknown Confidence (Neutral): No recent/relevant performance record is

available of [sic] the offeror’s performance record is so sparse that no meaningful

confidence assessment rating can reasonably be assigned.

AR Tab 3 at 60-61.

Third, under “Evaluation Factor 3 – Price,” the Solicitation provided that price would not

be rated per se, but required offerors to “price the base and option periods” of a potential

contract. AR Tab 3 at 58-59. In turn, MICC stated that it would evaluate the proposal that

3

offered “the best overall value to the Government, price and other factors,” such as the

Government’s option to extend services, considered. AR Tab 3 at 58.

In addition, the Solicitation provided for an on-site inspection of each offeror’s proposed

hotel. AR Tab 3 at 53. The “written proposal, in conjunction with the on-site evaluation,

[would] be used to assess evaluation factor ratings.” AR Tab 3 at 59. As part of its source

selection plan, MICC would use a Source Selection Evaluation Board (“SSEB”) to evaluate

proposals and conduct on-site evaluations. AR Tab 35 at 1852, 1860 (Source Selection Plan for

Phoenix MEPS). The Contracting Officer stated that MICC followed these procedures:

Upon receipt of the technical proposals at the MEPS, each member of the [SSEB]

evaluation team performed an independent evaluation of each written technical

proposal using evaluation forms provided by the contracting officer, evaluating

each proposal on all elements of Factor 1 Mission Capability. SSEB members

were to annotate if the offeror met the government’s requirement, and further

annotate any strengths, weaknesses, or deficiencies based on the offeror’s written

proposal. SSEB members were not given price proposals nor informed of any

pricing information prior to or during their evaluations.

AR Tab 2 at 37 (June 14, 2012 Contracting Officer’s Statement).

Based on the written proposals and on-site evaluation, the SSEB would assign relevant

rating definitions and descriptions: “strength”; “weakness”; “significant weakness”; or

“deficiency.” AR Tab 3 at 60. The SSEB would then report its consensus evaluations to the

contracting officer, who made the final award decision. AR Tab 35 at 1859-60.

The Solicitation provided that MICC would award a contract, without discussions, based

on the “best value trade off method” (AR Tab 3 at 59), considering the following factors:

1. EVALUATION OF PROPOSALS. Proposals submitted will be evaluated on

Mission Capability, Past Performance, and Price factors. Proposal shall conform

to all the terms and conditions contained in the solicitation.

2. BEST VALUE. The Government is interested in proposals that offer value in

meeting the requirements (i.e., quality performance with acceptable risk at a fair

and reasonable price).

Among technical factors: Mission Capability is significantly more

important than Past Performance. Past Performance will be separately evaluated

and assessed a performance risk rating. All evaluation factors, other than cost or

price, when combined, are significantly more important than price.

3. PRICE EVALUATION. Price will not be rated. Award will be made to the

responsible offeror whose proposal offers the best overall value to the

Government, price and other factors considered . . . . Where the selection official

finds the proposals as being essentially equal with respect to technical factors,

4

price may become the determining factor in selecting the best value offer and

making the award.

AR Tab 3 at 59.

B. The Proposals, Site Inspections, And Evaluations.

Fourteen proposals were submitted in response to the Solicitation, ten of which were

evaluated. AR Tab 2 at 34.2 Command submitted seven proposals on January 13, 2012 and

February 9, 2012; each proposed using a different major Phoenix hotel. Compl. ¶ 3; AR Tab 13;

AR Tab 24-30 (Command’s seven proposals). Hotel Contracting Services, Inc. (“HCS”)

submitted a single proposal on February 1, 2012. AR Tab 23.

The SSEB conducted on-site inspections of the proposed hotels on February 27-28, 2012

to “confirm the contents of each written proposal and to assess the cleanliness, condition,

security, and overall adequacy of the facilities proposed.” AR Tab 2 at 37. Thereafter, the SSEB

reconvened from February 29, 2012 through March 2, 2012, “first completing their individual

evaluation considering both findings from their written proposal and on-site evaluation of each

offeror, and finally reaching a team consensus and assigning a Factor 1 Mission Capability rating

to each proposal.” AR Tab 2 at 37. These evaluations were then incorporated into a written

memorandum, signed by the SSEB Chairman and presented to the contracting officer (“CO”) for

evaluation of “technical and price, and any tradeoffs” that would go into the Source Selection

Authority’s best value award decision. AR Tab 2 at 37; AR Tab 39 at 2166-82 (SSEB Initial

Report).

On March, 9, 2012, the CO issued a Source Selection Decision Document, concurring

with the SSEB’s findings. AR Tab 51 at 2525-46. Command’s past performance was rated as

“Very Relevant” and it received the highest rating of “Substantial Confidence.” AR Tab 15 at

198; AR Tab 16-21 (debriefings); AR Tab 51 at 2543-44. With respect to Mission Capability,

two of Command’s proposals were rated as “acceptable” and the remaining five were rated as

“unacceptable,” based on deficiencies assessed by the SSEB. AR Tab 5-11; AR Tab 51 at 2530-

40. The prices of Command’s proposals ranged from 13.37% less to 14.59% more than HCS’s

proposal. AR Tab 51 at 2528. MICC’s consensus evaluation afforded HCS’s proposal the

highest Mission Capability rating: “outstanding.” AR Tab 12 at 153. HCS’s past performance

was rated as “Very Relevant” with “Substantial Confidence” in the Performance Confidence

Assessment. AR Tab 51 at 2528-30. In addition, HCS’s price was the second lowest of any of

the prices received, and the lowest price of the proposals eligible for award. AR Tab 51 at 2526-

28.

After receiving the SSEB Chairman’s evaluations, the CO determined that HCS’s

proposal was the “best value to the government” based on its technical ratings and evaluations

and relative price. AR Tab 51 at 2545-46 (Source Selection Decision). The CO and the Source

2

Four proposals were rejected, without being evaluated, because they were “substantially

incomplete.” AR Tab 2 at 34.

5

Selection Authority awarded the contract to HCS on April 30, 2012. AR Tab 54 at 2573

(Contract W9124D-12-D-0019).

C. Mr. James Murray’s And First Sergeant James Lewis’s Involvement In The

Procurement Process.

From 2008 until November 2011,3 Mr. James Murray was MEPCOM’s Western Sector

Command Sergeant Major and Senior Enlisted Advisor (“SEA”) for all Western Sector MEPS,

including the Phoenix MEPS. AR Tab 57 at 2625; Pl. Mot. JAR Ex. 1 (Murray Dep. at 6-7

(Nov. 8, 2012)). In this capacity, he had contact with the CO and several MEPS contractors. Pl.

Mot. JAR Ex. 1 at 11, 68-70; Pl. Mot. JAR Ex. 1 at 28, 36. Mr. Murray also had contact with

several first sergeants, including First Sergeant James E. Lewis.

During this procurement, First Sergeant Lewis was the Chairman of the SSEB. AR Tab

35 at 1850. In that capacity, First Sergeant Lewis, a member of the evaluation team, led the on-

site inspections, and the evaluation of proposals submitted in response to the Solicitation. AR

Tab 38 at 2163.

The exact nature of the relationship between Mr. Murray and First Sergeant Lewis is the

focus of Command’s claims and is discussed more fully below.

II. PROCEDURAL HISTORY.

A. Before The Government Accountability Office.

On May 14, 2012, Command filed a protest with the Government Accountability Office

(“GAO”), challenging MICC’s award of the MEPS contract to HCS. AR Tab 32 at 1792, 1812.

Command requested a stay or termination of the MEPS contract, on the grounds that MICC’s

inspection findings and Mission Capability Evaluations were erroneous, unreasonable, and

inconsistent with the Solicitation’s evaluation criteria. In addition, Command asserted that its

proposals were not rated consistently with HCS’s proposal, thereby prejudicing Command. AR

Tab 32 at 1808-10. Because GAO determined that Command’s protest was not timely, a stay

was denied. AR Tab 2 at 34 n.1. HCS’s performance of the contract began on July 1, 2012, as

required by the Solicitation. AR Tab 3 at 49. After Command’s July 24, 2012 Complaint was

filed in the United States Court of Federal Claims, the GAO dismissed Command’s May 14,

2012 Protest.

B. Before The United States Court Of Federal Claims.

On July 24, 2012, Command filed a Complaint For Injunctive And Declaratory Relief in

the United States Court of Federal Claims, alleging that: (1) MICC’s procurement and contract

award was tainted by actual impropriety or the appearance of impropriety, in violation of 41

U.S.C. §§ 2101-2106 and 18 U.S.C. § 207, Federal Acquisition Regulation (“FAR”) 3.101, and

3

Mr. Murray went on terminal leave from the Army in August of 2011 and officially

retired on November 1, 2011. Pl. Mot. JAR Ex. 1 (Murray Dep. at 5).

