Advanced American Construction, Inc. v. United States

In the United States Court of Federal Claims

No. 12-694 C

(Filed June 5, 2013)1

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

ADVANCED AMERICAN *

CONSTRUCTION, INC., * Pre-Award Bid Protest;

* Post-Award Bid Protest;

Plaintiff, * Standing; Blue & Gold Fleet;

* Documented Market Research;

v. * 8(a) Business Development

* Program; FAR 10.001;

THE UNITED STATES, * FAR 10.002; FAR 19.805-1;

* Special Standards of

Defendant. * Responsibility.

*

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

Joseph A. Yazbeck, Jr., with whom was D. Brent Carpenter, Portland, OR,

for plaintiff.

David A. Levitt, United States Department of Justice, with whom were

Stuart F. Delery, Principal Deputy Assistant Attorney General, Jeanne E.

Davidson, Director, Claudia Burke, Assistant Director, Washington, DC, for

defendant. Tyler Moore and Thomas J. Warren, United States Army Corps of

Engineers, of counsel.

_______________________________

OPINION AND ORDER

________________________________

1

/ This opinion was issued under seal on May 10, 2013. Pursuant to ¶ 4 of the ordering

language, the parties were invited to identify source selection, proprietary, or other confidential

material subject to deletion on the basis that the material was either protected or privileged.

On May 24, 2013, the parties filed a notice indicating that they had no proposed redactions to the

opinion. Thus, with the exception of this footnote and the publication date, the public and sealed

versions of this opinion are identical.

Bush, Judge.

Advanced American Construction, Inc. (AAC) filed its pre- and post-award

bid protest complaint in this court on October 15, 2012. In its complaint, AAC

challenges the decision of the United States Army Corps of Engineers (the Corps

or agency) to set aside a contract under Solicitation No. W912EF-12-B-0022

(the IFB) for competition among 8(a) small business concerns. AAC also

challenges the award of that contract to TSS-Garco Joint Venture (TSS-Garco).

The subject contract is for the construction of a new barge moorage facility on the

north side of the Snake River at Lower Granite Dam near Pomeroy, Washington.

Defendant has agreed to stay performance of the contract until the court resolves

this protest on the merits.2

This bid protest is now before the court on defendant’s motion to dismiss the

complaint pursuant to Rules 12(b)(1) and 12(b)(6) of the Rules of the United States

Court of Federal Claims (RCFC), and on the parties’ cross-motions for judgment

on the administrative record pursuant to RCFC 52.1. Because plaintiff has

standing in this case and did not waive its pre-award challenges to the IFB, the

court hereby denies defendant’s motion to dismiss the complaint. For the reasons

discussed below, however, the motion for judgment on the administrative record

filed by defendant is granted, and the cross-motion filed by plaintiff is denied.

BACKGROUND

I. Factual Background

On July 30, 2012, the Walla Walla District of the Corps issued the IFB. See

AR Tab 13. Because most of AAC’s challenges to the procurement are based on

the agency’s decision to offer the contract to the Small Business Administration

(SBA) as an 8(a) set-aside, the court’s recitation of the facts in this case are

focused primarily on events that occurred before the IFB was issued by the Corps.

2

/ See AR at 3110 (continuing the suspension of performance that had been triggered by

AAC’s earlier protests to GAO). The IFB states that all in-water work under the contract was to

be completed between December 15, 2012, and February 28, 2013. Id. at 168. In continuing the

suspension of performance, the contracting officer explained that the time lost during the earlier

GAO bid protest “create[d] a high risk of not completing this project within the in-water work

window required by the contract.” Id. at 3110.

2

A. The 8(a) Business Development Program

In 1978, Congress amended the Small Business Act to establish the 8(a)

business development program. Pub. L. No. 95-507, sec. 202, 92 Stat. 1757, 1761

(1978) (codified as amended at 15 U.S.C. § 637 (2006)). Under that program, a

procuring agency may offer a contract to the SBA as a prime contractor, which

then subcontracts the requirements of that contract to small business concerns

owned and controlled by socially and economically disadvantaged individuals,

otherwise known as 8(a) firms.3 See 15 U.S.C. § 637(a)(1)(A)-(B). Generally,

set-aside contracts with a value below the competitive acquisition threshold –

currently, $4 million for construction contracts – are awarded on a sole-source

basis, while contracts with a value above that threshold are competed among 8(a)

firms. See id. § 637(a)(1)(D)(i); 13 C.F.R. § 124.506 (2013); 48 C.F.R. § 19.805-1

(2012).

Under the Small Business Act, the president is required to establish goals for

the percentage of procurement contracts awarded to various types of small business

concerns in each year. 15 U.S.C. § 644(g)(1) (2006). For the 8(a) program, the

Act provides that the government-wide goal must be at least five percent of the

total value of all prime contract and subcontract awards in each fiscal year. Id.

Individual agencies are also required to establish their own contracting goals,

which are to represent “the maximum practicable opportunity for small business

concerns, small business concerns owned and controlled by service-disabled

veterans [SDVOSBs], qualified HUBZone small business concerns, small business

concerns owned and controlled by socially and economically disadvantaged

individuals, and small business concerns owned and controlled by women.” Id.

The SBA and the Department of Defense, of which the Corps is a part, have

entered into a partnership agreement, under which the Corps is authorized to award

3

/ The Small Business Act defines socially disadvantaged individuals as “those who have

been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member

of a group without regard to their individual qualities,” 15 U.S.C. § 637(a)(5), while

economically disadvantaged individuals are those socially disadvantaged individuals

“whose ability to compete in the free enterprise system has been impaired due to diminished

capital and credit opportunities as compared to others in the same business area who are not

socially disadvantaged,” id. § 637(a)(6)(a).

3

contracts to the 8(a) firms directly. See AR at 1081-91. Section 19.803 of the

Federal Acquisition Regulation (FAR) describes the process for selecting

acquisitions for the 8(a) program:

Through their cooperative efforts, the SBA and an

agency match the agency’s requirements with the

capabilities of 8(a) concerns to establish a basis for the

agency to contract with the SBA under the program.

Selection is initiated in one of three ways —

(a) The SBA advises an agency contracting

activity through a search letter of an 8(a)

firm’s capabilities and asks the agency to

identify acquisitions to support the firm’s

business plans.

....

(b) The SBA identifies a specific requirement

for a particular 8(a) firm or firms and asks

the agency contracting activity to offer the

acquisition to the 8(a) Program for the

firm(s).

....

(c) Agencies may also review other proposed

acquisitions for the purpose of identifying

requirements which may be offered to the

SBA. Where agencies independently, or

through the self-marketing efforts of an 8(a)

firm, identify a requirement for the 8(a)

Program, they may offer on behalf of a

specific 8(a) firm, for the 8(a) Program in

general, or for 8(a) competition.

48 C.F.R. § 19.803 (2012). Following a preliminary evaluation of its decision to

offer an acquisition to the SBA for inclusion in the 8(a) program, see 48 C.F.R.

§ 19.804-1 (2012), the agency then formally offers the acquisition to the SBA, and

it is required to include certain information about the project in its letter to the

SBA, see 48 C.F.R. § 19.804-2 (2012). Finally, the SBA must accept – or decline

4

– the acquisition for inclusion in the 8(a) program within a specified period of

time. See 48 C.F.R. § 19.804-3 (2012).

B. The Challenged Procurement

1. The Set-Aside Decision

Based on the record, it appears that the decision to set aside the subject

contract for competition among 8(a) firms began to take shape in April 2012.

Initially, Scott Beckstrand, the small business programs manager for the

Walla Walla District of the Corps, planned to set aside the project for SDVOSBs.

AR at 860. Following a veterans’ business conference in April 2012, however,

Mr. Beckstrand determined that there would not be sufficient competition among

SDVOSBs to ensure price reasonableness. Id. For that reason, Mr. Beckstrand

elected to pursue an 8(a) small business set-aside. Id.

On or about May 14, 2012, the contracting officer for this procurement

e-mailed the statement of work for the proposed project to Mr. Beckstrand, who

was then attending a conference with representatives from the SBA. AR at 940.

During outreach meetings and in his office, Mr. Beckstrand met with no fewer than

eighteen 8(a) firms and other small businesses to discuss their ability to perform

complex marine construction projects. Id. at 860-61.

On May 29, 2012, Mr. Beckstrand e-mailed the Seattle and Boise offices of

the SBA to discuss the feasibility of setting aside the proposed procurement for

competition among 8(a) firms located in Washington and Idaho. See AR Tabs 2-3.

In that e-mail message, Mr. Beckstrand explained that the project would involve

the construction of a new barge mooring facility on the Upper Snake River, with a

total value of approximately $8 million. Id. at 6, 8. Mr. Beckstrand also noted that

“[p]reliminary market research indicates competent and qualified contractors in

this area.” Id.

