In the United States Court of Federal Claims
No. 17-1329
Filed: March 5, 2018*
****************************************
* 5 U.S.C. § 706 (Administrative Procedure
* Act, Scope of Review);
ERNST & YOUNG, LLP, * 28 U.S.C. § 1491(b)(1), (4) (United States
* Court of Federal Claims Bid Protest
Plaintiff, * Jurisdiction);
* 48 C.F.R. §§ 1.102-2 (Performance
v. * Standards); 8.404 (Use of Federal
* Supply Schedules); 8.405-3 (Blanket
THE UNITED STATES, * Purchase Agreements (BPAs)); 9.504
* (Contracting Officer Responsibilities);
Defendant, * 9.505 (General Rules); 9.505-2
* (Preparing Specifications or Work
and * Statements); 9.506 (Procedures);
* 15.305 (Proposal Evaluation); 15.306
PRICEWATERHOUSECOOPERS PUBLIC * (Exchanges with Offerors After
SECTOR, LLP, * Receipt of Proposals);
* Rules of the United States Court of
Defendant-Intervenor. * Federal Claims 52.1 (Motion for
* Judgment on the Administrative
* Record); 52.2 (Remand).
****************************************
Craig A. Holman, Arnold & Porter Kaye Scholer LLP, Washington, D.C., Counsel for Plaintiff.
Geoffrey M. Long, United States Department of Justice, Civil Division, Washington, D.C.,
Counsel for the Government.
Philip J. Davis, Wiley Rein, LLP, Washington, D.C., Counsel for Defendant-Intervenor.
MEMORANDUM OPINION AND FINAL ORDER GRANTING PLAINTIFF’S MOTION
FOR JUDGMENT ON THE ADMINISTRATIVE RECORD IN PART
*
On February 23, 2018, the court forwarded a sealed copy of this Memorandum Opinion
And Final Order to the parties to redact any confidential and/or privileged information from the
public version and note any citation or editorial errors that required correction. The parties had
until March 2, 2018 at 3:00 p.m. E.S.T., to file any proposed redactions or revisions. The court
has incorporated all appropriate redactions.
BRADEN, Chief Judge.
This bid protest concerns violations of several Federal Acquisition Regulations (“FAR”),
including the failure of the Contracting Officer (the “CO”) to “[i]dentify and evaluate” potential
organizational conflicts of interest (“OCI”), “as early in the acquisition process as possible,” and
“[a]void, neutralize, or mitigate significant potential [OCIs] before contract award.” See 48 C.F.R.
§ 9.504(a). That violation is more than sufficient grounds to support an injunction to set aside the
contract award in this case, but coupled with other prejudicial FAR violations, requires a remand
to the United States Department of Veterans Affairs (the “VA”).
To facilitate review of this Memorandum Opinion And Final Order, the court has provided
the following outline.
I. RELEVANT FACTUAL BACKGROUND.
A. The United States Department Of Veterans Affairs’s Market Area Health System
Optimization Pilot Study.
B. The Solicitation For The Market Area Health System Optimization Project.
C. The Factors By Which Proposals Would Be Evaluated.
1. The Small Business Participation Commitment/Plan Factor.
2. The Non-Price Factors.
a. The Technical Factor.
b. The Corporate Experience Factor.
c. The Past Performance Factor.
d. The Veterans Involvement Factor
3. The Price Factor.
D. Five Proposals For The Market Area Health System Optimization Project Were
Submitted.
E. The Source Selection Evaluation Board’s Evaluation.
1. The Small Business Participation Commitment/Plan Factor.
2. The Non-Price Factors.
a. The Technical Factor.
b. The Corporate Experience Factor.
c. The Past Performance Factor.
d. The Veterans Involvement Factor.
3. The Price Factor.
4. Summary Of The Source Selection Evaluation Board’s Evaluation.
2
F. The Contracting Officer’s “Best Value Trade-Off” Determination And Award Of
The Market Area Health System Optimization Contract To
PricewaterhouseCoopers Public Sector, LLP.
II. PROCEDURAL HISTORY.
III. DISCUSSION.
A. Subject Matter Jurisdiction.
B. Standing.
C. Whether The United States Department of Veterans Affairs’s Award to
PricewaterhouseCoopers Public Sector, LLP Was Contrary To Law, Not Rational,
Or Arbitrary And Capricious.