6

FAR 3.104-2(b)(3); (2) MICC failed to conduct a responsibility inquiry pursuant to FAR 9.104

and FAR Subpart 9.4, or, in the alternative, should have known that HCS was not a responsible

contractor and ineligible for this Contract award; (3) MICC failed to assess the possibility of an

organizational conflict of interest (“OCI”), as required by FAR 9.504(c); and (4) MICC’s

inspection findings and subsequent evaluations of Command’s proposed hotels were

unreasonable and inconsistent with the Solicitation’s stated evaluation criteria. Compl. ¶¶ 36-39,

41-43, 45-48, and 50-53.

On July 24, 2012, Command also filed a Motion For A Preliminary Injunction, together

with the Declarations of Brandon Anderson, Command’s Chief Operating Officer; Brian

Anderson, Command’s Chief Marketing Officer; Carleton Penn, Command’s Phoenix area

Regional Manager; and Edward Schroeder, a Command employee. On August 17, 2012, the

Government and HCS filed Responses. On August 24, 2012, Command filed a Reply.

On July 29, 2012, Command and the Government filed a Joint Motion For Protective

Order. On July 30, 2012, the court granted that motion. On July 30, 2012, HCS filed an

unopposed Motion To Intervene, pursuant to RCFC 24(a)(2). On July 31, 2012, the court

granted that motion.

On August 8, 2012, the parties filed a Joint Motion For Scheduling Order. On August 9,

2012, the court granted that motion. On August 17, 2012, the Government filed, under seal, a

Consent Motion To Supplement The Administrative Record with the declaration of the CO, Terri

Corbett (“Gov’t Mot. To Suppl. AR”).4 On August 17, 2012, Command filed, under seal, a

4

Supplementation of the administrative record in bid protest actions in this court is

governed by the United States Court of Appeals for the Federal Circuit's decision in Axiom

Resource Management, Inc. v. United States, 564 F.3d 1374 (Fed. Cir. 2009).

“[S]upplementation of the [administrative] record should be limited to cases in which ‘the

omission of extra-record evidence precludes effective judicial review.’” Id. at 1380 (quoting

Murakami v. United States, 46 Fed. Cl. 731, 735 (2000), aff’d, 398 F.3d 1342 (Fed. Cir. 2005)).

“The purpose of limiting review to the record actually before the agency is to guard against

courts using new evidence to ‘convert the “arbitrary and capricious” standard into effectively de

novo review.’” Id. (quoting Murakami, 46 Fed. Cl. at 735). However, to perform an effective

review pursuant to the APA, the court must have a record containing the information upon which

the agency relied when it made its decision, as well as any documentation revealing the agency’s

decision-making process. See Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402,

420 (1971) (“[S]ince the bare record may not disclose the factors that were considered or the

Secretary's construction of the evidence[,] it may be necessary for the [d]istrict [c]ourt to require

some explanation in order to determine if the Secretary acted within the scope of his authority

and if the Secretary’s action was justifiable under the applicable standard.”), abrogated in an

unrelated respect by Califano v. Sanders, 430 U.S. 99, 105 (1977); see also Montana Fish,

Wildlife, & Parks Found., Inc. v. United States, 91 Fed. Cl. 434, 440-41 (2010).

The court has determined that supplementation of the Administrative Record with the

CO’s declaration is necessary for effective review of whether the CO complied with FAR 9.504

and/or acted arbitrarily and capriciously. See Axiom, 564 F.3d at 1380. Therefore, the court

7

Motion To Supplement The Administrative Record (“Pl. Mot. To Suppl. AR”), with documents

supporting Command’s July 24, 2012 Complaint alleging an actual or apparent OCI and

requesting that MICC “conduct a search of e-mail and telephone logs for any post-October 2011

communications between [Mr.] Lewis and [Mr.] Murray or HCS,” and requested the court to

“grant leave to Command to issue subpoenas to [Mr.] Murray and HCS seeking the production of

all communications relating to the Solicitation between [Mr.] Murray, HCS[,] and [Mr.] Lewis,”

and also to “grant leave to Command to depose Mr. Murray and Mr. Lewis.” Pl. Mot. To Suppl.

AR at 6, 15. On August 24, 2012, the Government filed a Response In Opposition To Plaintiff’s

[August 17, 2012] Motion To Supplement The Administrative Record.

On August 24, 2012, the Government filed a Motion To Strike the declarations that

Command attached to its July 24, 2012 Motion For Preliminary Injunction, with the exception of

the May 14, 2012 declaration of Brian Anderson (“Gov’t Mot. To Strike”). On September 10,

2012, Command filed a Response To the Government’s Motion To Strike. On September 20,

2012, the Government filed a Reply.5

On October 16, 2012, the court held a status conference to discuss Command’s August

17, 2012 Motion To Supplement The Administrative Record and the parties’ proposed briefing

schedule. On the same date, the court issued a Scheduling Order. On October 23, 2012, the

court also issued an Order granting Command’s August 17, 2012 Motion To Supplement The

Administrative Record and allowing Command to take the depositions of First Sergeant Lewis

and Mr. Murray.

On November 21, 2012, Command filed a Motion For Judgment On The Administrative

Record (“Pl. Mot. JAR”). On December 5, 2012, the Government filed a Cross-Motion For

Judgment On The Administrative Record And Response To Plaintiff’s Motion For Judgment On

The Administrative Record (“Gov’t Mot. JAR”).

grants the Government’s August 17, 2012 Consent Motion To Supplement The Administrative

Record with the CO’s declaration.

5

In this case, the court has determined that the declarations referenced in the

Government’s August 24, 2012 Motion To Strike are not necessary for effective judicial review,

because they were prepared only in connection with the litigation and were not part of the record

before MICC when it awarded the contract nor before the GAO in Command’s May 14, 2012

protest. Although Command argues that the Declaration of Brandon Anderson evidences Mr.

Murray’s acquisition of non-public information during his 2009 visit to Command’s Portland,

Oregon headquarters, the declaration does nothing other than assert that Mr. Murray had access

to broad categories of non-public information. Because the declaration fails to provide any facts

supporting these assertions, the declaration is not necessary for effective judicial review of

Command’s claims.

The Government did not move to strike the May 14, 2012 Declaration of Brian Anderson,

because it was part of the Administrative Record before the GAO. Gov’t Mot. To Strike at 1 n.1

(citing AR Tab 50.1-.4 at 2513-24). For these reasons, the Government’s August 24, 2012

Motion To Strike is granted.

8

On December 5, 2012, HCS also filed a Response To The Plaintiff’s Motion For

Judgment On The Administrative Record And Cross-Motion For Judgment On The

Administrative Record (“D-Int. JAR Resp.”). On December 12, 2012, Command filed a

Combined Opposition To Defendant And Intervenor Motions For Judgment On The

Administrative Record And Reply In Support Of Plaintiff’s Motion For Judgment (“Pl. Reply”).

On December 19, 2012, the Government filed a Reply (“Gov’t Reply”). On that date, HCS also

filed a Reply (“D-Int. Reply”).

III. DISCUSSION.

A. Jurisdiction.

Pursuant to 28 U.S.C. § 1491(b)(1), the United States Court of Federal Claims has

jurisdiction:

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

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

award or the award of a contract or any alleged violation of statute or regulation

in connection with a procurement or a proposed procurement.

Id.

In this case, the July 24, 2012 Complaint alleged several violations of law and/or FAR

“in connection with” this procurement. Compl. ¶¶ 35-58. As such, the July 24, 2012 Complaint

recites a sufficient basis for the court to exercise jurisdiction, pursuant to 28 U.S.C. § 1491(b)(1).

