Sls Federal Services, LLC v. United States

In the United States Court of Federal Claims

No. 22-1215

(Filed: January 3, 2023)

(Re-filed: January 10, 2023) 1

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SLS FEDERAL SERVICES, LLC,

Plaintiff,

Bid protest; post-

v. award bid protest;

price reasonableness;

THE UNITED STATES, discussions; FAR 15-

Defendant, 404-1; DFARS

215.306; Blue &

and

Gold; injunction

JACOBS PROJECT MANAGEMENT CO.,

Intervenor.

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Kyle R. Jefcoat, Washington, DC, for plaintiff, SLS Federal Services

with whom were David R. Hazelton, Leah Friedman, Genevieve Hoffman,

W. Allen Perry, and W. Blake Page, of counsel.

Liridona Sinani, Attorney, United States Department of Justice,

Commercial Litigation Branch, with whom were Brian M. Boynton,

Principal Deputy Assistant Attorney General, Patricia M. McCarthy,

Director, and Douglas K. Mickle, Assistant Director, for defendant. Nicolle

A. Vasquez, Naval Facilities Engineering Systems Command Atlantic, of

counsel.

Robert J. Symon, Washington, DC, for intervenor, Jacobs Project

Management Co., with whom was Patrick R. Quigley and Lisa A. Markman

of counsel.

1

This opinion was originally issued under seal, and the parties were given an

opportunity to propose redactions of any protected material. The parties

agreed that none were necessary, so it appears in full.

OPINION

This is a post-award bid protest of the Naval Facilities Engineering

Systems Command’s (agency) decision to award indefinite-delivery,

indefinite-quantity contracts to six contractors. Plaintiff, SLS Federal

Services, LLC, argues that the agency ignored regulatory requirements,

failed to follow the solicitation’s terms, and engaged in an unequal and

arbitrary evaluation of its proposal. As a result, SLS seeks a permanent

injunction against the agency’s decision.

The matter is now fully briefed on cross-motions for judgment on the

administrative record. Oral argument was held on December 8, 2022. We

sustain SLS’s protest and, for the reasons set out below, enjoin the agency

from proceeding with performance of the contracts.

BACKGROUND

From time to time, the Department of Defense and other federal

agencies must respond to global emergencies, like natural disasters or

humanitarian conflicts. Responding to global emergencies often requires,

among other things, construction and engineering services. To secure those

services, agencies sometimes enter into “global contingency construction”

contracts in which a contractor’s performance can arise anytime and

anywhere. Administrative R. (AR) 251.

In this case, the agency issued Solicitation N62470-20-R-5003,

looking to award approximately four indefinite delivery, indefinite quantity

contracts for global contingency construction. As for how those contracts

would be awarded, the agency was clear: awards would be made to the

contractors whose offers “represented the best value to the Government.” AR

822. And best value, the agency instructed, would be determined through a

tradeoff analysis that considered both cost and non-cost factors. 2 Once the

contracts were awarded, the awardees would then later compete for either

cost-plus-award-fee or firm fixed price task orders with a maximum contract

value of $5 billion.

Most important within the agency’s tradeoff analysis was cost. To

consider cost, the solicitation required contractors to submit cost proposals,

2

The non-cost factors were (1) corporate experience, (2) safety, (3) small

business utilization and participation, and (4) past performance.

2

which the agency would analyze for both cost and price reasonableness. That

said, the agency—whether by oversight or intention—requested only cost

data, like hourly labor rates and indirect ceiling rates. Those figures, while

helpful to understand a contractor’s reimbursable expenses, did not include

any anticipated profit and left a hole in the agency’s evaluation. That is

because the agency planned to control cost by using firm fixed price “task

orders whenever possible.” AR 32. In fact, of the two contract-line-item

numbers (CLIN), the agency explained that over half of all work would be

performed under CLIN 002 as firm fixed price task orders. See AR 252

(anticipating that $3 billion of all task orders would be firm fixed price).