On the same day, Diana Drake of the SBA’s office in Seattle responded to

Mr. Beckstrand’s message, requesting the North American Industry Classification

System (NAICS) code for the project. AR at 5. Mr. Beckstrand responded that the

assigned code for the construction project was 237990, id., which corresponds to

“Other Heavy and Civil Engineering Construction,” and includes, inter alia,

5

“[c]onstruction projects involving water resources (e.g., dredging and land

drainage), [and] development of marine facilities.” Def.’s Mot. at 6 n.4.

Ms. Drake replied that there were at least ten 8(a) firms based in Washington that

would be able to bond the required amount for the project. AR at 5. On June 6,

2012, Irene Gonzalez of the SBA’s office in Boise informed Mr. Beckstrand that

there were three 8(a) firms in Idaho that would be able to meet the bonding

requirement for the project, based on its NAICS code. Id. at 7.

For any procurement that has a total value exceeding $150,000, the agency’s

acquisition strategy must be approved by the Tactical Acquisition Strategy Board

(TASB). See Def.’s Mot. at 7-8. On June 18, 2012, the contracting officer signed

off on the decision to set the project aside for competition restricted to 8(a) firms.

AR at 9-11. The signed document was then forwarded to the members of the

TASB for review. Id. One member of the TASB suggested that the requirements

be procured through an open and unrestricted competition in order to ensure

competitive bids. Id. at 14-15. However, Ruthann Haider, the chief of contracting

for the agency, dismissed that concern, noting that the Corps had identified seven

8(a) firms that were qualified, in addition to the ten 8(a) firms the SBA’s Seattle

office predicted would bid on the contract.4 Id. at 14. In response to Ms. Haider’s

e-mail, a second member of the TASB surmised that an 8(a) set-aside could

increase the agency’s costs by twenty percent or more, id., and recommended that

the agency’s requirements be procured through an unrestricted competition instead

of an 8(a) set-aside, id. at 13. Mr. Beckstrand then sent an e-mail to the TASB

members on June 21, 2012, which listed the names of the thirteen 8(a) firms

identified by the SBA. Id. at 857-59.

It appears that Mr. Beckstrand’s e-mail failed to completely allay the

TASB’s concerns. Thus, in a subsequent e-mail sent on July 9, 2012, Mr.

Beckstrand asked Kevin Michael, the procurement center representative for Area

VI at the SBA, whether he would be willing to agree to an unrestricted competition

for the barge mooring project. AR at 118-19. Mr. Michael responded as follows:

4

/ It is not clear whether any of the seven qualified 8(a) firms identified by the Corps

through its market research were included within the group of ten 8(a) firms identified by the

SBA’s Seattle office. See AR at 14 (“We did Market Research and found at least 7 8(a)s

qualified to do this work – in addition the SBA 8(a) coordinator has 10 8(a)s that have said they

will bid this IFB.”).

6

You are joking right? $8M contract with sufficient 8(a)

contractors, first I have heard about this, I get it sent to

me 11:11 a.m. today and you guys want a decision today.

I am supposed to sign off on the project as unrestricted

because the PM is “nervous”. This would be begging for

a protest. Even assuming I might consider this, [t]he 8(a)

people need to sign off on this action. Diana Drake is out

of the office, and I am waiting to hear from Ms.

Gonzalez.

Id. 118.

It is not clear from the record whether there was any further communication

between Mr. Beckstrand and Mr. Michael regarding an unrestricted competition for

the barge moorage project. The next day, however, the Corps sent letters to both

the Seattle and Boise offices of the SBA, offering the project as a set-aside for

competition restricted to 8(a) firms. See AR Tabs 7-8. The Corps attached an

information sheet for the construction project to each of the offer letters, which

described the scope, nature, value, and duration of the work to be performed. See

id. at 125-27. The offer letter listed the names of the thirteen 8(a) firms that had

been identified by the Seattle and Boise offices of the SBA, and emphasized that a

“[f]loating plant, drill rig, and diving are required for performance of the work.”

Id. at 125.

In a letter dated July 18, 2012, the Seattle office of the SBA accepted the

barge mooring project into the 8(a) business development program.5 AR Tab 11.

The acceptance letter authorized the Corps to issue a solicitation for the project,

and it specified that the competition was to be limited to 8(a) firms located within

Washington and Idaho. Id. at 135. The letter also stated that the SBA’s “analysis

indicates that acceptance of this requirement meets the criteria for competition in

the 8(a) [Business Development] Program.” Id. Finally, the letter indicated that

the “SBA will confirm the eligibility of the apparent successful offeror to receive

the contract award and will notify your office, in writing, of its determination.” Id.

at 136.

5

/ The Seattle office accepted the offer from the Corps because the construction project

was to be completed in Washington. See 13 C.F.R. § 124.502(b)(2) (2012).

7

2. The IFB

The Corps published a synopsis of the procurement on the Federal Business

Opportunities online publication (FedBizOpps) on July 18, 2012. See AR Tab 12.

The synopsis on FedBizOpps described the construction project as follows:

This project involves construction of a new moorage

facility and mooring dolphin at Lower Granite Dam in

Whitman County, Washington.

The new moorage facility will be a reinforced concrete

wharf approximately 300 feet in length and 40 feet in

width. The wharf will be fabricated using a combination

of cast-in-place and precast concrete. The wharf

structure will consist of precast cap beams and precast

slabs set on top of 4.5-foot diameter reinforced concrete

drilled shafts, approximately 40-feet in length. A cast-in-

place topping slab and in-fill will tie the drilled shafts,

cap beams, and precast slabs together. At least one

floating plant and drill rig will be required for installation

of the drilled shafts.

The mooring dolphin will consist of a 15-foot diameter

concrete shaft, approximately 40 feet in length, drilled

and anchored approximately 20 feet into bedrock. The

mooring dolphin will have a permanent steel casing,

mooring cleats, fender system, and a cast-in-place top

slab.

Other work includes excavation, trenching for utilities,

asphalt repair, installation of fender systems, mooring

cleats, mooring bits, potable water lines, compressed air

lines, electrical receptacles, area lighting, traffic bollards,

and fabrication of a movable access stairway.

AR at 138. The synopsis also stated that the contract would be awarded as a

competitive 8(a) set-aside with an NAICS code of 237990. Id. at 137. Finally, the

8

synopsis noted that the Corps intended to issue the IFB on or about July 30, 2012,

and that bids would be due on August 29, 2012. Id. at 139. On July 19, 2012, the

synopsis was amended to state that only 8(a) firms located within the geographic

areas of Washington or Idaho, or 8(a) firms with a bona fide place of business in

that area and assigned the appropriate NAICS code, would be eligible for award.6

Id. at 142.

On July 30, 2012, the Corps issued the IFB, which contemplated the award

of a firm fixed-price (FFP) contract. See AR Tab 13. The IFB specified that only

8(a) firms located in Washington and Idaho were eligible for award, and instructed

offerors to submit their bids no later than 2:00 p.m. on August 30, 2012. Id. at 145.

The IFB further stated that sealed bids would be publicly opened at that time. Id.

In an amendment to the IFB, the opening date for bids, and the deadline for the

submission of bids, were extended to 3:00 p.m. on August 30, 2012.7 Id. at 835.

Finally, the IFB states that

[t]his contract is issued as a direct award between the

contracting office and the 8(a) Contractor pursuant to

the Partnership Agreement between the [SBA] and the

Department of Defense. Accordingly, the SBA, even if

not identified in Section A of this contract, is the prime

contractor and retains responsibility for 8(a) certification,

for 8(a) eligibility determinations and related issues, and

for providing counseling and assistance to the 8(a)

Contractor under the 8(a) Program.

AR at 174.

6

/ The original synopsis also stated that the procurement would be set aside for eligible

8(a) firms in Washington and Idaho. AR at 138.

7

/ There were four amendments to the IFB, see AR Tabs 16-19, but, with the exception

of the extension of the deadline for bids, none of those amendments is relevant in this case.

9

3. Contract Award to TSS-Garco

A total of six firms submitted bids in response to the IFB. See AR Tab 14.

Five of the offerors were certified 8(a) firms, and one – plaintiff AAC – was not.

TSS-Garco, a joint venture formed in 2012 for the sole purpose of submitting a bid

on the barge moorage project, submitted the lowest bid of $6,969,000. Id. at 686.

Plaintiff submitted the second-lowest bid, in the total amount of $7,345,000. Id.

The government estimate for the project was $9,122,599, id. at 890-92, and the

highest bid received was $9,470,000, id. at 686.

On September 14, 2012, the Corps conducted a pre-award survey for the

contract and determined that TSS-Garco was a responsible bidder and eligible for

award. See AR Tab 27; see also id. at 1156 (confirming that TSS-Garco was an

approved joint venture within the 8(a) program). On September 19, 2012, the

Corps notified TSS-Garco that it was the successful bidder on the procurement.

See id. Tab 30. The contract was executed the same day, see id. at 1162, and

plaintiff was notified of the contract award in a letter dated September 19, 2012,

see id. at 1707.