B. Standing.

As a threshold matter, a plaintiff contesting the award of a federal contract must establish

that it is an “interested party” to have standing under 28 U.S.C. § 1491(b)(1). See Myers

Investigative & Sec. Servs., Inc. v. United States, 275 F.3d 1366, 1369 (Fed. Cir. 2002)

(“[S]tanding is a threshold jurisdictional issue.”). The United States Court of Appeals for the

Federal Circuit has construed the term “interested party” as synonymous with the definition of

“interested party” as recited in the Competition in Contracting Act of 1984 (“CICA”), 31 U.S.C.

§ 3551(2)(A). See Rex Serv. Corp. v. United States, 448 F.3d 1305, 1307 (Fed. Cir. 2006) (citing

decisions adopting the CICA definition of “interested party” to convey standing under 28 U.S.C.

§ 1491(b)(1)). As such, the United States Court of Appeals for the Federal Circuit requires that a

two-part test be applied in determining whether a protester is an “interested party”; a protestor

must establish that: “(1) it was an actual or prospective bidder or offeror, and (2) it had a direct

economic interest in the procurement or proposed procurement.” Distrib. Solutions,

Inc. v. United States, 539 F.3d 1340, 1344 (Fed. Cir. 2008). In addition, in post-award protests,

the plaintiff also must show it had a “substantial chance” of receiving the contract. See Rex Serv.

Corp., 448 F.3d at 1307.

The second standing requirement is that the protestor must show that the alleged errors in

the procurement were prejudicial. See Labatt Food Serv., Inc. v. United States, 577 F.3d 1375,

9

1378 (Fed. Cir. 2009) (“It is basic that because the question of prejudice goes directly to the

question of standing, the prejudice issue must be reached before addressing the merits.”)

(internal quotation marks omitted); see also Myers, 275 F.3d at 1370 (“[P]rejudice (or injury) is a

necessary element of standing.”). Prejudice is demonstrated where the protestor “can show that

but for the error, it would have had a substantial chance of securing the contract.” Labatt, 577

F.3d at 1378. Importantly, a proper standing inquiry must not conflate the requirements of

“direct economic interest” and prejudicial error. Id. at 1380 (explaining that examining

economic interest but excluding prejudicial error from the standing inquiry “would create a rule

that, to an unsuccessful but economically interested offeror in a bid protest, any error is

harmful”).

In this case, Command was an actual offeror, that timely submitted several alternative

proposals in response to the Solicitation. Compl. ¶ 14. In addition, Command had a direct

economic interest in the procurement because, if the allegations in its July 24, 2012 Complaint

are taken as true, Command had a substantial chance of receiving the contract at issue.

Therefore, the court has determined that Command was an interested party to the Solicitation and

would be prejudiced by MICC’s alleged errors regarding the alleged OCI, failure to investigate,

and failure to disqualify HCS. If these allegations are established, Command had a substantial

chance of receiving the contract award, since two of Command’s seven proposals were deemed

“acceptable” and eligible for contract award. Command asserts that HCS should have been

disqualified from award as a non-responsible offeror, and in the alternative, that HCS benefitted

from the fact that inspection standards were applied in an unreasonable and uneven manner.

Compl. ¶¶ 42-43, 47, 51-52. Taken as true, these allegations support a finding that Command

would have had a substantial chance of receiving the contract, but for the alleged errors. See

Labatt, 577 F.3d at 1378.

For these reasons, the court has determined that Command has standing to contest the

award of the contract at issue in this case.

C. The Applicable Standards Of Review.

Pursuant to the Tucker Act, 28 U.S.C. § 1491, as amended by the Administrative Dispute

Resolution Act, Pub. L. No. 104-320, § 12, 110 Stat. 3870, 3874 (1996), the United States Court

of Federal Claims is required to review challenges to an agency decision, pursuant to the

standards set forth in the Administrative Procedure Act (“APA”). 28 U.S.C. § 1491(b)(4) (“In

any action under this subsection, the courts shall review the agency’s decision pursuant to the

standards set forth in section 706 of title 5.”); see also 5 U.S.C. § 706(2)(A) (2006) (The

reviewing court shall “hold unlawful and set aside agency action, findings, and conclusions

found to be . . . arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with

law.”); Banknote Corp. of Am., Inc. v. United States, 365 F.3d 1345, 1350 (Fed. Cir. 2004)

(“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.’”). The United States Court of Appeals for the Federal Circuit has provided the trial

courts with specific guidance in how to analyze the required showings for injunctive relief under

APA standards.

10

The United States Court of Appeals for the Federal Circuit has held that a bid award may

be set aside if “the procurement procedure involved a violation of regulation or procedure.”

Weeks Marine, Inc. v. United States, 575 F.3d 1352, 1358 (Fed. Cir. 2009). The United States

Court of Appeals for the Federal Circuit has clarified, however, that when a contract award is

challenged, based on regulatory or procedural violation, “the disappointed bidder must show a

clear and prejudicial violation of applicable statutes or regulations.” Axiom Res. Mgmt., 564

F.3d at 1381 (internal quotation marks omitted). This burden is even greater when the

procurement is a “best value” procurement, as is the case here. See Galen Med. Assocs., Inc. v.

United States, 369 F.3d 1324, 1330 (Fed. Cir. 2004) (“[A]s the contract was to be awarded based

on ‘best value,’ the contracting officer had even greater discretion . . . . [T]he relative merit of

competing proposals is primarily a matter of administrative discretion.”) (citations omitted); see

also Unisys Corp. v. Widnall, 98 F.3d 1325, 1327 (Fed. Cir. 1996) (“In determining whether the

agency has complied with the regulation authorizing best value procurements, the [reviewing

authority] may overturn an agency's decision if it is not grounded in reason.”).

If an award decision is challenged as arbitrary, capricious, or lacking a rational basis, the

trial court “must sustain an agency action unless the action does not evince rational reasoning

and consideration of relevant factors.” Savantage Fin. Servs. v. United States, 595 F.3d 1282,

1287 (Fed. Cir. 2010) (internal alterations, quotation marks, and citations omitted); see also

Centech Grp., Inc. v. United States, 554 F.3d 1029, 1037 (Fed. Cir. 2009) (holding that the trial

court must “determine whether the contracting agency provided a coherent and reasonable

explanation of its exercise of discretion, and the disappointed bidder bears a heavy burden of

showing that the award decision had no rational basis”).

The court may set aside the procurement, but “only in extremely limited circumstances.”

United States v. John C. Grimberg Co., Inc., 702 F.2d 1362, 1372 (Fed. Cir. 1983). This rule

recognizes a zone of acceptable results in each particular case and requires that the final decision

evidences that the agency “considered the relevant factors” and is “within the bounds of reasoned

decision making.” Baltimore Gas & Elec. Co. v. Natural Res. Def. Council, Inc., 462 U.S. 87,

105 (1983); see also Weeks Marine, 575 F.3d at 1368-69 (“We have stated that procurement

decisions invoke . . . highly deferential rational basis review. . . . Under that standard, we sustain

an agency action evincing rational reasoning and consideration of relevant factors.” (internal

quotation marks and citations omitted)).

D. Issues Raised By The Plaintiff’s Motion For Judgment On The

Administrative Record.

1. Whether The Government Violated Federal Acquisition Regulation

1.102-2(c)(1), 3.101-1, 9.504, 9.505, And 9.506.

a. The Plaintiff’s Argument.

MICC, as the contracting agency, had a duty to protect the integrity of the procurement

process and avoid “‘engag[ing] in conduct that . . . favors one offeror over another.’” Pl. Reply

11

at 2 (citing FAR 1.102-2(c)(1)6; quoting FAR 15.306(e)). Command argues, however, that the

“procurement [was] tainted by an apparent or actual impropriety, conflict, unfair competitive

advantage[,] or bias occasioned by the Murray/Lewis assistance to HCS,” the presence of which

requires “(a) a thorough inquiry by the [CO], followed by [(]b) appropriate ameliorative

measures to ensure that HCS enjoys no unfair competitive advantage.” Pl. Mot. JAR at 28

(citing Compl. ¶¶ 31-35).