More broadly, the agency’s evaluation of offers involved three

entities, and the interplay between them worked as follows. First, the

Evaluation Board would independently evaluate each factor outlined in the

solicitation. It would then compile its review into essentially two reports, one

for non-cost factors and one for cost. After that, the Advisory Council would

review the Board’s findings, consolidate the findings into its own report, and

“make[] an award recommendation.” AR 258. At that point, the Source

Selection Authority would review the recommendations, and if it believed

that discussions were unnecessary, it would select the contractor whose

“proposal offers the best value to the government.” Id.

The agency advised contractors that it intended to award contracts

without discussions. It reserved the right to use them if the need arose, but it

never did. Instead, at nearly every stage of evaluating offers, the agency

reaffirmed its intent to award contracts without discussions because, in its

view, the offers were clearly awardable.

In the end, the agency awarded contracts to six (out of nine) bidders

but not SLS. 3 Unhappy with the agency’s awards, SLS filed a protest with

the Government Accountability Office (GAO). Among other things, SLS

argued that the agency should have conducted discussions and that it also

erroneously analyzed price reasonableness. Finding “potential merit” in

SLS’s “price reasonableness” argument, the agency agreed to take corrective

3

The agency awarded contracts to (1) Aptim Federal Services; (2) CDM, a

Joint Venture; (3) ECC Contingency Constructors, LLC; (4) Gilbane

Federal; (5) Jacobs Project Management Co.; and (6) Perini Management

Services, Inc.

3

action so that it could “address the evaluation of the proposals, including, but

not limited to, price reasonableness.” AR 11389. On that basis, the GAO

dismissed SLS’s protest.

Nearly a year after the notice of corrective action, the agency

announced that the awards would remain the same. In the Evaluation Board’s

report, it disclosed that the only corrective step it took was to remove an

“inappropriate CPARS evaluation.” AR 11417. Outside of that, “[t]here were

no additional amendments or requests for proposal revisions made in

pursuance of th[e] corrective action.” Id. Because little changed from the

agency’s initial evaluation, SLS filed a second protest with the GAO.

Disputes over document production then ensued, so SLS filed its protest with

this court.

DISCUSSION

I. The agency’s corrective action did not cure the original

procurement defect.

We review bid protests in accordance with the standards laid out in

the Administrative Procedure Act (APA). Advanced Data Concepts, Inc. v.

United States, 216 F.3d 1054, 1057 (Fed. Cir. 2000) (citing 28 U.S.C. §

1491(b)(1) (1996)). Under the APA, an agency’s actions cannot be

“arbitrary, capricious, an abuse of discretion, or otherwise not in accordance

with law.” 5 U.S.C. § 706(2)(A) (2018). In the context of corrective action,

that means that an agency’s decision must be “reasonable under the

circumstances and appropriate to the impropriety.” PGLS, Inc. v. United

States, 152 Fed. Cl. 59, 69 (2020).

A. Blue & Gold does not bar SLS’s challenge to the agency’s

corrective action.

SLS complains that the agency was incapable of evaluating price

reasonableness because the agency never requested or considered any pricing

information. At its core, SLS’s broader argument amounts to a challenge to

the solicitation’s structure. In effect, SLS argues that the solicitation did not

request enough information for the agency to perform its promised price

reasonableness analysis.

Jacobs, as intervenor in this protest, answers that SLS waived its price

reasonableness argument, relying on Blue & Gold Fleet v. United States. 492

4

F.3d 1308, 1313 (Fed. Cir. 2007). It explains that SLS should have noticed

the solicitation’s defect and challenged it before the competition concluded.

Because SLS did not do so, its challenge is untimely.

In a typical bid protest, Jacobs’s waiver defense would likely prevail.

Indeed, SLS conceded at oral argument that its GAO challenge could have

been dismissed as too late. The agency could have raised the waiver defense

at GAO (and then at this court), and, if it had, the protest would be over—at

least as far as price reasonableness is concerned. What makes this protest

atypical, however, is that those events never occurred. The agency did not

raise the waiver defense at GAO. Instead, the agency promised to take

corrective action. That choice allows SLS to challenge the agency’s

execution of that corrective action. See Amazon Web Servs., Inc. v. United

States, 153 Fed. Cl. 602, 607 (2021). The agency cannot later (and for the

first time) hide behind Blue & Gold when its corrective steps fail to solve the

problem. 4

B. The agency failed to correct its improper price

reasonableness analysis.