II. Procedural History

A. Agency-Level Protests

On August 7, 2012, after the IFB had been issued but before the deadline for

the submission of bids, plaintiff filed an agency-level protest with the Corps. See

AR at 961-91. Plaintiff filed supplemental protests on August 20, 2012, see id. at

993-96, and on August 24, 2012, see id. at 998-1012. In its agency-level protests,

plaintiff argued that the IFB required that the 8(a) firm selected for contract award,

rather than its subcontractors or joint venturer, be “regularly engaged” in the

specialized work of marine construction, and that no 8(a) firm could meet that

requirement. Plaintiff also asserted that, under FAR 19.805-1, the Corps was

required to have a reasonable expectation, before offering the project to the SBA,

that at least two eligible and responsible 8(a) firms would submit bids on the

project. Finally, plaintiff argued that the agency failed to conduct the necessary

market research required by FAR 10.001. On September 19, 2012, the same day

that the Corps awarded the contract to TSS-Garco, the Northwest Division Office

of the Corps denied the protests. See AR Tab 33.

10

B. GAO Protests

Following the award of the contract to TSS-Garco, plaintiff filed a protest

with the Government Accountability Office (GAO) on September 21, 2012, see

AR Tab 34, and it filed a supplemental protest with GAO on September 24, 2012,

see AR Tab 35. In its protests before GAO, plaintiff raised the same arguments it

presented to the agency, which are essentially the same arguments now before this

court. GAO summarily dismissed the protest as untimely on October 11, 2012.

See AR Tab 42.

C. Proceedings in this Court

Plaintiff filed its bid protest complaint in this court on October 15, 2012.

With its complaint, plaintiff also filed a motion for a preliminary injunction, as

well as a memorandum in support of that motion. TSS-Garco has not moved to

intervene in this protest. Because defendant has agreed to stay performance of the

subject contract until the court resolves this protest on the merits, the court denied

AAC’s motion for a preliminary injunction as moot.

In accordance with the scheduling order in this case, defendant filed the

administrative record (AR) on November 6, 2012. Defendant then filed a motion

to dismiss the complaint and a motion for judgment on the administrative record on

December 4, 2012. Plaintiff responded to the government’s motions and filed its

own cross-motion for judgment on the administrative record on January 3, 2013.

Defendant filed its response and reply on January 25, 2013, and plaintiff filed its

own reply on February 7, 2013. The court heard oral argument from the parties on

February 19, 2013.

DISCUSSION

I. Bid Protest Jurisdiction

This court “shall have jurisdiction to render judgment on an action by an

interested party objecting to a solicitation by a Federal agency for bids or proposals

for a proposed contract or to a proposed award or the award of a contract or any

alleged violation of statute or regulation in connection with a procurement or a

proposed procurement.” 28 U.S.C. § 1491(b)(1) (2006). The jurisdictional grant is

11

“without regard to whether suit is instituted before or after the contract is

awarded.” Id. As a threshold jurisdictional matter, however, the plaintiff in a bid

protest must show that it has standing to bring the suit. Info. Tech. & Applications

Corp. v. United States, 316 F.3d 1312, 1319 (Fed. Cir. 2003) (ITAC); Myers

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

2002).

In order to establish this court’s jurisdiction in a bid protest action, the

plaintiff must first demonstrate that it has been prejudiced by the alleged errors of

procurement officials. ITAC, 316 F.3d at 1319 (citing Am. Fed’n of Gov’t

Employees v. United States, 258 F.3d 1294, 1302 (Fed. Cir. 2001) (AFGE)). In the

absence of such prejudice, this court is without subject matter jurisdiction over the

protest, regardless of whether the government’s conduct was arbitrary, capricious,

or contrary to law. The plaintiff in a bid protest suit must establish that it is an

interested party with a direct economic interest in the procurement. Id. Bid protest

standing is limited to those plaintiffs who are “‘actual or prospective bidders or

offerors whose direct economic interest would be affected by the award of the

contract or by the failure to award the contract.’” Weeks Marine, Inc. v. United

States, 575 F.3d 1352, 1359 (Fed. Cir. 2009) (quoting AFGE, 258 F.3d at 1302).

In the context of a pre-award bid protest, a plaintiff must establish that it has

suffered or will suffer a “non-trivial competitive injury which can be addressed by

judicial relief.” Id. at 1362. In a post-award bid protest, a plaintiff must prove that

it would have a substantial chance of being awarded the contract if the alleged

procurement errors were corrected. Rex Serv. Corp. v. United States, 448 F.3d

1305, 1307-08 (Fed. Cir. 2006).

II. Standards of Review

A. Motion to Dismiss under RCFC 12(b)(1)

In rendering a decision on a motion to dismiss for lack of subject matter

jurisdiction pursuant to RCFC 12(b)(1), this court must presume all undisputed

factual allegations to be true and must construe all reasonable inferences in favor

of the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), abrogated on other

grounds by Harlow v. Fitzgerald, 457 U.S. 800, 814-15 (1982); Reynolds v. Army

& Air Force Exch. Serv., 846 F.2d 746, 747 (Fed. Cir. 1988). The relevant issue in

a motion to dismiss under RCFC 12(b)(1) “‘is not whether a plaintiff will

12

ultimately prevail but whether the claimant is entitled to offer evidence to support

the claims.’” Patton v. United States, 64 Fed. Cl. 768, 773 (2005) (quoting

Scheuer, 416 U.S. at 236). The plaintiff bears the burden of establishing subject

matter jurisdiction, Alder Terrace, Inc. v. United States, 161 F.3d 1372, 1377 (Fed.

Cir. 1998) (citing McNutt v. Gen. Motors Acceptance Corp. of Ind., 298 U.S. 178,

189 (1936)), and must do so by a preponderance of the evidence, Reynolds, 846

F.2d at 748 (citations omitted). The court may look at evidence outside of the

pleadings in order to determine its jurisdiction over a case. Martinez v. United

States, 48 Fed. Cl. 851, 857 (2001) (citing RHI Holdings, Inc. v. United States, 142

F.3d 1459, 1461-62 (Fed. Cir. 1998); Rocovich v. United States, 933 F.2d 991, 993

(Fed. Cir. 1991)), aff’d in relevant part, 281 F.3d 1376 (Fed. Cir. 2002). “Indeed,

the court may, and often must, find facts on its own.” Id. If jurisdiction is found to

be lacking, this court must dismiss the action. RCFC 12(h)(3).

B. Motion to Dismiss under RCFC 12(b)(6)

It is well-settled that a complaint should be dismissed under RCFC 12(b)(6)

“when the facts asserted by the claimant do not entitle him to a legal remedy.”

Lindsay v. United States, 295 F.3d 1252, 1257 (Fed. Cir. 2002). When considering

a motion to dismiss under this rule, “the allegations of the complaint should be

construed favorably to the pleader.” Scheuer, 416 U.S. at 236. “[W]hen the

allegations in a complaint, however true, could not raise a claim of entitlement to

relief,” dismissal is warranted under RCFC 12(b)(6). Bell Atlantic Corp. v.

Twombly, 550 U.S. 544, 558 (2007). To survive a motion to dismiss for failure to

state a claim, a complaint must contain “more than labels and conclusions, and a

formulaic recitation of the elements of a cause of action will not do.” Id. at 555.

While a complaint is not required to contain detailed factual allegations, it must

provide “enough facts to state a claim for relief that is plausible on its face.” Id. at

570. In order to meet the requirement of facial plausibility, the plaintiff must plead

“factual content that allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662,

678 (2009).

C. Motion for Judgment on the Administrative Record

RCFC 52.1(c) provides for judgment on the administrative record. To

review a motion, or cross-motions, under RCFC 52.1(c), the court asks whether,

13

given all the disputed and undisputed facts, a party has met its burden of proof

based on the evidence in the record. Bannum, Inc. v. United States, 404 F.3d 1346,

1356-57 (Fed. Cir. 2005). The court must make factual findings where necessary.

Id. The resolution of RCFC 52.1(c) cross-motions is akin to an expedited trial on

the paper record. Id.

D. Bid Protest Review

As the United States Court of Appeals for the Federal Circuit has stated,

“the proper standard to be applied in bid protest cases is provided by 5 U.S.C.

§ 706(2)(A) [(2006)]: 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.’” Banknote Corp. of Am. v. United States, 365 F.3d 1345, 1350-51 (Fed. Cir.

2004) (citing Advanced Data Concepts, Inc. v. United States, 216 F.3d 1054, 1057-

58 (Fed. Cir. 2000)). Under this standard, a procurement decision may be set aside

if it lacked a rational basis or if the agency’s decision-making involved a clear and

prejudicial violation of statute, regulation or procedure. Emery Worldwide

Airlines, Inc. v. United States, 264 F.3d 1071, 1085-86 (Fed. Cir. 2001) (citing

Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324,

1332-33 (Fed. Cir. 2001) (Impresa)).

The higher the degree of discretion allotted the contracting officer, the more

difficult it is for a protestor to prove that the procurement decision was arbitrary or

capricious. Burroughs Corp. v. United States, 617 F.2d 590, 597 (Ct. Cl. 1980)

(citing Keco Indus., Inc. v. United States, 492 F.2d 1200, 1203-04 (Ct. Cl. 1974)).