FAR 1.102-2(c)(1) and FAR 3.101-17 require disqualification of a procurement offeror

where impropriety or the possibility of an unfair competitive advantage in the acquisition process

is present. Pl. Mot. JAR at 28-29 (citing FAR 1.102-2(c)(1); FAR 3.101-1; see also NFK

Eng’g v. United States, 805 F.2d 372, 377 (Fed. Cir. 1986) (recognizing that the appearance of

impropriety alone can be a sufficient basis to disqualify an offeror and finding that the agency

reasonably decided to disqualify the offeror on that basis); Telecommunication Sys. Inc., B-

404496.3 (GAO Oct. 26, 2011) (“[W]here a firm may have gained an unfair competitive

advantage through its hiring of a former government official, the firm can be disqualified from a

competition based upon the appearance of impropriety which is created by this situation, even if

no actual impropriety can be shown, so long as the determination of an unfair competitive

advantage is based on facts and not on mere innuendo or suspicion.”)).

In addition, FAR 9.504(a)8 requires that contracting officials avoid, neutralize, or

mitigate potential significant conflicts of interest to prevent an unfair competitive advantage or

6

FAR 1.02-2(c)(1) provides

(1) An essential consideration in every aspect of the System is maintaining

the public's trust. Not only must the System have integrity, but the actions of each

member of the Team must reflect integrity, fairness, and openness. The

foundation of integrity within the System is a competent, experienced, and well-

trained, professional workforce. Accordingly each member of the Team is

responsible and accountable for the wise use of public resources as well as acting

in a manner which maintains the public’s trust. Fairness and openness require

open communication among team members, internal and external customers, and

the public.

48 C.F.R. § 1.102-2(c)(1).

7

FAR 3.101-1 provides, in pertinent part

Government business shall be conducted in a manner above reproach and

. . . with complete impartiality and with preferential treatment for none. . . . The

general rule is to avoid strictly any conflict of interest or even the appearance of a

conflict of interest in Government-contractor relationships.

48 C.F.R. § 3.101-1.

8

FAR 9.504(a) provides, in pertinent part, that “contracting officers shall analyze

planned acquisitions in order to . . . [i]dentify and evaluate potential organizational conflicts of

12

the existence of conflicting roles that may impair that official’s objectivity. When a possibility

of an impropriety or unfair competitive advantage arises, it must be investigated by the

contracting agency. Pl. Reply at 3 (citing FAR 9.504(a)). If the contracting agency’s

investigation confirms that there is a significant possibility of impropriety, conflict, or unfair

competitive advantage, “the agency must fashion and implement reasonable ameliorative

measures.” Pl. Reply at 3 (citing FAR 9.504-.506; Turner Constr. Co., Inc. v. United States, 645

F.3d 1377, 1386 (Fed. Cir. 2011) (“A significant potential conflict is one which provides the

bidding party a substantial and unfair competitive advantage during the procurement process on

information or data not necessarily available to other bidders.”)). These regulations were

promulgated to prevent an unfair competitive advantage through unauthorized access to

“proprietary” and “source selection information.” FAR 9.505(b). But they also recognize that

conflicts may arise in factual situations “not expressly covered” by FAR 9.505 or FAR 9.508. In

this case, the SSEB Instructions explicitly warned that “[i]t is imperative that all team members

refrain from discussing this or any other type of information with anyone outside the evaluation

team, the contracting advisor, and/or the [MEPCOM] individual who may be observing the

evaluation process.” AR Tab 38 at 2162. In addition, the Source Selection Plan instructed SSEB

Chairman Lewis and other SSEB members to avoid even the “appearance” of a conflict (AR Tab

35 at 1860); “immediately” report any possible conflicts to the CO (AR Tab 35 at 1860); not

discuss evaluation or source selection information with unauthorized persons, “even after the

announcement of the successful contractor” (AR Tab 35 at 1868); conduct themselves “in a way

that will not adversely affect the confidence of the public in the source selection process (AR

Tab 35 at 1868); and “avoid any action, whether or not prohibited, that could result in or create

the appearance of . . . losing independence or impartiality[.]” AR Tab 35 at 1868.

The record establishes a “potential or actual conflict, unfair competitive advantage[,] or

bias—namely, [that] Murray [and] Lewis [provided] assistance to [HCS].” Pl. Mot. JAR at 33-

34. As the former SEA, Mr. Murray supervised Western sector MEPS contracts, served as the

“point person” with MEPS contractors, and “received non-public Command information[.]” Pl.

Mot. JAR at 33. In that capacity, he also was in contact with First Sergeant Lewis at Phoenix

MEPS, who served as the SSEB Chairman for this procurement. Pl. Mot. JAR at 34. After

joining HCS in September 2011, Mr. Murray “assisted HCS in its competition with Command

under the Solicitation,” and during the time Command’s GAO protest was pending, Mr. Murray

contacted SSEB Chairman Lewis, and the two called a Command employee, Mr. Schroeder, “in

an attempt to solicit [him] to leave Command and join HCS.” Pl. Mot. JAR at 34.

Despite this situation, MICC did not investigate whether there was a conflict, unfair

competitive advantage, or impropriety, as required by FAR 9.504, FAR 9.505, and FAR 9.506(b)

in the face of even the “possibility of a conflict, unfair competitive advantage, or bias.” Pl. Mot.

JAR at 35; Pl. Reply at 5. This failure prevented MICC from taking the “second of two

mandated steps—fashion[ing] and implement[ing] informed [ameliorative] measures that will

ensure that the procurement is conduct[ed] without the risk of a conflict, unfair competitive

advantage or bias.” Pl. Mot. JAR at 31, 35. The court, therefore, should mandate these actions

by MICC. Pl. Mot. JAR at 35.

interest as early in the acquisition process as possible; and . . . [a]void, neutralize, or mitigate

significant potential conflicts before contract award.” 48 C.F.R. § 9.504(a).

13

b. The Government’s Response.

The Government responds that there was no actual or potential conflict of interest or bias

on the part of MICC. Gov’t Mot. JAR at 6. The United States Court of Appeals for the Federal

Circuit has explained that the FAR “requires mitigation of ‘significant potential conflicts,’ but

does not require mitigation of other types of conflicts, such as apparent or potential non-

significant conflicts,” and that contracting officers are entitled to “considerable discretion” in

identifying conflicts and developing mitigation plans where a significant potential conflict exists.

Gov’t Mot. JAR at 7 (quoting PAI Corp. v. United States, 614 F.3d 1347, 1352-53 (Fed. Cir.

2010)). A contracting officer is “only required to document the existence of an [OCI] and

prepare a mitigation plan, upon determining that a potential conflict is in fact ‘significant.’”

Gov’t Mot. JAR at 7-8 (quoting PAI Corp., 614 F.3d at 1353). In addition, the United States

Court of Appeals for the Federal Circuit also has suggested that an OCI exists only where a

relationship between two parties creates an actual competitive advantage for one of them. Gov’t

Mot. JAR at 8 (citing Turner Constr. Co., 645 F.3d at 1384 (observing that one issue was

whether the relationship between the conflicted parties created “a competitive advantage over the

other bidders”); see also id. at 1388 (but determining the absence of an OCI where no facts

existed showing that any of the allegedly conflicted parties “had access to any information of

competitive worth”)).

As a factual matter, Command is wrong in asserting that “Mr. Murray’s prior position

with the Army afforded him knowledge that amounted to unfair access to [non-public,

competition-sensitive] information” that gave HCS a competitive advantage in putting together

its proposal. Gov’t Mot. JAR at 8-9 (citing Pl. Mot. JAR at 5-6, 33). The record shows only

“unrelated and otherwise irrelevant facts” derived from Mr. Murray’s deposition, such as his

visits to MEPS Phoenix and his contacts with MEPS contractors and with personnel in the

contracting office, including First Sergeant Lewis. This evidence is “highly speculative and

severely lacking in substance.” Gov’t Mot. JAR at 9.

The record substantiates that Mr. Murray’s principal job was “serving as the senior

enlisted advisor to the commander (an officer) of his organization on a variety of issues

including training, health, welfare, and morale of his organization,” which in part included

giving “advice to MEPS on the subjects of training, school visits by recruiters, and testing,” but

he was not directly responsible for MEPS activities in any of those areas. Gov’t Mot. JAR at 9-

10 (citing Pl. Mot. JAR Ex. 1 (Murray Dep. at 6-7, 8-10)). To the extent that Mr. Murray had

any contact with MEPS contracting offices or first sergeants, these contacts were in the context

of serving as a “go-between” for the contracting representatives/first-sergeants and contracting

offices to address site-specific problems. Gov’t Mot. JAR at 11 (citing Pl. Mot. JAR Ex. 1

(Murray Dep. at 11-12, 18-19)). In addition, Mr. Murray testified that he had no involvement in

MEPS contracting and never saw an MEPS contract during his tenure with MEPCOM, nor did

he have much activity related to the issue of contracting. Gov’t Mot. JAR at 11 (citing Pl. Mot.