1. Standard Of Review For Judgment On The Administrative Record,
Pursuant To RCFC 52.1.
2. Standard Of Review For A Bid Protest.
3. Ernst & Young, LLP’s Amended Complaint.
4. Ernst & Young, LLP’s Motion For Judgment On The Administrative
Record.
a. The Source Selection Evaluation Board’s Evaluation Failed To
Comply With The Solicitation Or Otherwise Was Arbitrary And
Capricious.
b. PricewaterhouseCoopers Public Sector, LLP’s Assumptions Did
Not Comply With The Solicitation.
c. The Contracting Officer Failed To Conduct Discussions.
d. The Contracting Officer Failed Adequately To Mitigate
Organizational Conflicts Of Interest.
e. Injunctive Relief Is Appropriate.
5. The Government’s Response And Cross-Motion For Judgment On The
Administrative Record.
a. The Source Selection Evaluation Board’s Evaluation Was Proper.
b. PricewaterhouseCoopers Public Sector, LLP’s Assumptions
Complied With The Solicitation.
c. The Contracting Officer Was Not Required To Conduct
Discussions.
d. Ernst & Young, LLP’s Organizational Conflict Of Interest Claims
Are Untimely And Unsupported.
3
6. PricewaterhouseCoopers Public Sector, LLP’s Response And Cross-
Motion For Judgment On The Administrative Record.
7. Ernst & Young, LLP’s Reply In Support Of Motion For Judgment On The
Administrative Record And Opposition To The Government’s And
PricewaterhouseCoopers Public Sector, LLP’s Cross-Motions For
Judgment On The Administrative Record.
a. The Extent To Which
Will Be Involved Is Uncertain.
b. Ernst & Young, LLP Did Not Waive Organizational Conflict Of
Interest Claims.
c. Permanent Injunctive Relief Is Appropriate.
8. The Government’s Reply In Support Of Cross-Motion For Judgment On
The Administrative Record.
9. PricewaterhouseCoopers Public Sector, LLP’s Reply In Support Of Cross-
Motion For Judgment On The Administrative Record.
10. The Court’s Resolution.
a. Ernst & Young, LLP Did Not Waive Any Organizational Conflict
Of Interest Claims.
b. The Contracting Officer Violated FAR 9.504(a), By Failing To
Identify, Evaluate, And Mitigate A Significant Unequal Access To
Information Organizational Conflict Of Interest Prior To Award Of
The Market Area Health System Optimization Contract.
c. A Biased Ground Rules Organizational Conflict Of Interest,
However, Did Not Exist.
d. The Source Selection Evaluation Board Violated FAR 8.405-
3(b)(2), By Failing To Evaluate Proposals, Pursuant To The
Requirements Of The Solicitation.
i. As To Ernst & Young, LLP’s Technical Proposal.
ii. As To PricewaterhouseCoopers Public Sector, LLP’s Past
Performance Examples.
e. The Contracting Officer Violated FAR 1.102-2(c)(3), By Failing
To Conduct Discussions Prior To Award Of The Market Area
Health System Optimization Contract.
f. The Administrative Record Does Not Evidence That The
Contracting Officer’s Decision Not To Award The Market Area
4
Health System Optimization Contract To Ernst & Young, LLP
Was Arbitrary And Capricious, Or Lacked A Rational Basis.
g. Ernst & Young, LLP Was Prejudiced By The Contracting Officer’s
And The Source Selection Evaluation Board’s FAR Violations.
h. Ernst & Young, LLP Is Entitled To Injunctive Relief.
IV. CONCLUSION.
5
I. RELEVANT FACTUAL BACKGROUND.1
A. The United States Department Of Veterans Affairs’s Market Area Health
System Optimization Pilot Study.
On December 6, 2016, the VA awarded The Craddock Group, LLC (“Craddock”) Contract
No. VA101F-17-C-2843 (the “Pilot Study Contract”). Tab 27, AR 930–39. This contract required
Craddock to conduct a pilot study (the “Pilot Study”) in contemplation of “a National Realignment
Plan,” known as the Market Area Health System Optimization Project (the “MAHSO Project”).