In addition, the court may not substitute its judgment for the agency’s expertise in

procuring services to meet the needs of the government. See, e.g., Ala. Aircraft

Indus., Inc.-Birmingham v. United States, 586 F.3d 1372, 1376 (Fed. Cir. 2009)

(reversing this court when it “substitut[ed] . . . the court’s judgment for the

agency’s with regard to how the contract work should be designed” (citing Motor

Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983))).

Instead, the court must “determine whether the agency’s . . . analysis [of proposals]

was consistent with the evaluation criteria set forth in the [solicitation].” Id. at

1375-76 (citation omitted). The court will “sustain an agency action evincing

rational reasoning and consideration of relevant factors.” Advanced Data

Concepts, 216 F.3d at 1058 (citation omitted).

14

“‘If 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) (quoting M. Steinthal & Co. v. Seamans, 455 F.2d 1289, 1301

(D.C. Cir. 1971)). If, on the other hand, “the trial court determines [that] the

government acted without rational basis or contrary to law when evaluating the

bids and awarding the contract[,] . . . it proceeds to determine, as a factual matter, if

the bid protester was prejudiced by that conduct.” Bannum, 404 F.3d at 1351.

Plaintiff again bears the burden of proof, and must “show that there was a

‘substantial chance’ [plaintiff] would have received the contract award but for the

[government’s] errors in the [procurement] process.” Id. at 1358 (citations

omitted). If a protestor can show that there was a substantial chance that it would

have won the contract award but for the procurement errors of the agency,

prejudice has been established. Id. at 1353 (citations omitted). “Prejudice is a

question of fact.” Id. (citing Advanced Data Concepts, 216 F.3d at 1057).

III. Analysis of the Parties’ Motions

Defendant has filed a motion to dismiss the complaint in this case under

RCFC 12(b)(1) on the basis that plaintiff does not have standing to challenge the

agency’s set-aside decision or the ultimate award of the contract to TSS-Garco.

Defendant also moves to dismiss the complaint under RCFC 12(b)(6), asserting

that plaintiff waived its challenges to the agency’s set-aside decision by waiting

until after the contract was awarded to TSS-Garco before protesting the IFB.

Plaintiff has moved for judgment on the administrative record under RCFC 52.1(c)

based on the government’s alleged violation of various FAR provisions in setting

aside the contract for competition among 8(a) firms and in awarding the contract to

an 8(a) firm that did not, according to plaintiff, satisfy responsibility criteria set

forth in the IFB. In addition to its motion to dismiss the complaint, defendant has

filed a cross-motion for judgment on the administrative record on the same issues

raised by plaintiff.

Most of the challenges raised by plaintiff are pre-award in nature, in that

they focus on the early decision to set aside the project for competition restricted to

8(a) firms alone. In addition to those pre-award challenges, however, plaintiff

further asserts that the contract awardee, TSS-Garco, was not a responsible bidder.

15

In contrast to the challenges to the agency’s decision to offer the procurement to

the SBA, the objections to TSS-Garco’s responsibility are post-award in nature.

A. Motion to Dismiss under RCFC 12(b)(1)

In its motion to dismiss under RCFC 12(b)(1), defendant argues that plaintiff

cannot establish competitive prejudice, and therefore does not have standing in this

case, for three different reasons. First, defendant asserts that even if the Corps had

not offered the contract to the SBA for inclusion in the 8(a) program, it would have

been required to set the contract aside for small businesses under FAR 19.502-2.

Second, defendant argues that a large business, such as AAC, does not have

standing to challenge an agency’s decision to compete a contract among 8(a) firms

under FAR 19.805-1 because the alternative to a restricted competition would be

the award of the contract to an 8(a) firm on a sole-source basis, not an open and

unrestricted competition. Finally, defendant contends that plaintiff does not have

standing to challenge the agency’s conclusion that TSS-Garco was a responsible

bidder because plaintiff would not have a substantial chance of award even if the

court were to set aside the agency’s responsibility determination.

First, defendant points to FAR 19.502-2, which states in relevant part that

[t]he contracting officer shall set aside any acquisition

over $150,000 for small business participation when

there is a reasonable expectation that –

(1) offers will be obtained from at least two

responsible small business concerns offering

the products of different small business

concerns . . . ; and

(2) award will be made at fair market prices.

48 C.F.R. § 19.502-2(b) (2012). Defendant argues that because the government

had a reasonable expectation that two or more small businesses would submit bids

on the contract if the agency were to remove the procurement from the 8(a)

program, it had no discretion to allow large businesses, such as plaintiff, to

16

compete for the contract in an unrestricted competition.8 Defendant notes that the

SBA identified thirteen qualified 8(a) firms in connection with this procurement,

and that the agency determined through its own independent research that at least

seven such firms were capable of performing the work contemplated under the

contract. Further, defendant notes that two small businesses submitted bids on the

McNary Juvenile Fish Bypass Outfall Pipe Relocation Project (McNary Project),

see AR at 1-4, 942, 974-87, which plaintiff has described as a “project[] [that]

involved similar work to that required by the IFB – that is, the ‘specialized work’

of marine construction,” id. at 2406.9 Because its market research has identified at

least two responsible small business concerns, defendant argues that the removal of

the protested procurement from the 8(a) program would result in a competition

among small businesses – a competition for which plaintiff would be ineligible.

Defendant further argues that plaintiff does not have standing to challenge

the agency’s decision to award the contract based on a competition restricted to

8(a) firms under FAR 19.805-1, which provides that:

(a) Except as provided in paragraph (b) of this

subsection, an acquisition offered to the SBA

under the 8(a) Program shall be awarded on the

basis of competition limited to eligible 8(a) firms

if –

(1) There is a reasonable expectation that at

least two eligible and responsible 8(a) firms

will submit offers and that award can be

made at a fair market price; and

(2) The anticipated total value of the contract,

including options, will exceed $6.5 million

8

/ There is a distinction between 8(a) small business concerns and small businesses.

While all 8(a) firms are small businesses, not all small businesses are certified 8(a) firms.

9

/ Defendant also notes that two 8(a) firms attended site visits for the Lower Monumental

Juvenile Fish Bypass Outfall Pipe Relocation Project (Lower Monumental Project), which AAC

identified as another complex marine construction project similar to the barge mooring project,

while one 8(a) firm attended a site visit for the McNary Project. See Def.’s Reply at 11

(citing AR at 942, 977, 986). In addition, three non-8(a) small businesses attended site visits for

one or both of those projects. See id. (citing AR at 942, 977, 982-84).

17

for acquisitions assigned manufacturing

[NAICS] codes and $4 million for all other

acquisitions.

48 C.F.R. § 19.805-1(a). Defendant explains that FAR 19.805-1 does not dictate

when a contract may be offered to the SBA for inclusion in the 8(a) program, but

instead addresses what happens after a contract has been offered and accepted into

that program. When the government does not have a reasonable expectation that

two or more eligible and responsible 8(a) firms will submit bids on the contract, it

is still permitted to award the contract to an 8(a) firm on a sole-source basis.

Because plaintiff is not an 8(a) firm, defendant argues, plaintiff lacks standing to

challenge the agency’s action here – whether that action was to compete the

procurement among eligible and responsible 8(a) firms or to sole-source the

contract to an eligible and responsible 8(a) firm.

Finally, defendant argues that plaintiff does not have standing to challenge

the government’s responsibility determination for TSS-Garco because plaintiff is

ineligible for award. Because this aspect of AAC’s protest is post-award in nature,

plaintiff must demonstrate that it would have a substantial chance of being awarded

the contract in the absence of the alleged procurement errors. See Rex Service,

448 F.3d at 1307-08. Defendant contends that even if the court were to hold that

TSS-Garco does not meet the responsibility standards set forth in the IFB, plaintiff

would still not have a substantial chance of contract award because it is ineligible

for award of a contract set aside for 8(a) firms.

Defendant is correct that no single procurement error alleged by plaintiff has

resulted in competitive harm to plaintiff, but that is not the appropriate inquiry in

determining whether a protestor has standing for jurisdictional purposes. Rather,

“a plaintiff must show that it would have had a substantial chance of being

awarded the contract but for the combined impact of all agency decisions alleged

to be unlawful.” Linc Gov’t Servs., LLC v. United States, 96 Fed. Cl. 672, 696

(2010) (emphasis added and citations omitted). To the extent that AAC’s inability

to compete for the contract is the result of the alleged procurement errors, that

inability is a non-trivial competitive injury. See Weeks Marine, 575 F.3d at 1362;

Distributed Solutions, Inc. v. United States, 539 F.3d 1340, 1345 (Fed. Cir. 2008)

(holding that the protestors possessed a direct economic interest in the procurement

because they were deprived of the opportunity to compete for its requirements).