JAR Ex. 1 (Murray Dep. at 18-19, 23)). Even if Mr. Murray did have supervisory responsibility

over MEPS contracts, Command has failed to “explain how such alleged supervisory duties

would have necessarily provided HCS with access to proprietary Command information, or even

[to] what specific information such a position would have given him access[.]” Gov’t Reply at 4.

14

Command’s argument that Mr. Murray received proprietary business information from

his trip to Command’s headquarters (Pl. Mot. JAR at 5-6) is similarly unsupported. Command’s

assertion is based solely on vague conclusions from the Declaration of Brandon Anderson

(Command’s Chief Operating Officer) attached to Command’s July 24, 2012 Motion For A

Preliminary Injunction and from Mr. Murray’s Deposition testimony, in which he denied having

discussed any proprietary information. Gov’t Mot. JAR at 13-14. Mr. Anderson’s declaration is

problematic not only because of its vagueness, but also because it is based on little personal

knowledge of either Mr. Murray’s job responsibilities or MEPCOM’s chain of command. Gov’t

Reply at 5-6. Instead, Command simply lists broad categories of information that it believes Mr.

Murray obtained from Command, without providing any detail about the information he

allegedly obtained. Gov’t Reply at 5. As such, Command has not met its burden of providing

hard facts to support its allegations. Gov’t Mot. JAR at 13, 15.

In addition, there is no evidence that the Army showed bias in favor of Mr. Murray or

HCS. It is true that Mr. Murray’s first point of contact in the Phoenix MEPS office was First

Sergeant Lewis. Gov’t Mot. JAR at 15. But, First Sergeant Lewis testified that he only called

Mr. Murray a total of three times, when Mr. Murray was in the Army, and the two had very

limited contact when Mr. Murray visited the Phoenix MEPS office. Gov’t Mot. JAR at 15-16

(citing Pl. Mot. JAR Ex. 1 (Lewis Dep. at 10:3-21, 15:2-16:22) (Nov. 8, 2012)). In addition,

contrary to Command’s assertions, Mr. Murray did not supervise First Sergeant Lewis. First

sergeants at MEPS offices reported to their supervisors, not to Mr. Murray. Gov’t Mot. JAR at

16-17.

The fact that First Sergeant Lewis assisted Mr. Murray in contacting and allegedly

attempting to hire one of Command’s employees on June 5, 2012 does not evidence bias. This

action occurred when First Sergeant Lewis no longer was serving as Chairman of the SSEB,

which had been dissolved. AR Tab 51 at 2525 (Mar. 9, 2012 Source Selection Decision).

Instead, First Sergeant Lewis was acting in his capacity as a “contracting officer representative.”

Furthermore, it was appropriate for First Sergeant Lewis to work with Mr. Murray “to ensure

that the MEPS lodging contract was performed properly, including working to ensure that the

transition was handled smoothly,” and to “assist with the hiring of personnel who were familiar

with the contract.” Gov’t Mot. JAR at 17-18. In addition, the competition had concluded and

the contract was awarded to HCS, and First Sergeant Lewis was not aware that a protest had

been filed. Gov’t Mot. JAR at 17 (citing Pl. Mot. JAR Ex. 1 (Lewis Dep. at 23:5-9)); Gov’t

Reply at 7. Therefore, Command’s allegations of bias are unsupported by any evidence of actual

wrongdoing or of a facilitating relationship. Gov’t Mot. JAR at 16.

Last, “[n]othing in the record suggests that the contracting officer acted outside her

‘considerable discretion’ when, upon learning that Mr. Murray was employed by HCS, she did

not determine his employment to be a ‘significant potential conflict’ that warranted a mitigation

plan.” Gov’t Mot. JAR at 18 (quoting PAI Corp., 614 F.3d at 1352-53). There is no reason why

the CO should have identified Mr. Murray as a significant potential conflict, since he was cleared

to work for Command or any other contractor after November 1, 2011. AR Tab 56 at 2622-23.

Nor did the CO have any personal relationship with Mr. Murray or observe any improper

interaction between Mr. Murray and any other SSEB members during on-site evaluations. Gov’t

15

Mot. JAR at 18. Likewise, the CO had no reason to believe that Mr. Murray had any

information, proprietary or otherwise, or that he had any specific expertise about Phoenix area

contracts, that would have afforded HCS a competitive advantage. Gov’t Mot. JAR at 18-19

(citing AR Tab 57 at 2625 (showing that Mr. Murray supervised the entire Western Sector)).

c. The Defendant-Intervenor’s Response.

HCS adds that, the competition, evaluations, and source selections relating to the

procurement all ended when the Army awarded the contract to HCS on April 30, 2012. AR Tab

1 at 16; AR Tab 2 at 38. The meeting between Mr. Murray, First Sergeant Lewis, and the

Command employee allegedly being solicited did not occur until June 5, 2012, after the

competition had ended and First Sergeant Lewis had become a “contracting officer’s

representative” for the Army, rather than a member and chairman of the SSEB. D-Int. JAR

Resp. at 2-3 (citing Pl. Mot. JAR Ex. 1 (Lewis Dep. at 28)). First Sergeant Lewis facilitated this

meeting “as part of his normal contract administration duties,” and HCS asserts that it is “not

unusual for a new contractor to fill some of its positions with persons from the unsuccessful

former incumbent contractor’s staff.” D-Int. JAR Resp. at 3 (citing Pl. Mot. JAR Ex. 1 (Lewis

Dep. at 31)). Command, however, mischaracterized First Sergeant Lewis as Chairman of the

SSEB during that time and “improperly involved with a competitor’s employee, [Mr.] Murray,”

in an attempt to “poach” a “competitor’s employee,” even after the competition ended. D-Int.

JAR Resp. at 4. This misleading characterization caused the court to allow the Depositions of

First Sergeant Lewis and Mr. Murray; therefore, “the [c]ourt should consider sanctions (costs of

the Depositions) against the Plaintiff for its continuing misleading filings.” D-Int. JAR Resp. at

5-6.

The period of competition under the Solicitation began on December 11, 2011 and ended

on April 30, 2012. During that time, First Sergeant Lewis and Mr. Murray “had no written or

telephonic contact of any kind as confirmed by the Government’s document search . . . and based

on the sworn Deposition testimony of Lewis and Murray[.]” D-Int. JAR Resp. at 7. The only

brief face-to-face interaction occurred when First Sergeant Lewis was part of the “Army group

that inspected the HCS hotel that HCS offered in response to the . . . Solicitation.” D-Int. JAR

Resp. at 7. Therefore, there was no inappropriate contact between Mr. Murray and First

Sergeant Lewis.

With respect to Command’s allegations regarding Mr. Murray’s access to and use of

Command’s proprietary information, HCS responds that Mr. Murray testified in his November 8,

2012 Deposition that he remembered very little from the presentation given to him at

Command’s Portland, Oregon headquarters in 2009 and denied that he was presented with any

proprietary information during his visit. D-Int. JAR Resp. at 8. This testimony is consistent with

the fact that none of the Army group members at the 2009 presentation were required by

Command to sign any type of non-disclosure agreement. D-Int. JAR Resp. at 8. In addition, Mr.

Murray was not involved in any source selection activities or other activities relating to the

MEPS contracts or proposals while with the Army, nor was he involved in the proposal process

while at HCS, other than assisting HCS in selecting the location of a hotel. D-Int. JAR Resp. at

8. In addition, Mr. Murray sought and received a letter of guidance from a Designated Agency

Ethics Official on September 8, 2011, prior to his retirement from active duty, that specifically

16

authorized him to accept a position with a contractor firm providing meals, lodging, and

transportation to military applicants. D-Int. JAR Resp. at 8-9 (citing AR Tab 56 at 2622-24; AR

Tab 57 at 2625-27; AR Tab 58 at 2628-29). Therefore, Command’s allegations in this regard

also lack merit.