Tab 1, AR 4; Tab 4, AR 83; Tab 27, AR 830, 930–39. The MAHSO Project sought to “develop a
National Realignment Strategy . . . to establish high performing health care networks for [Veterans
Health Administration (the “VHA”)] services and facilities.” Tab 1, AR 4.
Under the Pilot Study Contract, Craddock was required to “[d]efine the ideal healthcare
delivery system design processes and outputs.” Tab 27, AR 934. In doing so, Craddock was “to
evaluate feasibility, time, costs, adverse events, strengths and weakness of the proposed [MAHSO
Project] to improve upon the study design.” Tab 1, AR 5. Craddock was required to assess three
VHA market areas (the “Pilot Study Market Areas”) to “develop[] a strategy to provide exceptional
healthcare that improves the health and wellbeing of [v]eterans throughout the country.” Tab 27,
AR 830; see also Tab 27, AR 934. This “strategy,” referred to as the “Methodology,” was “to be
used as a guide for future consulting firms to follow . . . during the . . . national ‘roll out’” of the
MAHSO Project across 96 VHA market areas. Tab 27, AR 830–31; Tab 27, AR 934. Between
April 2017 and August 2017, Craddock together with a subcontractor, PricewaterhouseCoopers
Public Sector, LLP (“PwC”), developed the Methodology. Tab 2, AR 26; Tab 27, AR 831. To
produce the Methodology, the VA provided Craddock and PwC with “proprietary” non-public
“[g]overnment-issued data” (the “Pilot Study Data”) for the three Pilot Study Market Areas. Tab
27, AR 831; Tab 27, AR 835–36 (“Data was directly provided to . . . Craddock . . . by the [VA]
during the development of the [M]ethodology[.]”).
The Methodology was a “straightforward step-by-step process that outline[d] the high level
approach, activities, and data that [would] be used” during the MAHSO Project. Tab 27, AR 835;
see also Tab 9, AR 377 (“The roadmap below outlines the high level approach, activities, and data
that were used for each market assessment.”). The Methodology described a “general approach
for analyzing each [VHA] market [area]” (Tab 27, AR 833), by the performance of eight defined
tasks: (1) “Evaluate Market Geography and Demographics;” (2) “Conduct Site Visits and
Interviews;” (3) “Estimate Current and Future Market Demand;” (4) “Estimate Current and Future
Total Market Supply;” (5) “Assess Quality, Satisfaction, Accessibility, Cost, Facility Condition
and Impact on Mission;” (6) “Review Preliminary Analysis, Results and Conclusions with Local
Market and VISN2 Staff;” (7) “Recommend Market Optimization Plan Based on Enterprise-wide
1
The facts recited herein were derived from the Second Corrected Administrative Record
(Tab 1, AR 1–Tab 27, AR 981). ECF No. 39.
2
The VHA is divided into 18 regional Veterans Integrated Service Networks
(“VISN”). See Locations: Veterans Health Admin., U.S. DEP’T OF VETERANS AFFAIRS,
https://www.va.gov/directory/guide/division.asp?dnum=1 (last visited Feb. 22, 2018).
6
Guiding Principles and Performance Against Quality, Access, Cost, Satisfaction and Mission
Standards;” and (8) “Integrate Market Optimization Recommendations into VISN and National
Strategic Plans.” Tab 9, AR 377.
During the time Craddock and PwC were working on the Methodology, the VA separately
“began developing a procurement package” (the “MAHSO Solicitation” or “Solicitation”) with
the assistance of the CO “to acquire consulting services” to perform the MAHSO Project, “based
on . . . experience[] gained . . . through participating in the [P]ilot . . . [S]tud[y] and assisting in the
evolution of the [M]ethodology.” Tab 27, AR 830, 837. The VA completed the MAHSO
Solicitation before the Methodology was finalized (Tab 27, AR 832 (“[T]he methodology was not
complete at the time of solicitation issuance[.]”)), but the VA was aware of the content and status
of the Methodology, as the VA “worked closely” with Craddock and PwC to develop the
Methodology. Tab 27, AR 831; Tab 27, AR 835 (“Craddock . . . and PwC had direct information
concerning the [M]ethodology since they were currently in the process of developing it with the
[VA].”).
On or about May 17, 2017, the CO was informed that Craddock and PwC would “likely
bid” on the MAHSO Project. Tab 27, AR 831.