18

Further, if AAC were to succeed on all of the grounds set forth in its

complaint, including plaintiff’s contention that no 8(a) firms or other small

businesses were capable of meeting the IFB’s responsibility requirements, then

plaintiff would be free to compete for the contract in an open and unrestricted

competition. See Assessment & Training Solutions Consulting Corp. v. United

States, 92 Fed. Cl. 722, 728 (2010) (ATSCC) (holding that a non-8(a) small

business had standing to challenge the government’s decision to set aside a

contract for competition among 8(a) firms alone because it would be able to

compete for the contract in any subsequent open or small-business competition).10

Here, if the agency were required to hold an unrestricted competition for this

procurement, plaintiff would in fact have a substantial chance of being awarded the

contract. See Rex Service, 448 F.3d at 1307-08. AAC has significant experience in

marine construction and has been awarded contracts for such work in the past. See

AR at 970-71 (noting that AAC was awarded and has performed at least two

specialized marine construction projects for the Corps in the past). The court

concludes that plaintiff has standing in this case.

B. Motion to Dismiss under RCFC 12(b)(6)

Defendant also argues that any challenges to the set-aside decision must be

dismissed under RCFC 12(b)(6) because plaintiff failed to protest the IFB in this

court until after the contract was awarded to TSS-Garco.11 According to defendant,

pursuant to Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308, 1315

(Fed. Cir. 2007), plaintiff has waived any such arguments. In response, plaintiff

argues that it did not waive any of its claims because it filed a timely agency-level

protest and diligently pursued those claims thereafter. The court agrees with

plaintiff.

10

/ Defendant notes that this court held that the protestor in ATSCC could not establish

competitive harm in its assertion that the government violated FAR 19.805-1, see ATSCC,

92 Fed. Cl. at 732, but that determination was contained in the court’s analysis of prejudice on

the merits, not in its preliminary analysis of jurisdictional standing. See Linc, 96 Fed. Cl. at 694-

97 (discussing the two distinct analyses of prejudice required in bid protest cases).

11

/ Defendant does not expressly state that its waiver arguments are included in its

motion to dismiss under RCFC 12(b)(6), but the court notes that such arguments are not

jurisdictional in nature. See Linc, 96 Fed. Cl. at 697-98.

19

In Blue & Gold Fleet, the Federal Circuit held that “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 afterwards in a § 1491(b) action in the Court of Federal

Claims.” Id. In that case, the court explained the reason for the waiver rule:

In the absence of a waiver rule, a contractor with

knowledge of a solicitation defect could choose to

stay silent when submitting its first proposal. If its

first proposal loses to another bidder, the contractor

could then come forward with the defect to restart the

bidding process, perhaps with increased knowledge

of its competitors.

Id. at 1314. Thus, the rule in Blue & Gold Fleet “prevents contractors from taking

advantage of the government and other bidders, and avoids costly after-the-fact

litigation.” Id.

The Federal Circuit did not hold, however, that a protestor must always file

suit in this court before the closing date for the receipt of bids to avoid waiving its

claims. In fact, this court has rejected precisely that interpretation of the waiver

rule, explaining that the rule set forth in Blue & Gold Fleet “does not require a

protester raising a solicitation impropriety to file suit before the closing date for the

receipt of proposals, provided that timely challenges have first been made at the

agency or before the GAO.” DGR Assocs., Inc. v. United States, 94 Fed. Cl. 189,

194 (2010). The court went on to specifically state that

[t]he correct interpretation of Blue & Gold Fleet is that,

if a party has challenged a solicitation impropriety

before the close of the bidding process, the party is not

precluded from later filing its protest at the Court of

Federal Claims. A party must do something before the

closing date to preserve its rights, and must thereafter

pursue its position in a timely manner.

20

Id. at 203. Thus, as a general rule, a party may preserve its rights by filing a

protest with the agency or GAO, instead of this court, before the closing date for

bidding.

In Blue & Gold Fleet, the protestor challenged an alleged infirmity in the

procurement before GAO, but it waited to do so until the procuring agency had

already selected a bidder for contract award, even though the protestor was aware

of the basis of its protest prior to bid closing. That is not the situation in this case.

Here, plaintiff filed a protest with the agency on August 7, 2012, and it filed

supplemental protests on August 20, 2012, and on August 24, 2012. See AR at

961-1012. The initial protest was filed just one week after the issuance of the IFB,

and more than three weeks before bids were due. The supplemental protests were

also filed before the closing date for the receipt of bids. On August 28, 2012, the

agency informed plaintiff that it intended to proceed with the opening of bids on

August 30, 2012, but that it would not award the contract until after it had resolved

AAC’s protest.12 See AR at 3097-98, 3103-05; see also id. at 937 (stating that

while “the District will not award this contract until adjudication of the agency

protest, it is proceeding with bid opening”).

The agency denied AAC’s protest on September 19, 2012, see AR Tab 33,

and awarded the contract to TSS-Garco on the same day, see id. Tab 30. Plaintiff

then filed a protest with GAO just two days later, on September 21, 2012, see id.

Tab 34, and then filed a supplemental protest on September 24, 2012, see id. Tab

35. Plaintiff diligently prosecuted its protest before GAO until the protest was

ultimately dismissed as untimely on October 11, 2012. See id. Tab 42. Finally, on

October 15, 2012, only four days after the dismissal of its protest by GAO, plaintiff

filed its bid protest complaint in this court, along with a motion for a preliminary

injunction.

12

/ There is some dispute as to the precise nature of the communications between the

parties. Defendant asserts that it informed plaintiff that it was required to resolve the protest

before contract award due to the regulatory stay requirement set forth in 48 C.F.R. § 33.103(f)

(2012). See AR at 3103-04. Plaintiff, in contrast, claims that the agency implied that it was

delaying the award of the contract because the agency was still considering whether to take

corrective action in response to AAC’s protest. See id. at 3098. These factual disputes do not,

however, materially impact the issue addressed here.

21

In this case, there is no question that plaintiff “did something” before the

closing date for the receipt of bids by filing a timely agency-level protest. Further,

it is equally clear that plaintiff diligently pursued its position in a timely manner

thereafter. In the months since its first protest to the agency, plaintiff has been

continuously contesting the agency’s set-aside decision in one forum or another.

Plaintiff did not submit a bid to the government, “remain silent,” and then protest

the IFB for the first time when its offer was not accepted. Plaintiff has not waived

any of its pre-award challenges under Blue & Gold Fleet.

Defendant argues that plaintiff did not pursue its claims in a timely manner

following its initial protest to the agency because its appeal to GAO was untimely.

That argument fails for a number of reasons. First, there is no requirement that a

protestor pursue its claims before GAO prior to filing a bid protest in this court.

See 31 U.S.C. § 3556 (2006) (stating that GAO’s authority to review bid protests

under the Competition in Contracting Act does not in any way “affect the right of

any interested party to file a protest with the contracting agency or to file an action

in the United States Claims Court”); 4 C.F.R. § 21.11(b) (2012) (requiring GAO to

dismiss any protest in that forum when the matter is the subject of litigation in this

court). Thus, despite defendant’s assertion to the contrary, there is simply no

requirement that a protestor “fully exhaust administrative remedies to avoid

waiving its solicitation-based claim in this Court after the closing date for the

receipt of bids.” Def.’s Mot. at 16. The fact that GAO dismissed AAC’s protest as

untimely is irrelevant to this court’s analysis of AAC’s claims in this suit, and this

court will not review GAO’s decision in that regard. See Advance Constr. Servs.,

Inc. v. United States, 51 Fed. Cl. 362, 365 (2002) (noting the “well-settled

principle that ‘it is the agency’s decision, not the decision of GAO, that is the

subject of judicial review’ when a bid protestor protests an award previously

reviewed by GAO”) (citations omitted).

Further, GAO dismissed AAC’s protest as untimely under a regulation that

does not apply to this court. See AR at 3113 (citing 4 C.F.R. § 21.2(a)(3) (2012)).

In contrast to GAO, this court is not bound by any regulatory time limits for the

filing of bid protests. See DGR, 94 Fed. Cl. at 201 (“Unlike agency-level or GAO

protests, there are no regulatory time limits for filing at the Court.”). Defendant

cites the Federal Circuit’s decision in Comint Systems Corp. v. United States,

700 F.3d 1377 (Fed. Cir. 2012), for the proposition that a protestor may not bring

suit in this court if the protest would not be permitted under GAO regulations. See

22

Def.’s Notice of Supplemental Authority at 2 (citing Comint, 700 F.3d at 1383

(“It would be incongruous to bar later GAO protests but to permit a later court

challenge.”)). However, in Comint, as in Blue & Gold Fleet, the protestor did not

take any protest action – in any forum – until after the closing date for bids.

Indeed, the protestor in Comint did not file an agency-level protest until after the

contracts were awarded.

Comint, moreover, did not establish a more rigorous approach to the waiver

rule set forth in Blue & Gold Fleet. To the contrary, the court held that when an

alleged error in the procurement is not apparent until after the closing date for

bidding, the protestor does not waive its arguments as long as it raises them before

the contract is awarded:

To be sure, where bringing the challenge prior to the

award is not practicable, it may be brought thereafter.