After the court’s conference call on September 13, 2012, the parties met, and on October

2, 2012, the Government requested, at the insistence of Command, that the CO conduct a

“thorough OCI investigation of Murray concerning the same OCI allegations now before the

[c]ourt.” D-Int. Reply at 9-10. On November 7, 2012, the CO requested information from HCS

in connection with her investigation. D-Int. Reply Ex. 2. In response, HCS provided the sworn

declarations of Mr. Murray, in his capacity as a Project Manager for HCS, and Dick Williams,

HCS’s Executive Vice-President. D-Int. Reply at 10 (citing D-Int. Reply Ex. 3). On December

7, 2012, the CO issued a letter concluding that there is “insufficient evidence to substantiate a

finding that an OCI exists.” D-Int. Reply Ex. 4.9 Now that an OCI investigation has been

conducted and completed, HCS requests that the court dismiss Command’s “primary allegation

in this protest [(Compl. ¶¶ 9, 39, 47)] claiming that the Army failed to conduct an OCI

investigation of [Mr.] Murray.” D-Int. Reply at 11.

d. The Court’s Resolution.

The issues presented in the first three claims of Command’s Complaint are: (1) whether

the CO failed to follow FAR provisions requiring that the CO investigate and avoid or mitigate

an actual or apparent conflict of interest prior to contract award; and (2) whether Command has

met its burden to establish that an actual or apparent conflict of interest, or bias, existed that

caused Command to be prejudiced.

With respect to the CO’s obligations under the FAR, the United States Court of Appeals

for the Federal Circuit has explained that:

[FAR] Section 9.504(a) requires that a contracting officer “(1) [i]dentify

and evaluate potential organizational conflicts of interest as early in the

acquisition process as possible; and (2) [a]void, neutralize, or mitigate significant

potential conflicts before contract award.” 48 C.F.R. § 9.504(a) (emphasis

added). This regulation requires a contracting officer to identify and evaluate

potential conflicts in the early stages of the acquisition process.

Section . . .9.504(a) does not require that this preliminary analysis be documented

in writing, but if a potential conflict is identified, the regulation specifies that the

contracting officer must avoid, neutralize, or mitigate any “significant potential

conflicts” before the contract award. Id. § 9.504(a). A significant potential

conflict is one which provides the bidding party a substantial and unfair

competitive advantage during the procurement process on information or data not

necessarily available to other bidders. See ARINC [Eng’g Servs. v. United States],

9

HCS requests that the court supplement the Administrative Record with these four

exhibits. D-Int. Reply at 10-11. The court denies this request, as this Opinion does not rely on

these exhibits, nor are they necessary for “effective judicial review.” Axiom, 564 F.3d at 1380.

17

77 Fed. Cl. [196,] 202 [(2007)]. Section 9.504(a) therefore requires mitigation of

“significant potential conflicts,” but does not require mitigation of other types of

conflicts, such as apparent or potential non-significant conflicts. The contracting

officer does have considerable discretion in determining whether a conflict is

significant. Moreover, the FAR provides a contracting officer with considerable

discretion to conduct fact-specific inquiries of acquisition proposals to identify

potential conflicts and to develop a mitigation plan in the event that a significant

potential conflict exists. 48 C.F.R. § 9.505; see also Axiom, 564 F.3d at 1382.

PAI Corp., 614 F.3d at 1352-53.

In sum, the FAR requires that “[e]ach individual contracting situation should be

examined on the basis of its particular facts and the nature of the proposed contract. The

exercise of common sense, good judgment, and sound discretion is required in both the decision

on whether a significant potential conflict exists and, if it does, the development of an

appropriate means for resolving it.” PAI Corp., 614 F.3d at 1352 (citing 48 C.F.R. § 9.505); see

also Axiom, 564 F.3d at 1382 (citing ARINC, 77 Fed. Cl. at 202 (“The responsibility for

determining whether such unequal access exists and what steps should be taken in response

thereto rests squarely with the contracting officer.”)). Importantly, FAR 9.504(d) provides that

“[t]he contracting officer’s judgment need be formally documented only when a substantive

issue concerning potential organizational conflict of interest exists.” 48 C.F.R. § 9.504(d).

Moreover, under the FAR, a contracting officer is only required to document the existence of an

OCI, and prepare a mitigation plan, upon determining that a potential conflict is “significant.”

PAI Corp., 614 F.3d at 1352.

In this case, there was no reason for the CO to suspect, before the issuance of the

Solicitation or the filing of Command’s bid protest, the potential existence of a “significant”

OCI. Nor did Command raise this as a potential issue to the CO prior to the award or the initial

GAO protest. Gov’t Mot. To Suppl. AR (CO Corbett Decl. ¶ 10). Mr. Murray sought and

received clearance to work for a private contractor following his retirement from active duty and

was prohibited from representing a contractor before the MEPCOM until his terminal leave

period ended on November 1, 2011. AR Tab 56 at 2622 (Sept. 8, 2011 Department of Defense’s

Deputy Command Legal Counsel’s opinion that Mr. Murray was not prohibited by the

Procurement Integrity Act, 41 U.S.C. § 2104, from accepting compensation from a contractor

after his retirement from active service); AR Tab 57 at 2625 (Sept. 29, 2011 Meals and Lodging

Ethics Advisory noting that Mr. Murray was not ethically precluded from “accepting post-

retirement employment with HCS”); AR Tab 58 at 2628 (Department of Defense’s Deputy

Command Legal Counsel’s Sept. 8, 2011 e-mail to Mr. Murray that there was “no conflict of

interest” with him taking a position with Command or any other “hotel broker,” but that he was

prohibited from “engag[ing] in duties requiring any significant direct contact with

[MEPCOM] . . . contracting personnel until [November 1, 2011]”). In September, 2011, the CO

for the procurement was informed by MEPCOM’s Meals and Lodging Program Manager of Mr.

Murray’s plans to work for HCS and that he had been cleared to work for one of the meals and

lodging contractors. Gov’t Mot. To Suppl. AR (CO Corbett Decl. ¶ 2). Based on this

information, and on limited personal knowledge of Mr. Murray, the CO concluded that Mr.

Murray’s employment with HCS did not present a conflict of interest, significant potential

18

conflict of interest, or potential ethics violation, and did not investigate the matter further. Gov’t

Mot. To Suppl. AR (CO Corbett Decl. ¶ 3-4).

Mr. Murray’s only apparent contact with members of the SSEB during the period of

competition prior to award occurred at the SSEB’s inspection of HCS’s proposed hotel, on

February 27 or 28, 2012, but after his terminal leave ended. AR Tab 2 at 37; see also Pl. Mot.

JAR Ex. 1 (Lewis Dep. at 10:3-21, 15:2-16:22) (First Sergeant Lewis’s testimony that he did not

have more than a few interactions with Mr. Murray over a three year period including the

competition under the Solicitation).10 Furthermore, Mr. Murray’s June 5, 2012 phone call to a

Command employee, facilitated by First Sergeant Lewis, occurred after Mr. Murray’s terminal

leave had ended, and the competition was over. Mr. Murray also was not involved in the

selection process in his capacity as an SEA, or in the preparation of HCS’s proposal in response

to the Solicitation, in any way, other than in selecting the location of a hotel for the proposal. Pl.

Mot. JAR Ex. 1 (Murray Dep. at 52).

Command had the burden of identifying “hard facts” to support its allegations of a

conflict of interest or bias on the part of MICC that gave HCS unequal access to information or

an unfair competitive advantage in obtaining the contract award. The court has determined that

Command failed to meet this burden. See PAI Corp., 614 F.3d at 1352 (“To demonstrate that

such a determination is arbitrary or capricious, a protester must identify ‘hard facts’; a mere

inference or suspicion of an actual or apparent conflict is not enough.”); see also C.A.C.I., Inc.-

Fed. v. United States, 719 F.2d 1567, 1581 (Fed. Cir. 1983) (holding that to demonstrate that a

contract award is arbitrary or capricious on the basis of a “possibility and appearance of

impropriety,” a protester must identify “hard facts,” not a mere inference based on “suspicion or

innuendo”).

The Administrative Record does not set forth any facts evidencing that Mr. Murray

obtained any proprietary information about Command during his visit to its Portland, Oregon

headquarters in 2009. Nor does the Administrative Record show that Mr. Murray used any

proprietary information, if he received any. Although Command refers to four categories of non-

public information that it asserts Mr. Murray obtained during his visit to Command’s Portland

headquarters, Command did not identify “hard facts” demonstrating that he acquired any such

information. With regard to this visit, Mr. Murray testified that he was not presented with any

proprietary information, nor was he or any of the other Army representatives asked by Command

to sign a non-disclosure agreement. As such, Command has not provided any “hard facts” to

establish an actual or apparent conflict of interest.