B. The Solicitation For The Market Area Health System Optimization Project.
On June 30, 2017, the VA issued the MAHSO Solicitation, Solicitation No. VA101-17-Q-
0395. Tab 7, AR 139. The Solicitation was amended on July 7, 2017 (“Amendment A00001”)
and again on July 20, 2017 (“Amendment A00002”). Tab 8, AR 227; Tab 9, AR 337; Tab 27, AR
896. On July 7, 2017, The VA sent the Solicitation directly to Deloitte Consulting LLP
(“Deloitte”), Ernst & Young, LLP (“E&Y”), KPMG LLP (“KPMG”), and PwC, and also posted
the Solicitation on the General Services Administration’s (the “GSA”) eBuy website. Tab 18, AR
678.
The VA requested proposals from contractors “with deep and broad healthcare system
planning expertise” (Tab 9, AR 346), to “execut[e] extensive market studies of 96 . . . [VHA]
markets . . . and coalesce all findings into an integrated synergistic national realignment study.”
Tab 1, AR 4. The Solicitation stated that the VA “intend[ed] to establish a [single-award blanket
purchase agreement (“BPA”)]” under which the VA would place “calls,” or task orders, as “the
need for services ar[ose].” Tab 7, AR 139, 141. The Solicitation called for an initial task order
(“Task Order One”) to be completed within four months, i.e., “120 calendar days.” Tab 9, AR
339–44. The VA expected to award Task Order One “at [the] time of establishing the BPA.” Tab
8, AR 270.
The Solicitation included two Statements of Work (“SOW”): a BPA SOW (Tab 9, AR
346–74); and a Task Order One SOW. Tab 9, AR 339–44. The BPA SOW identified three “Task
Areas.” Tab 9, AR 349–54. “Task Area 1” was described as
[u]sing [the] . . . [M]ethodology defined through [the] [P]ilot [Study] . . . , develop
a National Enterprise Strategy to Create High Performing Networks and Optimize
Health Care Service Delivery by defining an optimum Health Care Service
Delivery System Design for each of the identified markets across the [VHA] (now
7
identified as 93 plus three previously completed pilot markets, for a total of 96) that
will continue to improve access, satisfaction, and deliver efficient, high quality care
in a [v]eteran-centric way.
Tab 9, AR 349.
“Task Area 2” was described as
[u]sing [the] . . . [M]ethodology consisting of proven analytical tools and
applications to assess access, quality, and cost of available community care,
conduct market assessments for all V[H]A markets across the nation. Evaluate VA
care in each market and identify opportunities for [the] VA to purchase care from
community providers. Aggregate and analyze assessment results to inform the
Enterprise-wide National Realignment Strategy. Provide clear, data driven,
comprehensive written reports/presentations of findings, options and
recommendations for each market.
Tab 9, AR 351.
“Task Area 3” was described as
additional studies and analyses [to] further enable [the] VA to optimize its High
Performing Network Design and National Realignment Strategy and elicit
appropriate executive support, strategic communication, and stakeholder
management.
Tab 9, AR 352.
The Task Order One SOW, included components of all three Task Areas described in the
BPA SOW, and required the successful offeror to develop Phase I of the National Realignment
Strategy in approximately 32 VHA market areas across six VISNs and “recommend potential
health care service delivery realignments as well as recommendations to continue care as currently
provided in each market [area] for a 10 year period.” Tab 9, AR 339. The Task Order One SOW
required the successful offeror to “have one team per VISN” (Tab 9, AR 339) and, as a “General
Requirement,” the VA advised prospective offerors that “[t]ravel [would be] required for at least
six teams of five healthcare planners and data analysts to assess . . . [VHA market areas] within
each of the six (6) VISNs[.]” Tab 9, AR 344. In addition, the Task Order One SOW provided that
“[t]eams shall be supported by . . . disciplines and specialists[,] as needed. Core team leads include
a Senior Medical Facility Planner (Architect) and a Senior Medical Services Planner (Healthcare
Planner).” Tab 9, AR 344.
The Task Order One SOW required “consistent application” of the Methodology “across
all assessment teams.” Tab 9, AR 339 (“The [c]ontractor will be responsible for ensuring
consistent application of the [M]ethodology across all assessment teams. The market area health
system plans will be conducted according to [the M]ethodology.”); see also Tab 9, AR 341–42.