With SLS clearing the Blue & Gold hurdle, we turn to the merits of

SLS’s price reasonableness argument. Recall that SLS takes issue with the

agency’s solicitation. In particular, it contends that the agency failed to

request any pricing information, which, in turn, made it impossible to analyze

price reasonableness. The essence of SLS’s position is this. A problem

existed because the solicitation failed to request pricing information. At the

GAO, the agency promised to take corrective action, which was assertedly

to address a possible price reasonableness defect. Yet, in the time between

the notice of corrective action and the new awards, the agency never acquired

the missing price data. As a result, the agency remained unable to analyze

price reasonableness.

The government’s response is twofold, though the two positions are

difficult to reconcile. On the one hand, the government reminds us that this

4

Parties may forfeit rights and defenses when they fail to timely assert them.

See, e.g., United States v. Olano, 507 U.S. 725, 733 (1993). Instead of

asserting its waiver defense, the agency chose to initiate corrective action, in

part, at least, directed at fixing the asserted defect with the solicitation. For

better or worse, the agency is bound by that decision.

5

is a global contingency construction contract. Because the nature of

performance is unknown, it would be “impossible” to evaluate firm-fixed-

price proposals. Yet on the other hand, the government also assures us that it

did analyze price reasonableness using FAR 15.404-1(b). It understands that

provision to mean that a comparison of costs plus adequate competition

equals a fair and reasonable price.

We hold that the agency’s corrective action was unreasonable and

failed to address the original “impropriety.” PGLS, 152 Fed. Cl. at 69. We

begin with FAR 15.404-1. 5 Under subsection (a)(2), an agency “shall” use

price analysis “when certified cost or pricing data” is not required. FAR

15.404-1(a)(2). If we look to Section 15.403-1(b), we see that this

procurement falls within subsection (a)(2) as a case in which contractors need

not provide certified data. That is because an agency “shall not require

certified cost or pricing data” when it “determines that prices agreed upon

are based on adequate price competition.” 15.403-1(b)(1). And adequate

price competition exists when, as here, an award “will be made to the offeror

whose proposal represents the best value [and] where price is a substantial

factor in source selection.” 15.403-1(c)(1)(i)(B).

Because certified data was not required, we return to Section

15.404-1. Subsection (a)(2) requires the agency to use price analysis, which

the section defines as “the process of examining and evaluating a proposed

price without evaluating its separate cost elements and proposed profit.”

15.404-1(b)(1). Or put another way, subsection (b)(1) allows an agency to

determine a price’s reasonableness without going line-by-line through the

constituent cost elements. One acceptable method of doing that is to simply

compare the prices received when adequate competition exists. Normally,

that will “establish[] a fair and reasonable price.” 15.404-1(b)(2)(i).

With these principles in view, the agency did not (and could not)

analyze price reasonableness under FAR 15.404-1(b). Simply put, the

regulation—which allows evaluation of price without separately considering

5

Admittedly, the parties do not address the contours of Section 15.404-1 in

this level of detail. But “when an issue or claim is properly before the court,”

we “retain[] the independent power to identify and apply the proper

construction of the governing law.” U.S. Nat’l Bank of Oregon v. Indep. Ins.

Agents of Am., Inc., 508 U.S. 439, 446 (1993).

6

cost—presupposes that agencies possess, at the very least, some pricing

information. Here, the parties do not appear to dispute that the agency never

requested, received, or evaluated any price data from the bidders. Instead, the

agency requested cost information, such as hourly labor rates, which helped

it determine a contractor’s reimbursable expenses but not its prices. As a

result, the solicitation’s structure left the agency without the necessary

information to perform a price analysis. That problem then survived the

agency’s corrective action because the agency never attempted to fill that

void. The agency could not evaluate price reasonableness without pricing

information.

In defense of the agency, the government flips subsection (b)(1) on its

head. The government starts with an accurate description of price analysis

under subsection(b)(1), and it also correctly explains that one method of price

analysis is a “[c]omparison of proposed prices received” when “adequate

price competition exists.” 15.404-1(b)(2)(i). It is what comes after that

departs from the regulation’s text. From here, the government explains that

the agency reviewed the cost proposals and determined that they were

“complete, reasonable, and realistic.” AR 11639. Combining that, then, with

adequate competition, the agency concluded that its comparison of cost

proposals could therefore establish a reasonable price.