But, assuming that there is adequate time in which to do

so, a disappointed bidder must bring a challenge to a

solicitation containing a patent error or ambiguity prior to

the award of the contract.

Comint, 700 F.3d at 1382. The Federal Circuit’s decision in Comint does not

require a protestor to file suit in this court before the closing date for the receipt of

bids, nor does it adopt GAO’s timeliness regulations for this court.13

13

/ Defendant cites this court’s decision in Esterhill Boat Service Corp. v. United States,

91 Fed. Cl. 483 (2010), for the proposition that a pre-award, agency-level protest does not

preserve a protestor’s rights under Blue & Gold Fleet when the agency subsequently takes action

that is adverse to the protestor’s interests, such as accepting bids in accordance with the

challenged solicitation, and the protestor does not immediately pursue its claims before GAO or

this court. Plaintiff argues that Esterhill is distinguishable because the initial “protest” in that

case was not a formal agency-level protest in accordance with FAR 33.103, but was instead an

informal letter to the contracting officer. Defendant disputes that characterization of the initial

protest. To the extent that the initial protest in Esterhill was an informal one, that case is

distinguishable from this case. See Contract Servs., Inc. v. United States, 104 Fed. Cl. 261, 277

(2012) (noting that “even if [the protestor] had discussed the issue with [the contract specialist],

an informal question to the Solicitation’s contract specialist does not qualify as the type of

objection or challenge contemplated by Blue & Gold Fleet”). However, to the extent that the

initial protest in Esterhill was a formal one, that decision would then appear to be in some

continue...

23

In sum, plaintiff did not waive any of its claims in this case. AAC filed a

timely protest with the agency before the closing date for bids, and it has

continuously pursued its claims since that time, first at GAO and now before this

court. Defendant’s motion to dismiss the complaint on that basis must be denied.

C. Cross-Motions for Judgment on the Administrative Record

Plaintiff argues in its cross-motion that the government violated a number of

regulatory provisions when it set aside the subject procurement for competition

limited to 8(a) firms. First, plaintiff argues that the agency erred in its

determination that TSS-Garco was a responsible bidder because the IFB contained

special standards of responsibility that plaintiff contends no 8(a) firm could

possibly meet. Next, plaintiff asserts that the government violated FAR 19.805-1

because it offered the subject procurement to the SBA without first determining

that there were at least two 8(a) firms capable of meeting those responsibility

standards. Plaintiff further argues that the government violated FAR 10.001

because it did not perform the market research necessary to support its decision to

offer the procurement to the SBA for inclusion in the 8(a) program. Finally,

plaintiff contends that the government failed to document its market research, as

required under FAR 10.002. In its own motion for judgment on the administrative

record, the government argues that none of its actions violated any provision of the

FAR. For the reasons set forth below, the court agrees with the government.

1. The IFB Does Not Contain Definitive Responsibility

Criteria that Must Be Satisfied Before Award

AAC argues that the government was required to determine whether the

lowest bidder met the definitive responsibility criteria set forth in the IFB before

awarding the contract to that bidder. Plaintiff argues that the government never

determined whether TSS-Garco actually met those criteria, and that no 8(a) firm

possessed the requisite experience to meet them. Plaintiff, however, misinterprets

the IFB, which does not contain any special standards of responsibility.

13

/ ...continue

tension with this court’s decision in DGR. Neither of those decisions is binding on this court,

but the court finds the analysis set forth in DGR to be more persuasive in the circumstances of

this case and will therefore follow it here.

24

The term “responsibility” is used to describe the ability of an offeror to

successfully meet its obligations under a contract. The contracting officer must

make a responsibility determination prior to award. See 48 C.F.R. § 9.103(b)

(2012) (“No purchase or award shall be made unless the contracting officer makes

an affirmative determination of responsibility.”); see also John Cibinic, Jr. et al.,

Formation of Government Contracts at 411 (4th ed. 2011); Steven W. Feldman,

Government Contract Guidebook at 134 (4th ed. 2008) (“[W]hile the

responsiveness of a bid is determined at the time bids are opened, the responsibility

of a prospective contractor is determined by the time of award of the contract.”).

There are two different kinds of contractor responsibility. First, there are general

standards of responsibility, which are expressly set forth in the FAR and are

applicable to all contractors. See 48 C.F.R. § 9.104-1 (2012). Second, in some

procurements, there may also be “special standards of responsibility”:

When it is necessary for a particular acquisition or class

of acquisitions, the contracting officer shall develop, with

the assistance of appropriate specialists, special standards

of responsibility. Special standards may be particularly

desirable when experience has demonstrated that unusual

expertise or specialized facilities are needed for adequate

contract performance.

48 C.F.R. § 9.104-2(a) (2012). Importantly, “[t]he special standards shall be set

forth in the solicitation (and so identified) and shall apply to all offerors.” Id.

The GAO has explained the difference between the two types of

responsibility:

In most cases, responsibility is determined on the basis of

what the FAR refers to as general standards of

responsibility, such as adequacy of financial resources,

ability to meet delivery schedules, and a satisfactory

record of past performance and of business integrity and

ethics. In some cases, however, an agency will include in

a solicitation a special standard of responsibility, which is

often referred to as a definitive criterion of responsibility.

Definitive responsibility criteria are specific and

25

objective standards established by an agency as a

precondition to award which are designed to measure a

prospective contractor’s ability to perform the contract.

Vador Ventures, Inc., B-296394, 2005 CPD ¶ 155, 2005 WL 1876113, at *2

(Comp. Gen. Aug. 5, 2005) (citations omitted).

The IFB in the instant procurement set forth the requirements to be

considered by the agency in determining whether a prospective contractor was a

responsible bidder:

CONTRACTOR RESPONSIBILITY,

PREAWARD SURVEY

In order to determine a contractor’s responsibility for

purposes of contract award the contractor is required to

provide a statement regarding previous experience and

past performance in performing comparable work,

information related to the business organization, financial

resources, and/or plant to be used in performing the

work. (See the Attention to Bidders form included in this

solicitation.) In accordance with FAR 9.104-1, to be

determined responsible, a prospective contractor must –

(a) Have adequate financial resources to

perform the contract, or the ability to obtain

them;

(b) Be able to comply with the required or

proposed delivery or performance schedule,

taking into consideration all existing

commercial and governmental business

commitments;

(c) Have a satisfactory performance record.

(A prospective contractor shall not be

determined responsible or non-responsible

solely on the basis of a lack of relevant

performance history except as provided in

FAR 9.104-2);

26

(d) Have a satisfactory record of integrity and

business ethics;

(e) Have the necessary organization,

experience, accounting and operational

controls, and technical skills, or the ability

to obtain them;

(f) Have the necessary production, construction,

and technical equipment and facilities, or the

ability to obtain them;

(g) Be otherwise qualified and eligible to

receive an award under applicable laws and

regulations.

AR at 150. As noted in the IFB, these are the same general responsibility

standards, virtually word for word, set forth in FAR 9.104-1.

The contractor responsibility section of the disputed IFB does not include

any other responsibility standards, aside from those described above. However,

plaintiff argues that provisions located in other sections of the IFB do contain

definitive responsibility criteria that must be satisfied by the successful bidder prior

to award. Specifically, part 1.6 in section 31 63 26.00 10 of the IFB provides the

following with respect to contractor qualifications for drilled shaft experience:

1.6 CONTRACTOR QUALIFICATIONS

AND EXPERIENCE

Drilled shafts shall be constructed only by a Contractor

who has been regularly engaged in the performance of

this type of specialized work. The Contractor shall have

successfully completed large-diameter drilled shaft

foundation projects, with an emphasis on those projects

completed in-water, or demonstrate that the company has

the key personnel from a former company in which these

personnel successfully met the same requirements.

AR at 567.

27

Similarly, part 1.6 in section 31 63 26.00 20 of the IFB sets forth nearly

identical language for the required contractor experience in casing installation for

the mooring dolphin:

1.6 CONTRACTOR QUALIFICATIONS

AND EXPERIENCE

The Mooring Dolphin shall be constructed only by a

Contractor who has been regularly engaged in the

performance of this type of specialized work. The

Contractor shall have successfully completed large-

diameter casing foundation projects, with an emphasis on

those project[s] completed in-water, or demonstrate that

the company has the key personnel from a former

company in which these personnel successfully filled the

same role and successfully met the same requirements.

AR at 610.

Plaintiff argues that both of the sections noted above contain definitive

responsibility criteria, and that the government was required to determine, before

contract award, that TSS-Garco satisfied those requirements. The court further

notes that AAC’s interpretation of those sections provides the foundation for each

of its challenges to the government’s set-aside decision. Plaintiff argues that the

Corps was required to determine, before offering the contract to the SBA, that at

least two 8(a) firms met the experience requirements discussed above. Plaintiff

also asserts that the agency was required to perform market research regarding the

ability of 8(a) firms to meet those requirements, and that the agency was required

to document the results of its research on that issue. Finally, plaintiff argues that

the 8(a) firm may not rely on subcontractors, joint venturers, or post-award hires to

meet those experience requirements. Rather, according to plaintiff, the 8(a) firm

must meet those requirements itself. Plaintiff is incorrect on all counts.