But, none of the prospective offerors, except PwC had access to the Methodology when the
Solicitation was issued on June 30, 2017. Tab 9, AR 337. Several prospective offerors, however,
requested that the Methodology be provided to all the prospective offerors. Tab 8, AR 298; see
8
also Tab 8, AR 299–300, 302. The CO refused, but promised that the Methodology would “be
provided after award of the BPA.” Tab 8, AR 298. The offerors also requested access to “any
assumptions used in development” of the Methodology. Tab 8, AR 298; see also Tab 8, AR 299–
300, 302. The CO responded that the “[M]ethodology is still being developed . . . but will be
relatively straight forward in nature, and after completion will require extensive
input/customization from the selected contractor.” Tab 8, AR 299. In addition, prospective
offerors requested “information on who developed the [M]ethodology.” Tab 8, AR 298. The CO
responded that Craddock was “assisting” in development of the Methodology, but did not mention
PwC’s involvement. Tab 8, AR 298–300, 302.
After the CO’s initial responses, but prior to release of the Methodology, a prospective
offeror expressed concern that
the [VA] recognizes that the [M]ethodology, which is key to the technical approach,
is currently being developed by contractors as part of the [P]ilot[ Study]. Given
that knowledge of th[e M]ethodology constitutes both unequal access to
information and creates biased ground rules that would subsequently provide an
unfair advantage to the current pilot support contractor and their team; and given
the increased likelihood that participation in development of the [M]ethodology
could subsequently impair a contractor’s ability to provide objective advice in
evaluating market options and developing the subsequent National Enterprise
Strategy, can the [VA] confirm that these companies will not be allowed to bid on
th[e MAHSO Project]?
Tab 9, AR 345 (emphasis added). The CO responded that “there [would] be no such prohibitions.”
Tab 9, AR 345.
A draft of the Methodology was eventually provided to prospective offerors with
Amendment A00002 on July 20, 2017, only seven days before proposals were due on July 27,
2017. Tab 9, AR 337. The underlying Pilot Study Data provided to Craddock and PwC by the
VA, however, was never provided to the other prospective offerors. Tab 27, AR 833.
C. The Factors By Which Proposals Would Be Evaluated.
The Solicitation advised prospective offerors that the VA would “use the best value trade-
off process to select . . . the most beneficial quote, price and other factors considered.” Tab 8, AR
269. Therefore, the award would be made
based on the best overall (i.e., best value) quote that meets or exceeds the minimum
small business participation percentages established by the [VA] under a Small
Business Participation Commitment/Plan Factor, and is determined to be most
beneficial to the [VA], with appropriate consideration given to the [P]rice [F]actor
and the following four additional non-price evaluation factors: Technical
(including Technical Approach, Staffing/Management Plan, and Key Personnel
Résumés), Corporate Experience, Past Performance, and Veterans Involvement.
Tab 8, AR 269 (emphasis added).
9
The VA committed to “award a contract resulting from th[e MAHSO S]olicitation to the
responsible offeror whose offer conforming to the solicitation will be most advantageous to the
[VA], price and other factors considered.” Tab 8, AR 268. The Solicitation, however, also advised
offerors that
[t]he [VA] intends to establish a BPA and award [Task ]Order [One] without further
communicating with [c]ontractors. . . . However, the [VA] reserves the right to
communicate with any or all [c]ontractors submitting a quote, if it is determined
advantageous to the [VA] to do so. . . . A [c]ontractor may be eliminated from
consideration without further communication if its non-price and/or pricing quotes
are not among those [c]ontractors considered most advantageous to the [VA] based
on a best value determination.
Tab 8, AR 269 (emphasis added).
1. The Small Business Participation Commitment/Plan Factor.
The Solicitation stated that the “Small Business Participation Commitment/Plan Factor
[was] an acceptable/unacceptable (go/no go) factor, and as such, failure to meet the small business
participation requirements established in the [S]olicitation will render a [q]uoter’s response
unacceptable and therefore not eligible for award, with no further award consideration given.” Tab
8, AR 269. Under the Small Business Participation Commitment/Plan Factor, the Solicitation
required: (1) that “[a]t least 30% of the total dollar value of [Task Order One go] to small
business(es)[;]” and (2) that “[a]t least 10% of the total dollar value of [Task Order One go]
to a . . . Service Disabled Veteran Owned Small Business (“SDVOSB”) or at least 12% of the total
dollar value of [Task Order One go] to a . . . Veteran Owned Small Business (“VOSB”).” Tab 8,
AR 271.