The agency’s approach lacks the regulation’s support. By its plain

language, subsection(b)(1) empowers agencies to review proposed prices

“without evaluating its separate cost elements.” 15.404-1(b)(1) (emphasis

added). But the reverse is not true. The agency does not perform a price

analysis when it evaluates the separate cost elements and ignores price.

Instead, and as subsection(c)(1) explains, that is called “cost analysis.”

15.404-1(c)(1). 6 Price—though it encompasses cost—is broader and

includes a contractor’s anticipated profit. See 15.404. The agency must

compare prices to satisfy 15.404-1(b), which it failed to do here.

To the government’s point that a price analysis would be impossible,

we have found other procurements where agencies have evaluated price

reasonableness in similar contexts. For instance, the Army Corps of

Engineers found a way to evaluate contractors’ prices in a contract for debris

6

More specifically, cost analysis is the “review and evaluation of any

separate cost elements.” 15.404-1(c)(1).

7

management operations after “natural or man-made disasters.” In re

CrowderGulf, LLC, B-418693.9 et al., 2022 CPD ¶ 90, at *1 (Comp. Gen.

Mar. 25, 2022). The agency devised a scheme where the government would

provide a “set of estimated quantities for a ‘likely emergency event’ to take

place in that region” and would multiply that by “the rates proposed by each

offeror” to “arrive at the total evaluated price for each region.” Id. at *3. In

NEQ, LLC v. United States, the Environmental Protection Agency (EPA)

contracted for “[e]nvironmental cleanup [in] response to natural disasters and

terrorist activities.” 88 Fed. Cl. 38, 41 (2009). There, too, the EPA managed

to evaluate price reasonableness. See id. at 43, 51.

Presumably, an agency’s price evaluation is harder with contingent or

uncertain performance. But be that as it may, difficult is different from

impossible. And “[m]aking that difficult decision was the agency’s job”—

one that it “failed to do” here. Dep’t of Homeland Sec. v. Regents of the Univ.

of Cal., 140 S. Ct. 1891, 1914 (2020).

In sum, the agency’s solicitation failed to request the pricing

information that would enable it to analyze price reasonableness. Its

corrective action never asked for any information to address that defect.

Therefore, the agency’s corrective action is unreasonable, and SLS did not

waive its right to bring a challenge.

II. The agency violated DFARS 215.306.

A. DFARS 215.306 creates a presumption in favor of discussions

that the agency failed to overcome.

SLS argues that the agency abused its discretion when it refused to

engage in discussions. We agree. At this point, we think it is settled that

DFARS 215.306 “create[s] a presumption in favor of” discussions. Oak

Grove v. United States, 155 Fed. Cl. 84, 108 (2021).

Discussions promote an important public interest. Among other

things, discussions “maximize the government’s ability to obtain [the] best

value,” FAR 15.306(d)(2), by “allowing the offeror to revise its proposal,”

CliniComp Int’l, Inc. v. United States, 117 Fed. Cl. 722, 744 (2014). Despite

their importance, however, a contracting officer normally has the discretion

to choose whether to use them. JWK Int’l Corp. v. United States, 279 F.3d

985, 988 (Fed. Cir. 2002).

8

This protest raises a more nuanced question about discussions. Under

the DFARS—which supplements the FAR in all defense contracts—

”contracting officers should conduct discussions” “[f]or acquisitions with an

estimated value of $100 million or more.” DFARS 215.306(c)(1) (emphasis

added). The parties dispute if and how the word “should” alters the normal

discretion that a contracting officer possesses under the FAR. To SLS, the

regulation creates a presumption that discussions will take place and thus

requires agencies to provide adequate justification if they wish to depart from

the regulatory scheme. In response, and even though the agency never made

such a claim when it proceeded without discussions, the government appears

to argue that the regulation creates no such presumption, especially when the

agency intends to award without discussions from the outset. We agree with

SLS.