In addition, the interactions between Mr. Murray and First Sergeant Lewis with respect to

“recruiting” calls made to a Command employee on June 5, 2012 do not evidence the existence

of bias or a potential conflict of interest, since this event took place after the contract was

awarded and after First Sergeant Lewis’s duties on the SSEB ended. First Sergeant Lewis’s

10

In addition, the CO’s declaration provided that she did not “witness any inappropriate

behavior or overhear any inappropriate conversations between any SSEB member and an

offeror’s representative” at any of the on-site evaluations. Gov’t Mot. To Suppl. AR (CO

Corbett Decl. ¶ 6-7).

19

conduct, however, appears to conflict with his responsibility to MICC in contract administration

and should be further examined. AR Tab 35 at 1868 (Source Selection Participation Agreement

requiring SSEB team members to certify that they will not “discuss evaluation or source

selection matters . . . even after the announcement of the successful contractor” and that they will

“avoid any action, whether or not prohibited, that could result in or create the appearance of my

losing independence or impartiality”); AR Tab 38 at 2162 (SSEB Team Instructions barring

SSEB members from “discussing [information about the evaluation process] or any other type of

information”).11

2. Whether MICC’s Inspection Findings Concerning Command’s And

HCS’s Proposals Were Unreasonable.

a. The Plaintiff’s Argument.

Next, Command argues that MICC failed to apply the same inspection standards to both

Command properties and the HCS property and that the debriefing record evidences “numerous

instances of demonstrably erroneous or unreasonable” inspection findings by MICC. Pl. Mot.

JAR at 36. Specifically, Command contends that MICC’s findings regarding such “well-

respected Phoenix landmarks,” as the Crowne Plaza Phoenix and Renaissance Phoenix

Downtown as “unacceptable,” were “objectively erroneous or unreasonable and therefore fail to

comport with the Solicitation evaluation criteria.” Pl. Mot. JAR at 36-37. In support, Command

provides a chart in which it counters many of MICC’s inspection findings regarding weaknesses

or deficiencies of Command’s proposed hotels. Pl. Mot. JAR at 17-24. Command reasons that

these erroneous or unreasonable findings, coupled with the absence of similar assessments of

weaknesses in HCS’s proposal, demonstrate that MICC failed to apply the same inspection

standards to both bidders’ proposed sites, and overlooked actual and readily apparent defects in

HCS’s proposed hotel. Pl. Mot. JAR at 24 (citing AR Tab 50.1-.4 (5/14/12 Anderson Decl.)).

Therefore, Command requests that the court require that MICC conduct a new inspection,

evaluation, and a new best value determination. Pl. Mot. JAR at 37.

b. The Government’s Response.

With respect to the five Command proposals that were evaluated as “unacceptable,” the

Government responds that each properly was assigned one or more “deficiency” ratings, for

failing to provide information or documents required by the Solicitation. Gov’t Mot. JAR at 27

(citing AR Tab 51). In three proposals, Command failed to provide adequate surveillance system

information, such as the number of cameras and the major points of surveillance, as required by

paragraph 1.2.1 of the Solicitation. Gov’t Mot. JAR at 27-28 (citing AR Tab 3 at 56; AR Tab at

566 (Holiday Inn & Suites Airport North proposal12); AR Tab at 729 (Holiday Inn Phoenix West

11

It is unclear to what extent Mr. Lewis was bound by these Instructions after he was no

longer a member of the SSEB.

12

Command’s proposal involving Holiday Inn & Suites Airport North also was assigned

a deficiency, because it “failed to provide a lodging facility with interior corridor guest room

entry,” as required by paragraph 5.1.2.4 of the Solicitation (AR Tab 3 at 104). Gov’t Mot. JAR

at 30 (citing AR Tab 51 at 2531). Command did not dispute this deficiency. HCS, on the other

20

proposal); AR Tab at 1163 (Courtyard Scottsdale Old Town proposal)). In addition, as

Command admits, the Renaissance Phoenix Downtown proposal did not have a surveillance

system, a fact that the hotel’s management confirmed during the on-site evaluation. Gov’t Mot.

JAR at 29 (citing Pl. Mot. JAR at 22-23; AR Tab 51 at 2537). Command’s proposal did not

propose to install a surveillance system that would comply with the Solicitation. Gov’t Mot.

JAR at 29. Therefore, the SSEB reasonably concluded that these proposals were incomplete and

assigned each a deficiency. On the other hand, HCS’s proposal complied with the Solicitation’s

security requirements, providing the required number of cameras, their locations within the hotel,

and the standard recording time. Gov’t Mot. JAR at 29 (citing AR Tab 23 at 446).

In addition, Command’s Crowne Plaza Phoenix Airport proposal failed to provide the

current state health inspection report for the proposed food preparation/dining facility, as

required by paragraph 1.17(a) of the Solicitation (AR Tab 3 at 56). Gov’t Mot. JAR at 30 (citing

AR Tab 51 at 2540). Instead, Command provided a health inspection report for a similarly

named coffee bar, not the restaurant, and the SSEB assigned a “deficiency” to this proposal. AR

Tab 51 at 2540. Command admitted this error, but nevertheless argued that the SSEB “did not

entertain oral presentations or accept proposal revisions during the on-site evaluation.” Gov’t

Mot. JAR at 30. In contrast, HCS’s proposal submitted current state health and inspection

reports for its proposed food preparation and dining facilities. Gov’t Mot. JAR at 30.

With regard to the weaknesses and significant weaknesses assigned to Command’s

proposals, the Government contends that MICC’s assessments were reasonable and logically-

based. Gov’t Reply at 11. As to “significant weaknesses,” including the SSEB’s finding that

Command’s Holiday Inn Phoenix West proposal did not demonstrate a clear understanding of

the Solicitation’s meals requirement, Command “failed to identify any determining factor

utilized by the Agency’s evaluators that was inconsistent with the stated criteria in the

[S]olicitation.” Gov’t Mot. JAR at 32. Instead, Command “has merely stated a disagreement

with the results of the evaluations. Such disagreement does not meet the burden that the

evaluation was unreasonable.” Gov’t Mot. JAR at 32 (citing Afghan Am. Army Serv.

Corp. v. United States, 90 Fed. Cl. 341, 364 (2009)).

In addition, the “weaknesses” in Command’s proposals were supported by the Consensus

Evaluation and SSEB Report. AR Tab 51. The Declaration of Brian Anderson, on which

Command relies to contest these findings, discusses his personal observations disagreeing with

the SSEB’s findings, such as the uncleanliness of the bathrooms at Crowne Plaza Phoenix

Airport (AR Tab 50.1 at 2513 (5/14/12 Anderson Decl. ¶ 2)), but does not “disprove the

[contrary] observations of the SSEB team[.]” Gov’t Mot. JAR at 32 (citing AR Tab 51 at 2539-

40). Command’s disagreement with the SSEB and MICC’s evaluation of its proposals, however,

does not properly establish that the agency’s evaluation was unreasonable. Gov’t Mot. JAR at

33.

With respect to the SSEB’s assessment of a “weakness,” based on findings that three of

Command’s hotels were located in high traffic areas, the Government argues that the SSEB

hand, proposed a hotel “in which all guest rooms are accessed through an interior corridor.”

Gov’t Mot. JAR at 31 (citing AR Tab 13 at 178).

21

appropriately employed personal knowledge and local understanding. Gov’t Reply at 11-12.

With respect to the SSEB’s assessment of a “weakness,” because food preparers at two of

Command’s hotels did not wear gloves, the Government responds that this finding was

inherently, logically, and reasonably related to the Solicitation’s evaluation criteria, since

sanitation and cleanliness were components of Evaluation Factor 1 - Mission Capability. Gov’t

Reply at 12 (citing AR Tab 3 at 60-61 (Evaluation Rating Definitions/Descriptions)). With

respect to the SSEB’s assessment of a “weakness,” to one of Command’s hotels, because an

emergency exit staircase had low railings, “avail[ing] itself to a safety risk,” the rating was

consistent with the Solicitation. Gov’t Reply at 13 (citing AR Tab 2 at 42).