2. The Non-Price Factors.
The Solicitation provided that
[a]fter being determined acceptable for the Small Business Participation
Commitment/Plan, the quote will be evaluated utilizing the four remaining non-
price factors[.] To receive consideration for award, a rating of no less than
“Satisfactory” must be achieved for the Technical and Corporate Experience
Factors. Contractors are cautioned that the award may not necessarily be made to
the [c]ontractor quoting the lowest price, or to the [c]ontractor with the most highly
rated technical quote. Award may be made to other than the lowest priced quote,
if the [VA] determines that a price premium is warranted due to the merits of one
or more of the non-price factors. Additionally, the [VA] will not establish a BPA
with any [c]ontractor whose price cannot be found fair and reasonable.
Tab 8, AR 270 (emphasis added).
As to the “Relative Importance” of the Non-Price Factors, the Solicitation provided that
“[t]he Technical Factor and Corporate Experience [F]actors are equally important. Together, these
two factors are significantly more important than the Past Performance Factor[,] which is
10
significantly more important than the Veterans Involvement Factor. All [N]on-Price Factors, when
combined, are significantly more important than Price.” Tab 8, AR 269.
The following court exhibit depicts the relationship between each of the evaluation factors
and their relative importance.
1. Small Business Participation
Commitment/Plan Factor
2. Non-Price Factors
a. Corporate
Technical
Experience
Relative Importance
b. Past Performance
Veterans
c.
Involvement
3. Price Factor
Notes:
The Small Business Participation Commitment/Plan Factor was a threshold
“acceptable/unacceptable (go/no go) factor.” Tab 8, AR 269.
The Technical and the Corporate Experience Factors were “equally important,” but
“[t]ogether . . . significantly more important than the Past Performance Factor.” Tab
8, AR 269.
The Past Performance Factor was “significantly more important than the Veterans
Involvement Factor.” Tab 8, AR 269.
Together, all Non-Price Factors were “significantly more important than Price.”
a. The Technical Factor.
Regarding the Technical Factor, the Solicitation stated that each offeror was required to
“provide a Technical Volume that include[d]”: (1) “a description of the [offeror’s] BPA-level
technical approach to providing VHA Health System Optimization . . . demonstrat[ing] its
understanding of the work, including understanding the objectives of the [BPA SOW] . . . and
specific tasks, challenges, and risks[;]” (2) “[a] staffing/management plan tailored to [Task Order
One] covering the first year of performance;” and (3) “[r]ésumés for the key personnel meeting
the requirements in the . . . SOW[.]” Tab 8, AR 282.
11
The VA was to evaluate each offeror’s Technical Volume by considering four elements.
Tab 8, AR 272–73. First, the VA would evaluate the offeror’s understanding of the problem, by
considering “the extent to which [the offeror] demonstrate[d] a clear understanding of all features
involved in solving the problems and meeting and/or exceeding the requirements presented in the
[S]olicitation.” Tab 8, AR 272. Second, the VA would evaluate the feasibility of each offeror’s
approach, by considering “the extent to which the [offeror’s] proposed approach is workable and
the end results achievable[,]” including consideration of the “level of effort and mix of labor
proposed to perform the tasks identified in [Task Order One].” Tab 8, AR 272. Third, the VA
would evaluate the offeror’s key personnel, by considering “whether the quoter’s proposed key
personnel [were] available to begin on [Task Order One] . . . and ha[d] the minimum required
knowledge, skills, and experience to perform the tasks under th[e Solicitation.]” Tab 8, AR 272.
Fourth, the VA would evaluate each offeror’s “Staffing/Management Plan[,]” to “determine
whether the quoter ha[d] adequate key personnel readily available to perform the required services
within the requested period of time.” Tab 8, AR 273.
After evaluation, each offeror would be assigned one of five possible ratings: “Excellent;”
“Good;” “Satisfactory;” “Marginal;” or “Unacceptable.” Tab 18, AR 689. Offerors receiving a
rating of less than “Satisfactory”3 would not be eligible for an award. Tab 8, AR 270.
b. The Corporate Experience Factor.