We begin with the regulation’s text, which, if unambiguous, controls.

Aspen Consulting, LLC v. Sec’y of Army, 25 F.4th 1012, 1016 (Fed. Cir.

2022). DFARS 215.306 provides that, “[f]or acquisitions with an estimated

value of $100 million or more, contracting officers should conduct

discussions.” And according to the FAR, the word “should” means “an

expected course of action or policy that is to be followed unless inappropriate

for a particular circumstance.” FAR 2.101. The regulations’ language is thus

clear: for “acquisitions with an estimated value of $100 million or more”

discussions are the “expected course of action” unless they are “inappropriate

for a particular” procurement.

Although clear regulatory language means that the judicial inquiry

into meaning is complete, precedent “confirms what is [already] clear from

the [regulation’s] plain language.” Wimberly v. Labor & Indus. Relations

Comm’n of Miss., 479 U.S. 511, 522 (1987). In Dell Federal Systems v.

United States 7—which addressed a $5 billion computer hardware

7

Dell Federal’s unique procedural posture deserves some explanation. After

receiving 58 proposals, the Army decided against using discussions because

it would “significantly delay award[ing]” contracts. Id. As a result,

unsuccessful bidders filed a protest with the GAO. Id. at 988. In response to

the protest, the Army took corrective action, which included, among other

things, opening discussions with all remaining offerors. Id. At that point,

however, two of the awardees (wanting the original award to stand) filed suit,

arguing that the Army’s corrective action was unreasonable. Id. at 989.

9

procurement—the Federal Circuit explained that, by using the word

“should,” the regulation contemplates that “discussions normally are to take

place in these types of acquisitions.” 906 F.3d 982, 995 (Fed. Cir. 2018)

(citing FAR 2.10). Thus, when the Army chose not to use discussions for its

own convenience, it created an “undisputed procurement defect.” Id. at 996.

The government accepts that Dell Federal “generally stated” that

discussions should take place in these types of acquisitions. But even so, the

government argues that Dell Federal is distinguishable because it involved

an agency’s corrective action. That makes a difference, so the argument goes,

because the case only stands for the proposition that discussions can be a

reasonable corrective action.

We disagree with that narrow construction. For corrective action to be

reasonable, it must be rationally related to the original action’s defects. Dell

Fed., 906 F.3d at 994. Thus, when the court in Dell Federal concluded that

the Army’s proposed corrective action (i.e., using discussions) was

“rationally related to the procurement’s defects,” it necessarily required

considering if and how DFARS 215.306 limited a contracting officer’s

discretion. Id. at 995. In other words, the outcome in Dell Federal makes

little sense if the regulation did not already create a presumption that

discussions would occur.

Consistent with the Federal Circuit, this court has also interpreted

DFARS 215.306 to create a presumption that agencies will conduct

discussions for defense acquisitions of $100 million or more. For example,

in Oak Grove v. United States, this court reviewed a $245 million Army

procurement that proceeded without discussions. 155 Fed. Cl. at 90–91.

Applying Dell Federal, this court concluded that “conducting discussions”

is the “default rule.” Id. at 108. This means that, even though the regulation

does not mandate discussions, the agency must at least create a record to

justify not using them.

This court recently encountered this same issue and reaffirmed Oak

Grove. See IAP Worldwide Servs. Inc. v. United States, 159 Fed. Cl. 265, 308

(2022) (IAP Worldwide I). We understood the “provision’s plain language

[to] create a presumption in favor of . . . conducting discussions.” Id. (first

alteration in original). With that in mind, the “question, then, [was] how

much discretion the Army possesse[d] not to engage in discussions.” Id. at

307. This court answered, saying that “an agency must justify not engaging

10

in discussions where [DFARS 215.306] applies.” Id. at 308 (quoting Oak

Grove, 155 Fed. Cl. at 108).

Turning to the GAO, it too reads DFARS 215.306 to mean that

“discussions are the expected course of action in [Department of Defense]

procurements valued over $100 million.” Sci. Applications Int’l Corp.

(SAIC), No. B-413501, 2016 WL 6892429, at *8 (Comp. Gen. Nov. 9, 2016).