In addition, even if Command’s proposals were re-evaluated and its ratings improved, “it

has provided no allegations, facts, or law to show it would be next in line for award.” Gov’t

Mot. JAR at 37. Command submitted only one proposal with a lower price than HCS’s

proposal, “and that proposal was deemed ‘Unacceptable’ in its Mission Capability Factor as the

SSEB noted its proposal as having not one, but two deficiencies.” Gov’t Mot. JAR at 37 (citing

AR Tab 51 at 2526-27). On the other hand, HCS received an “Outstanding” Mission Capability

rating with the lowest price of any proposals deemed eligible for award. Gov’t Mot. JAR at 37.

In sum, only two of Command’s proposals were deemed acceptable, but each had numerous

weaknesses and both were more expensive than HCS’s proposal. Gov’t Reply at 10 (citing AR

Tab 39 at 2168-2180). Therefore, Command failed to demonstrate that it has a substantial

chance of award, but for MICC’s alleged evaluation errors.

c. The Plaintiff’s Reply.

Command replies that with respect to several of MICC’s ratings downgrading

Command’s properties, the Government merely contends that MICC’s hypothesizing regarding,

e.g., commute times longer than thirty minutes, or that MICC has “great discretion,” are ample

justifications for MICC’s findings. Pl. Reply at 10 (citing Gov’t Mot. JAR at 34). With respect

to MICC’s finding that the Crowne Plaza Phoenix emergency exit stairwells “provide a risk of

injury as an applicant could fall or jump over the rail and go several flights down,” AR Tab 20 at

208, Command points out that HCS’s property had the same types of stairwells, as evidenced by

the photograph contained within the declaration of Brian Anderson. Pl. Reply at 11. The

Government’s other responses to the challenged deficiencies are improper attempts to rely on

unstated evaluation criteria to downgrade a proposal, which is forbidden as a matter of law. Pl.

Reply at 10-11 (citing NEQ, LLC v. United States, 88 Fed. Cl. 38, 43 (2009)).

Furthermore, contrary to the Government’s argument, governing precedent requires that

Command need only show that there was a “substantial chance it would have received the

contract award, but for that error.” Pl. Reply at 9 (quoting Alfa Laval Separation, Inc. v. United

States, 175 F.3d 1365, 1367 (Fed. Cir. 1999)).

d. The Court’s Resolution.

To prevail in a bid protest, “the complainant must establish by a preponderance of the

evidence that [the] defendant’s actions either lacked a reasonable basis or violated applicable

statutes and regulations.” Afghan Am. Army Serv. Corp, 90 Fed. Cl. at 354 (citing Banknote

22

Corp., 365 F.3d at 1351). Where the court “finds a reasonable basis for the agency’s action, the

court should stay its hand even though it might, as an original proposition, have reached a

different conclusion as to the proper administration and application of the procurement

regulations.” Honeywell, Inc. v. United States, 870 F.2d 644, 648 (Fed. Cir. 1989). There is a

“zone of acceptable results in each particular case,” and the agency's decision must “be the result

of a process that considers the relevant factors and is within the bounds of reasoned decision

making.” Afghan Am. Army Serv. Corp, 90 Fed. Cl. at 355.

The United States Court of Appeals for the Federal Circuit has held that a proposal that

fails to conform to a solicitation’s material terms and conditions is technically unacceptable and

ineligible for contract award. See E.W. Bliss Co. v. United States, 77 F.3d 445, 448 (Fed. Cir.

1996) (“In negotiated procurements, a proposal that fails to conform to the material terms and

conditions of the solicitation should be considered unacceptable and a contract award based on

such an unacceptable proposal violates the procurement statutes and regulations.”) (internal

citations omitted). In this case, the court has determined that the SSEB properly assigned

“deficiency” ratings to five out of Command’s seven proposals, because they failed to comply

with explicit requirements of the Solicitation with respect to security requirements and health

and inspection reports and therefore were incomplete. AR Tab 3 at 55-56; AR Tab 39 (SSEB

Initial Report); AR Tab 51 (Source Selection Decision). The Solicitation clearly defined a

“deficiency” as a “material failure of a proposal to meet a Government requirement or a

combination of significant weaknesses in a proposal that increases the risk of unsuccessful

contract performance to an unacceptable level.” AR Tab 3 at 60. The Solicitation also defined

an “Unacceptable” proposal as one that “does not meet requirements and contains one or more

deficiencies.” AR Tab 3 at 60. Three of Command’s proposals failed to provide information

required by the Solicitation with respect to details of each hotel’s security surveillance system,

and one proposal’s hotel lacked a surveillance system altogether. AR Tab 51 at 2531, 2533,

2536-37. Another of Command’s proposals lacked a current state health inspection report for the

proposed food preparation and dining facility. AR Tab 51 at 2540. Therefore, based on the

SSEB’s determination that these five proposals failed to comply with explicit terms of the

Solicitation, it was reasonable for the SSEB to assign deficiencies to these proposals, and for the

CO to conclude that these proposals were ineligible for contract award. Moreover, nothing in the

record supports finding that the SSEB and the CO’s conclusions in this regard were arbitrary or

capricious.

With respect to Command’s two eligible proposals, the court has determined that the

SSEB’s assessments of weaknesses and significant weaknesses with regard to the two hotel

properties offered were reasonable. Although Command challenges many of the SSEB’s

specific inspection findings (Pl. Mot. JAR at 17-24), the majority of these challenges reflect little

more than a disagreement with the SSEB’s on-site evaluations. Mere disagreements with an

agency’s judgment concerning the adequacy of an offeror’s proposal, as a matter of law, do not

“establish that the agency acted unreasonably.” Afghan Am. Army Serv. Corp, 90 Fed. Cl. at 364

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

With respect to Command’s claims that the SSEB’s inspection standards were

inconsistently applied, the court has determined that Command has failed to meet the burden of

proof required to make such a showing. As the United States Court of Appeals for the Federal

23

Circuit has stated, “contracting officers have a great deal of discretion in making contract award

decisions, particularly when . . . the contract is to be awarded to the bidder or bidders that will

provide the agency with the best value.” Banknote Corp., 365 F.3d at 1355; see also E.W. Bliss

Co., 77 F.3d at 449 (“Procurement officials have substantial discretion to determine which

proposal represents the best value to the government.”) (citations omitted). Many of the

weaknesses assessed to its proposals, such as Command’s failure to clearly specify where

breakfast would be served in one of the hotels, or the existence of a safety risk with respect to

emergency exit stairwells, were not at issue in HCS’s proposal. See, e.g., AR Tab 2 at 42

(Contracting Officer’s Statement, noting that she did “not recall a similar emergency exit

stairwell at any other hotel evaluated, to include the awardee's facility”). Any evidence in the

record concerning similar weaknesses in HCS’s hotel property, including photographs of worn

carpeting or furniture, without more, does not demonstrate that the SSEB was biased or applied

different standards to HCS’s hotel.

Finally, Command has not asserted that HCS should have been charged with a

deficiency, since HCS’s proposal complied with the Solicitation’s requirements in all material

respects. The fact that HCS’s proposal was less expensive than any of Command’s proposals not

assigned a deficiency, and therefore eligible for award, further demonstrates that Command was

not prejudiced by the SSEB’s evaluation of weaknesses and significant weaknesses in its offered

hotels. In sum, HCS’s proposal was eligible for award, less expensive, and was technically equal

to or more highly rated than each of Command’s eligible proposals. Even if HCS’s proposal

suffered from some of the same weaknesses as Command’s, as Command now alleges, or if the

Mission Capability ratings of Command’s two eligible proposals were upgraded, giving

Command an overall rating of “Outstanding,” both of Command’s eligible proposals were more

expensive than HCS’s proposal. As such, Command has not established that, but for these

ratings, it would have had a substantial chance at award. As such, Command was not prejudiced

by the SSEB’s or the CO’s conclusions regarding its proposals and the award of a contract to

HCS.

IV. CONCLUSION.

For the foregoing reasons, the Government’s December 5, 2012 Cross-Motion For

Judgment On The Administrative Record is granted and Command’s November 21, 2012 Motion

For Judgment On The Administrative Record is denied.

IT IS SO ORDERED.

s/ Susan G. Braden

SUSAN G. BRADEN

Judge

24