Regarding the Corporate Experience Factor, the Solicitation stated that each offeror was
required to “provide up to three specific examples of its past corporate experience” and “[d]escribe
how its past experience in commercial and [g]overnment healthcare ha[d] equipped it with the
knowledge, skills and abilities to beneficially impact a healthcare delivery system for a large,
complex enterprise-wide health care network.” Tab 8, AR 283.
In evaluating each offeror’s corporate experience, the VA was to “determine the extent to
which a quoter’s corporate experience ha[d] equipped it with the knowledge, skills and ability to
support transformation and implementation of a health care delivery system for a large, complex
regional (preferably national) health care network.” Tab 8, AR 273. The evaluation would include
a “confidence assessment of the quoter’s corporate experience . . . reflect[ing] the [VA’s]
confidence in and the likelihood that the quoter [would] successfully complete the [S]olicitation
requirements based on previous demonstrated recent and/or relevant experience.” Tab 8, AR 273.
The Solicitation provided that “[i]n this context, ‘quoter’ refers to the prime [c]ontractor and all
proposed major subcontractor(s).”4 Tab 8, AR 273. The Solicitation provided further that “only
3
The VA defined “Satisfactory” as: “[a]dequate understanding; meets the minimum
requirements of the [Solicitation].” Tab 18, AR 689.
4
In response to a prospective offeror’s request regarding “the requirements to determine
what subcontractor is considered a major subcontractor,” the CO indicated that “[a] major sub-
contractor would be defined as any sub-contractor that is performing a critical component of the
work identified. It is up to the quoter to identify their major subcontractors.” Tab 8, AR 303
(emphasis added).
12
corporate experience is evaluated and that personnel experience will not be evaluated as part of
this factor.” Tab 8, AR 273 (emphasis omitted).
After evaluation, each offeror would be assigned one of four possible ratings: “Substantial
Confidence;” “Satisfactory Confidence;” “Limited Confidence;” or “No Confidence.” Tab 18, AR
689. Offerors receiving a rating of less than “Satisfactory Confidence”5 would not be eligible for
an award. Tab 8, AR 270.
c. The Past Performance Factor.
Regarding the Past Performance Factor, the Solicitation stated that each offeror was
allowed to submit “a narrative detailing up to three (3) contracts (prime contracts, task/delivery
orders, and/or major subcontracts) in performance during the past three (3) years from the date of
issuance of the . . . [S]olicitation, which are relevant to the efforts required by the [Solicitation].”
Tab 8, AR 284. The Solicitation provided that “[a]reas of relevance include all objectives
addressed in the [BPA] SOW.” Tab 8, AR 284. Although offerors were allowed to include past
efforts of their major subcontractors, the Solicitation stated that “[d]ata concerning the prime
quoter shall be provided first, followed by each proposed major subcontractor, if applicable, in
alphabetical order.” Tab 8, AR 284.
In evaluating each offeror’s past performance, the VA was to “assess the relative risks
associated with a quoter’s likelihood of success in fulfilling the [S]olicitation’s requirements as
indicated by that quoter’s record of past performance.” Tab 8, AR 274. Again, the Solicitation
indicated that “[i]n this context, ‘quoter’ refers to the prime [c]ontractor and all proposed major
subcontractor(s).” Tab 8, AR 274. The Solicitation clarified, however, that “in this assessment,
the [VA] will consider past performance for the proposed prime [c]ontractor (identified in Block
17a of the SF 1449) to be significantly more important than past performance examples submitted
for any other member of the vendor’s proposed structure.” Tab 8, AR 274. The VA would assess
each offeror’s “relative risk” “based on the quality, relevancy (size, scope, and complexity) and
recency (within last 3 years) of the quoter’s past performance, as well as that of its major
subcontractor(s), as it relates to the probability of successful accomplishment of the required
effort.” Tab 8, AR 274.
After evaluation, each offeror would be assigned one of four possible ratings:
“Neutral/Unknown;” “Low Risk;” “Moderate Risk;” or “High Risk.” Tab 18, AR 690.
d. The Veterans Involvement Factor
Regarding the Veterans Involvement Factor, the Solicitation required the VA to
assign full evaluation credit for a quoter (prime [c]ontractor) which is
a . . . registered and verified SDVOSB and partial credit for a verified VOSB prime
[c]ontractor. Non-SDVOSB/VOSB quoters proposing to subcontract 10% or more
5
The VA defined “Satisfactory Confidence” as: “[b]ased on the quoter’s recent/relevant
record of experience, the [VA] has a reasonable expectation that the quoter will successfully
perform the required effort.” Tab 18, AR 689.