In SAIC, the GAO emphasized “that the [regulation’s] operative word” was

“should,” which meant that “discussions [were] the expected course of

action” in these procurements. Id. at *8. Agencies can proceed without

discussions, then, only “if the particular circumstances of the procurement

dictate that making an award without discussions is appropriate.” Id.

Finally, the Department of Defense itself agrees that DFARS 215.306

creates an expectation that discussions should occur. In an Acquisition Policy

Memo, the Department stated that “[f]or acquisitions with an estimated value

of $100 million or more, . . . contracting officer[s] should conduct

discussions.” Memorandum, Dep’t of Defense, Defense Procurement

Acquisition Policy, ¶ 1.4.2.2.8 (Apr. 1, 2016).

The regulation may make certain defense procurements more

cumbersome. The Department “note[d] the potential disadvantages of this

proposed change,” which included “increased time to complete the source-

selection process and additional workload for acquisition staff.” Discussions

Prior to Contract Award, 75 Fed. Reg. 71,647, 71,648 (Nov. 24, 2010).

Nevertheless, it believed that the benefits outweighed the costs because the

“failure to hold discussions” “has led to misunderstandings of Government

requirements by industry and flaws in the Government’s evaluation of

offerors’ proposals.” Id. Those both “lead[] to protests that [are] sustained”

and ultimately “extend source-selection timelines.” Id. In any event, whether

the government still favors the rule is beside the point. The Department

“weighed the [associated] costs,” and we do not question its judgment. Nat’l

Ass’n for Surface Finishing v. EPA, 795 F.3d 1, 10 (D.C. Cir. 2015).

It thus appears that there is near universal agreement that DFARS

215.306 creates a presumption that defense agencies will engage in

discussions when an acquisition is valued at $100 million or more.

Presumably because of this consensus, the government appears to argue that

the regulation does not apply if the agency simply chooses from the start not

to conduct discussions.

11

We disagree. It is well established that agencies are “bound by the

applicable procurement statutes and regulations,” Dell Fed., 906 F.3d at 995,

and have “no discretion regarding whether . . . to follow” them. Blue & Gold

Fleet v. United States, 70 Fed. Cl. 487, 512 (2006). Simply put, the

government cannot ignore DFARS 215.306, even when it chooses to do so

from the start. See, e.g., IAP Worldwide I, 159 Fed. Cl. at 307.

While DFARS 215.306 does not mandate discussions, the agency

must, at the very least, justify not using them. To that end, we “ask whether

the Agency sufficiently justified its decision not to” use discussions in this

case. Oak Grove, 155 Fed. Cl. at 108–09. In answering that question, we

consider only the reasons contained in the administrative record, which in

this case do not pass muster. See IAP Worldwide I, 159 Fed. Cl. at 309. 8

The government informs us that the agency’s decision not to use

discussions was “adequately documented.” The only documented reason we

found, however, was the agency’s statement that the “six highest ranked

proposals . . . [were] clearly awardable without discussions [and] present[ed]

the best value” to the government. AR 11686. That is not enough.

First, an agency cannot survive scrutiny under DFARS 215.306 with

“threadbare, conclusory assertions.” Accord IAP Worldwide I, 159 Fed. Cl.

at 310; see also Dell Fed., 906 F.3d at 986. Instead, an agency must

“articulate a rational connection between the facts found and the choice

made”; otherwise, its “decision is arbitrary and capricious.” In re Vivint, Inc.,

14 F.4th 1342, 1351 (Fed. Cir. 2021). In this case, the agency never explained

how the facts supported its decision to proceed without discussions. At best,

the agency merely assumed that SLS could not improve its bid. Assumptions,

however, cannot “survive APA review.” IAP Worldwide I, 159 Fed. Cl. at

311.

8

The government attempts to distinguish IAP Worldwide I because it

involved draft evaluation notices that strongly suggested a need for

discussions. Even though that may be true, the existence of the evaluation

notices was only one of six reasons the court held that the record did not

justify the agency’s decision. See IAP Worldwide I, 159 Fed. Cl. at 310–13.

Because there were five other reasons, we find that IAP Worldwide I is still

relevant precedent.