First, as noted above, the IFB clearly sets forth the responsibility standards

that apply in this case, and those standards do not include the experience

requirements described above. Rather, the responsibility standards in the IFB

28

closely track the general standards of responsibility set forth in the FAR. Compare

AR at 150 with 48 C.F.R. § 9.104-1.

Second, the experience requirements referenced by plaintiff are contained in

a section of the IFB addressing the post-award submittal process for the contractor.

The IFB explains that the contractor must obtain government approval for the

drilled shaft and casing installation experience described above in accordance with

the submittal procedures of the IFB. See AR at 563, 607. Those procedures, in

turn, require the contractor to prepare a schedule of its submittals within fifteen

calendar days of receiving a notice to proceed with the project. Id. at 241; see also

id. at 168 (requiring the contractor to commence work within ten days of receiving

a notice to proceed).

Thus, the experience requirements described above cannot be viewed as

responsibility requirements – either general or special – because they are not

required to be satisfied by the contractor until after the contract is awarded. See

48 C.F.R. § 9.103(b) (2012) (“No purchase or award shall be made unless the

contracting officer makes an affirmative determination of responsibility.”);

Centech Grp. v. United States, 554 F.3d 1029, 1034 n.2 (Fed. Cir. 2009)

(“Responsibility refers to an offeror’s apparent ability and capacity to perform all

contract requirements and is determined, not at proposal opening, but at any time

prior to award of the contract based on any information received by the agency up

to that time.”); Advanced Tech. Sys., B-296493.6, 2006 CPD ¶ 151, 2006 WL

2975357, at *3 (Comp. Gen. Oct. 6, 2006) (“The concept of responsibility

expressly applies to ‘prospective contractors’ – not ‘current’ or ‘existing’

contractors – a limitation that is repeated throughout the applicable statutes and

regulations, and that indicates that the requirement for a responsibility

determination applies before award of a contract.”) (citations omitted); Matter of

Charter Environmental, Inc., B-297219, 2005 CPD ¶ 213, 2005 WL 3288200,

at *2 (Comp. Gen. Dec. 5, 2005) (noting that definitive responsibility criteria

“must be met as a precondition to award”).

Plaintiff also argues that responsibility standards are not required to be

located in any particular section of the IFB, and that “the substance of the

provision, not its label or location in the IFB, determines whether it is a definitive

responsibility criterion.” Pl.’s Reply at 11. However, FAR 9.104-2 states that

special standards of responsibility “shall be set forth in the solicitation (and so

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identified), and shall apply to all offerors.” 48 C.F.R. § 9.104-2(a) (emphasis

added); see also News Printing Co. v. United States, 46 Fed. Cl. 740, 746 (2000)

(“Two characteristics thus mark . . . definitive responsibility criteria. They must be

specific and objective, and the bidders have to be warned of them.”). Because the

experience requirements were not contained in the responsibility section of the IFB

and were not otherwise specified as responsibility standards, the court may not

treat them as responsibility standards.

An additional contention set forth by plaintiff is based largely on this court’s

earlier decision in Chas. H. Tompkins Co. v. United States, 43 Fed. Cl. 716 (1999).

AAC contends that a procuring agency may actually establish definitive

responsibility criteria even if it had no intention of doing so. That argument is

inapposite for two reasons. First, the government’s intent is not at issue in this

case; rather, the court concludes, based on the language and structure of the IFB,

that the contractor experience sections cited by plaintiff are not responsibility

standards. Moreover, in Chas. H. Tompkins, there was no dispute over whether the

provisions at issue were responsibility standards; rather, the disagreement between

the parties turned on whether those responsibility standards were general or

special. See id. at 717 (quoting language from the solicitation indicating that

“[t]his information will be used by the Government to assist in its determination of

responsibility in accordance with Subpart 9.1 of the FAR”), 720 (noting that the

plaintiff in that case “view[ed] the disputed provision . . . as setting forth definitive

responsibility criteria or special standards as described in FAR 9.104-2, while the

government characterize[d] the same provision as setting forth general

responsibility standards as described in FAR 9.104-1”). Here, the court holds that

the experience requirements cited by plaintiff are not responsibility standards,

either general or special, at all.

Finally, plaintiff argues that the successful bidder must meet the experience

requirements for drilled shafts and casing installation itself, and may not rely upon

subcontractors or new hires for that purpose. First, because those requirements are

not responsibility standards, but matters of post-award contract administration,

plaintiff cannot challenge any contractor’s alleged inability to meet those

requirements in this bid protest. See Diversified Maint. Sys., Inc. v. United States,

103 Fed. Cl. 431, 436-37 (2012) (noting that disputes between a current contractor

and the government that are based on matters of post-award contract administration

may not be resolved in the context of a bid protest). Further, AAC’s arguments in

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this regard are based on an unreasonable reading of the IFB, under which the term

“Contractor” is read to refer only to the prime contractor, while “contractor” may

be read to refer to either the prime contractor or one of its subcontractors. The

interpretation urged by plaintiff is problematic in a number of respects. For

example, the SBA is technically the prime contractor on this contract, while the

8(a) firm is the SBA’s subcontractor. See AR at 174. In addition, the IFB uses the

term “8(a) Contractor” – rather than simply “Contractor” – to refer to the 8(a) firm.

See id. at 174-75. Further, the first sentence of the two sections referenced by

plaintiff as containing definitive responsibility criteria do not refer to “the

Contractor,” as plaintiff suggests, but to “a Contractor.” See id. at 567, 610.

Subsequent references to “the Contractor” in those sections of the IFB are most

naturally read to refer to the party referenced in the first sentence (i.e., “a

Contractor”), which could, in turn, refer to either the 8(a) firm or a subcontractor.

Finally, the general responsibility standards set forth in the “Contractor

Responsibility, Preaward Survey” section of the IFB – which are the only

responsibility requirements in the entire IFB – contemplate the use of

subcontractors or new hires to perform the technical aspects of the contract. For

example, the 8(a) firm must

(e) Have the necessary organization, experience,

accounting and operational controls, and technical

skills, or the ability to obtain them; [and]

(f) Have the necessary production, construction, and

technical equipment and facilities, or the ability to

obtain them.

AR at 150 (emphasis added). AAC’s interpretation of the IFB is contradicted by

its plain terms.

In sum, the court concludes that the contractor experience requirements for

drilled shafts and casing installation are not standards of responsibility that must be

satisfied prior to contract award. The only responsibility standards in the IFB are

the general standards set forth in the section entitled “Contractor Responsibility,

Preaward Survey.” See AR at 150. The agency determined that TSS-Garco met

those standards, see id. at 1153-55, and plaintiff has not challenged that finding in

this case. For that reason, the government is entitled to judgment with respect to

AAC’s post-award challenge to TSS-Garco’s responsibility.

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2. The Government Did Not Violate FAR 19.805-1

Plaintiff argues that the government violated FAR 19.805-1(a), which states:

(a) Except as provided in paragraph (b) of this

subsection, an acquisition offered to the SBA

under the 8(a) Program shall be awarded on the

basis of competition limited to eligible 8(a) firms

if –

(1) There is a reasonable expectation that at

least two eligible and responsible 8(a) firms

will submit offers and that award can be

made at a fair market price; and

(2) The anticipated total value of the contract,

including options, will exceed $6.5 million

for acquisitions assigned manufacturing

[NAICS] codes and $4 million for all other

acquisitions.

48 C.F.R. § 19.805-1(a).

When the agency does not have a reasonable expectation that two or more

eligible and responsible 8(a) firms will submit offers on the procurement, the

agency may award the contract to an 8(a) firm on a sole-source basis:

(b) Where an acquisition exceeds the competitive

threshold, the SBA may accept the requirement for

a sole source 8(a) award if –

(1) There is not a reasonable expectation that at

least two eligible and responsible 8(a) firms

will submit offers at a fair market price; or

(2) SBA accepts the requirement on behalf of a

concern owned by an Indian tribe or an

Alaskan Native Corporation.

48 C.F.R. § 19.805-1(b).

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Plaintiff argues that this section requires the procuring agency to determine

that two or more 8(a) firms are eligible and responsible and will submit offers on a

procurement before that procurement is offered to the SBA for inclusion in the 8(a)

business development program. That argument is flawed for at least two reasons.