12

Second, “the DFARS presumption favoring discussions must be

overcome with reasoned decision-making.” Id. at 313. Even ignoring the lack

of factual support, it still is not clear whether the agency seriously considered

whether discussions should be used. Merely repeating the conclusion that the

proposals were “clearly awardable without discussions” has little to no value

when the agency never planned to use discussions. Indeed, as the government

has elsewhere explained, “simply expressing a preference for not following

an expected course of action does not . . . foreclose inquiries into whether a

reasonable basis exists upon which that preference rests.” Redacted Resp.

and Reply Brief of Defendant United States, Dell Fed., 133 Fed. Cl. 92, at

*4–5 (internal citations omitted). Nothing in the record supports the

conclusion that the agency reasonably considered whether discussions would

be useful.

Third, accepting the agency’s justification for not using discussions—

that is, that certain proposals were “clearly awardable” and “represent[ed]

the best value”—would effectively nullify DFARS 215.306. Cf. Duncan v.

Walker, 533 U.S. 167, 167 (2001) (expressing “reluctan[ce] to treat statutory

terms as surplusage”). Here, the government assumed that certain offers

presented the best value and believed that it could therefore avoid discussions

on that basis. But we have already rejected the “implicit assertion that a best

value decision may substitute for a determination not to conduct discussions

where DFARS 215.306 applies.” IAP Worldwide I, 159 Fed. Cl. at 312. That

is because “every contract award in a best value procurement is premised

upon a sound best value decision.” Id. If the government’s self-interested

determination that certain offers present the best value could circumvent

DFARS 215.306, it is unclear when, if ever, the regulation would apply.

As a last resort, the government and Jacobs both argue that the

agency’s decision was reasonable because SLS had no “deficiencies or

significant weaknesses.” Relying on FAR 15.306, they both claim that an

agency need only engage in discussions to address “deficiencies, significant

weaknesses, and adverse past performance information to which the offeror

has not yet had an opportunity to respond.”

Discussions about deficiencies and significant weaknesses are a floor,

not a ceiling, however. See 15.306(d)(3). The contracting officer is also

“encouraged” to discuss any aspect of a proposal that could improve its value

if altered or explained. Id. We do not know why the agency thought that

13

offers could not be enhanced through discussions. The government adopted

DFARS 215.306 in part because awards without discussions often led to

“flaws in the Government’s evaluation of offerors’ proposals.” Id. Thus, an

agency cannot avoid DFARS 215.306 simply because it does not assign any

deficiencies or significant weaknesses.

In sum, the agency failed to adequately justify its decision not to use

discussions. That does not mean that the agency did not have the discretion

to proceed without discussions. Instead, we hold only that that “the DFARS

presumption favoring discussions must be overcome with reasoned decision-

making not reflected in the administrative record.” IAP Worldwide I, 159

Fed. Cl. at 313.

B. Blue & Gold does not apply.

If an offeror “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,” it “waives its ability to raise the same

objection subsequently in a bid protest.” Blue & Gold, 492 F.3d at 1313. For

that reason, the government argues that even if DFARS 215.306 required the

agency to justify its decision, SLS waived that argument when it failed to

object before the competition concluded.

We disagree. Simply announcing an intent to proceed without

discussions does not put contractors on notice that the government intends to

violate DFARS 215.306, something the government aptly explained in Dell

Federal. See Redacted Resp. and Reply Brief of Defendant United States,

Dell Fed., 133 Fed. Cl. 92, at *9. The government appeared to agree in that

case that a challenge to the agency’s decision could be brought after the

competition concluded. Thus, if agencies reserve the right to hold

discussions, Blue & Gold will not protect the agency when it eventually

foregoes them without explanation.

C. The agency’s violation of DFARS 215.306 prejudiced SLS.

Although we conclude that the agency failed to comply with DFARS

215.306, an agency’s error is not enough by itself to merit relief; that error

must also be prejudicial. Office Design Grp. v. United States, 951 F.3d 1366,

1373 (Fed. Cir. 2020).

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The agency prejudiced SLS when it violated DFARS 215.306 and

proceeded without discussions, which the government does not appear to

dispute. If the agency had used discussions, SLS may have had been able to

revise aspects of its offer and provide the government with better value. See

Dell Fed., 906 F.3d at 996 (“Had the Army conducted pre-award discussions,

several of the lower-priced offerors deemed unacceptable—either as a result

of ambiguous Solicitation requirements or otherwise—might have revised

their initial proposals, which then might plausibly have been found

technically acceptable.”). Thus, because “a correct application of DFARS

215.306 may have kept [SLS] in the competition [it] is sufficient to

demonstrate prejudice.” IAP Worldwide I, 159 Fed. Cl. at 317.

III. SLS is entitled to injunctive relief.

At this point, the only remaining question is what relief, if any, is

appropriate. SLS seeks a permanent injunction. When issuing an injunction,

courts “must balance the competing claims of injury and must consider the

effect on each party of the granting or withholding of the requested relief.

Winter v. Nat’l Res. Def. Council, 555 U.S. 7, 24 (2008). In particular, the

court must consider four factors: (1) whether the plaintiff succeeds on the

merits; (2) whether the plaintiff will suffer irreparable harm without

injunctive relief; (3) whether the “balance of hardships” favors the plaintiff;

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

United States, 389 F.3d 1219, 1228–29 (Fed. Cir. 2004). First, for the reasons

already discussed, SLS has demonstrated success on the merits.

Second, protesters often show irreparable harm through “evidence of

lost profits or evidence that a monetary award would not remedy its

damages.” PGBA, 389 F.3d at 1231. In a similar vein, “a protester [also]

suffers irreparable harm if it is deprived of the opportunity to compete fairly

for a contract.” FCN, Inc. v. United States, 115 Fed. Cl. 335, 384 (2014).

In this case, the agency improperly analyzed price reasonableness and

violated DFARS 215.306. Those errors, if left alone, will inflict irreparable

harm. Not only will SLS be deprived of a fair chance to compete, FCN, 115

Fed. Cl. at 384, but it will also lose the profits it could have obtained through

the contract, Fed. Acquisition Servs. Team, LLC v. United States, 124 Fed.

Cl. 690, 708 (2016).

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Third, we must “consider whether the balance of hardships leans in

the plaintiff’s favor, [which] requir[es] a consideration of the harm to the

government” and Jacobs. Id. While the government does not identify any

harm it will suffer from this injunction, Jacobs does. 9 The only hardship that

Jacobs identifies, however, is “not being able to perform [its] properly

awarded contract[].” As discussed, those awards came from a flawed

procurement process. So, when weighed against the irreparable harm that

SLS faces, the balance of hardships favors SLS.

Finally, we examine the public interest. When it comes to government

contracts, the public has an “overriding . . . interest in preserving the integrity

of the federal procurement process by requiring government officials to

follow procurement statutes and regulations.” AshBritt, Inc. v. United States,

87 Fed. Cl. 344, 379 (2009). Here, the government failed to follow the

applicable regulations, and so this injunction is in the public’s interest.

In the end, all four factors weigh in SLS’s favor. The agency therefore

is enjoined from proceeding with performance of the contracts.

CONCLUSION

In sum, SLS has shown that the agency awarded six contracts for

global contingency construction in violation of applicable regulations. First,

it improperly analyzed price reasonableness when it failed to request or

evaluate pricing information. Second, it violated DFARS 215.306 when it

awarded the contracts without adequately justifying its decision not to use

discussions. Because these are sufficient grounds to sustain the protest, we

need not address SLS’s remaining arguments. Accordingly, we order the

following:

1. SLS’s motion for judgment on the administrative record is

granted. The government’s and Jacobs’s cross-motions are denied.

9

Jacobs goes on to describe some of the agency’s harms if we enjoin

performance. Because the government can speak for itself (and did not

identify any harm), we consider only the harm that Jacobs alleges it will

suffer.

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2. The agency is enjoined from proceeding with performance of the

contracts awarded to Aptim, CDM, ECC, Gilbane, Jacobs, and

Perini.

3. If the agency moves forward with the solicitation, it will do so in

a manner consistent with this opinion.

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

5. Costs to plaintiff.

s/Eric G. Bruggink

ERIC G. BRUGGINK

Senior Judge

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