First, plaintiff misreads the clear language of FAR 19.805-1, which does not

require a procuring agency to evaluate the responsibility of 8(a) firms before an

acquisition is offered to the SBA. Rather, that section addresses when a

procurement that has already been offered to the SBA must be awarded on the

basis of competition among 8(a) firms and when it may be awarded on a sole-

source basis. See ATSCC, 92 Fed. Cl. at 732 (noting that FAR 19.805-1 “does not

provide for two separate offers but rather directs how an acquisition is to be

awarded once it is ‘offered to the SBA under the 8(a) Program’”); see also

13 C.F.R. § 124.506(a)(2) (2013) (stating, in an SBA regulation that largely tracks

the language of FAR 19.805-1, that “[a] procurement offered and accepted for the

8(a) BD program” must be competed among 8(a) firms when the requirements are

met) (emphasis added). AAC’s interpretation of FAR 19.805-1 is based on cases

that interpreted different regulations. See, e.g., RhinoCorps Ltd. v. United States,

87 Fed. Cl. 261, 279-80 (2009) (discussing the “rule of two” established by FAR

19.502-2); JT Constr. Co., B-254257, 93-2 CPD ¶ 302, 1993 WL 505803, at *3-*4

(Comp. Gen. Dec. 6, 1993) (discussing the set-aside requirement established by

DFARS § 219.502-2-70(a)).

Here, since the challenged procurement was above the competitive

acquisition threshold of $4 million, FAR 19.805-1 required the Corps to compete

the challenged procurement among 8(a) firms as long as it possessed a reasonable

expectation that at least two eligible and responsible 8(a) firms would submit

offers, and that an award to one of those firms could be made at a fair market price.

In the absence of such an expectation, the alternative to an 8(a) competition was a

sole-source award to an 8(a) firm, not a full and open competition as plaintiff

suggests. See ATSCC, 92 Fed. Cl. at 732 (“Because the contracting agency had

already determined that it would offer the requirement to the SBA for the 8(a)

program, the agency’s alternative to a competitive 8(a) award would be a sole-

source 8(a) award.”).

Finally, even if the court were to accept, arguendo, the interpretation now

advanced by plaintiff, the SBA – the entity responsible for determining whether an

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8(a) firm is eligible for contract award – informed the Corps that no fewer than

thirteen 8(a) firms were qualified to perform the contract. In addition, the Corps

identified seven qualified 8(a) firms through its own independent research.

Because the agency identified two or more eligible and responsible 8(a) firms, the

agency did not violate FAR 19.805-1, even under the incorrect interpretation of

that section advanced by plaintiff here.

3. The Government Did Not Violate FAR 10.001

Plaintiff argues that the government violated section 10.001 of the FAR,

48 C.F.R. § 10.001 (2012), which requires each procuring agency to “[c]onduct

market research appropriate to the circumstances . . . before developing new

requirements documents for an acquisition by that agency,” id. § 10.001(a)(2).

That section further provides that the results of the agency’s market research

should be used to “[d]etermine if sources capable of satisfying the agency’s

requirements exist.” Id. § 10.001(a)(3)(i). However, “[w]hen conducting market

research, agencies should not request potential sources to submit more than the

minimum information necessary.” Id. § 10.001(b).

The court first notes that the Small Business Act “affords the SBA and

contracting agencies broad discretion in selecting procurements for entry to the

8(a) program.” MCB Lighting & Elec., B-406703, 2012 CPD ¶ 206, 2012 WL

2878575, at *2 (Comp. Gen. July 13, 2012); see also Data Transformation Corp. v.

United States, 13 Cl. Ct. 165, 173 (1987) (“Judicial intrusion into the procurement

process is generally infrequent, limited and circumspect. The discretion inherent in

the section 8(a) contractor selection process requires even greater judicial

restraint.”) (citations omitted).

In a similar vein, the agency enjoys substantial discretion in determining

how much and what type of market research is “appropriate to the circumstances”

for the purpose of “[d]etermin[ing] if sources capable of satisfying the agency’s

requirements exist.” 48 C.F.R. § 10.001(a). For example, in ATSCC, the agency

issued a ‘sources sought notice’ to determine whether there were any 8(a) firms

qualified to perform a contract for medical training services. Based on the

responses to that notice, the agency determined that only one such firm was

qualified and offered the contract to the SBA for award on a sole-source basis.

The SBA subsequently provided the agency with the name of a second 8(a) firm

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and therefore, the agency elected to proceed with a competition restricted to 8(a)

small businesses. The incumbent contractor, a non-8(a) small business, argued that

neither the information requested in the ‘sources sought notice,’ nor the

information received in response to that notice, was sufficient to determine whether

there were two or more 8(a) firms capable of performing the contract. This court

rejected that challenge to the adequacy of the agency’s market research:

Given this regulatory guidance and the discretion

afforded agencies and contracting officers in making

such procurement-related determinations, the court

cannot conclude that the market research conducted by

the Contracting Officer was inadequate nor that the

Contracting Officer’s 8(a) set-aside decision was

unreasonable.

ATSCC, 92 Fed. Cl. at 731.

Here, Mr. Beckstrand attended a number of small business conferences; he

discussed the possibility of setting aside the project for 8(a) participation with SBA

representatives; he met with eighteen 8(a) firms and other small businesses to

discuss their marine construction capabilities; he identified seven 8(a) firms that

would be able to complete a marine construction project; he obtained the names of

thirteen qualified 8(a) firms from SBA representatives in Seattle and Boise; and he

performed further research on those firms. Plaintiff argues that the facts in ATSCC

are distinguishable from the facts in this case because the agency there issued a

‘sources sought notice.’ Nothing in this court’s decision, however, suggests that

such a notice is a sine qua non of market research. Although the protestor in that

case argued that the ‘sources sought notice’ and the responses to that notice were

both inadequate for the agency’s purposes, this court did not engage in an intrusive

scrutiny of either the notice or the responses. The court cannot conclude here that

the agency’s market research was either unreasonable or inadequate.

4. The Government Did Not Violate FAR 10.002

Finally, plaintiff argues that the government violated section 10.002(e) of

the FAR, which provides that “[a]gencies should document the results of market

research in a manner appropriate to the size and complexity of the acquisition.”

35

48 C.F.R. § 10.002(e). Plaintiff asserts that the Corps did not adequately document

its research into whether two or more 8(a) firms were capable of performing the

contract. That argument fails for at least three reasons.

First, as discussed above, the asserted “requirement” that the government

determine whether there are at least two responsible 8(a) firms before offering a

contract to the SBA for inclusion in the 8(a) program is based on a misreading of

applicable regulations. The court will not require the agency to demonstrate

adequate documentation of market research to support a nonexistent requirement.

In addition, the language of section 10.002(e) is precatory in nature and does

not establish any mandatory documentation requirement. That section states that

agencies “should” document the results of their market research; it does not state

that those agencies “shall” do so. Plaintiff acknowledges that its proffered reading

of FAR 10.002 is unsupported by any legal authority, but it attempts to draw an

analogy between that section and other purportedly similar regulations. However,

each of the regulations cited by plaintiff imposes a clear duty on the agency. See,

e.g., 48 C.F.R. § 15.308 (2012) (stating that a source selection authority’s

“decision shall be based on a comparative assessment of proposals against all

source selection criteria in the solicitation . . . [and] shall be documented, and the

documentation shall include the rationale for any business judgments or tradeoffs

made or relied on by the SSA”) (emphases added).

Finally, the administrative record demonstrates that the agency documented

its market research. See AR at 5-8 (correspondence between Mr. Beckstrand and

the SBA regarding the capabilities of 8(a) firms in Washington and Idaho), 857-59

(e-mail to TASB members listing the 8(a) firms identified by the SBA), 860-62

(e-mail from Mr. Beckstrand to agency counsel describing the steps leading to his

decision to set aside the procurement for 8(a) participation), 864-89 (spreadsheet

compiling the identity, capabilities, and other information on 8(a) firms). Thus, the

court concludes that the government did not violate FAR 10.002 in this case.

CONCLUSION

The court concludes that plaintiff has standing in this case and did not waive

any of its arguments under Blue & Gold Fleet. For that reason, defendant’s motion

to dismiss the complaint is denied. However, the court further holds that the Corps

36

did not violate any of the regulatory provisions cited by plaintiff, nor did it err in

concluding that TSS-Garco was a responsible bidder. For those reasons,

defendant’s motion for judgment on the administrative record is granted, and

AAC’s cross-motion for judgment on the administrative record is denied.

Accordingly, it is hereby ORDERED that

(1) Defendant’s Motion to Dismiss or, in the Alternative, for Judgment

upon the Administrative Record, filed December 4, 2012, is DENIED

in part, as it relates to the motion to dismiss, and GRANTED in part,

as it relates to the motion for judgment on the administrative record;

(2) Plaintiff’s Cross-Motion for Judgment on the Administrative Record,

filed January 3, 2013, is DENIED;

(3) The Clerk’s Office is directed to ENTER final judgment in favor of

defendant, dismissing the complaint with prejudice;

(4) On or before May 24, 2013, counsel for the parties shall CONFER

and FILE with the Clerk’s Office a redacted copy of this opinion,

with any material deemed proprietary marked out and enclosed in

brackets, so that a copy of the opinion can then be prepared and made

available in the public record of this matter; and

(5) Each party shall bear its own costs.

/s/Lynn J. Bush

LYNN J. BUSH

Judge

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