13
of [Task Order One’s] value to a verified SDVOSB concern or 12% or more of
[Task Order One’s] value to a verified VOSB concern [would] receive some
evaluation credit.
Tab 8, AR 275.
3. The Price Factor.
Regarding the Price Factor, each offeror was required to “complete and submit [a] Price
Volume,” including: (1) “[t]he BPA Rate Schedule . . . of the [Solicitation], quoting labor rates for
the required labor categories;” and (2) “[t]he Call Labor Basis worksheet . . . of the [Solicitation],
showing the labor categories, hours, and labor rates used to develop the quoted fixed-price.” Tab
8, AR 287. The Solicitation also provided that “[p]rice [was to] be evaluated for reasonableness
by assessing[:] (1) the reasonableness of the quoted labor rates, as well as (2) the reasonableness
of the total quoted price for [Task Order One], considering the level of effort and the mix of labor
proposed to perform the specific tasks being ordered.” Tab 8, AR 276. In addition, the Solicitation
provided that
[t]he [VA] anticipates that the effort and resources required for [Task Order One]
will be representative of future [task orders]. Accordingly, pricing for [Task Order
One] serves to provide the [VA] with a reasonable and realistic estimate for how
each subsequent [task order] will be priced by a respective quoter. The CO is
therefore responsible for determining that the price for [Task Order One] is
reasonable from all responses received in accordance with the evaluation criteria.
In making this determination, the [VA] will consider the level of effort and the mix
of labor proposed to perform the specific tasks being ordered.
The proposed BPA pricing, consisting of [Task Order One] pricing and the
option years’ labor rates will be used in the “best value” analysis and determination
made by the [CO].
Tab 8, AR 276.
After evaluation, “[p]rice [would] not be assigned an adjectival rating, but [would only be
evaluated to determine whether it [was] ‘fair and reasonable.’” Tab 18, AR 691. “[T]he [VA
would] not establish a BPA with any [c]ontractor whose price [could not] be found fair and
reasonable.” Tab 8, AR 270.
The VA estimated that Task Order One would require 81,920 hours of labor, covering eight
labor categories. Tab 18, AR 727. Using “labor rates from approximately four GSA contract
holders with similar labor categories,” the VA estimated a “[t]otal estimate” for Task Order One
of $ , including “the not to exceed travel amount of $600,000.” Tab 18, AR 727. To
evaluate the reasonableness of each offeror’s proposed price, however, an estimate of
$ was used, reflecting . Tab
18, 728–29, 731–33. The VA also prepared an Independent Government Cost Estimate (the
“IGCE”) for the MAHSO Project “through market research, recent contracts for pilot analysis
studies of VHA markets and average GSA labor rates from a sample of potential contractors.” Tab
1, AR 6. The IGCE was $ . Tab 1, AR 6.
14
D. Five Proposals For The Market Area Health System Optimization Project
Were Submitted.
Proposals initially were due on July 21, 2017; the VA, however, extended that date to July
27, 2017 by Amendment A00001. Tab 27, AR 896; see also Tab 9, AR 385. Prior to the final
deadline, five offerors submitted proposals, including: Deloitte, E&Y, Huron Consulting Group
Inc. (“Huron”), McKinsey & Company, Inc. (“McKinsey”), and PwC. Tab 18, AR 678.
The Source Selection Evaluation Board (the “SSEB”) determined that all five offerors
“were . . . responsive and included [them] in the competition.” Tab 18, AR 678.
E. The Source Selection Evaluation Board’s Evaluation.
1. The Small Business Participation Commitment/Plan Factor.
Regarding the Small Business Participation Commitment/Plan Factor, each offeror
received an “Acceptable/Go” rating. Tab 18, AR 692–97.
2. The Non-Price Factors.
a. The Technical Factor.
Regarding the Technical Factor, only PwC received a “Good”6 rating; Deloitte, E&Y,
Huron, and McKinsey each received a less than “Satisfactory” rating of “Marginal.”7 Tab 18, AR
698–709. Consequently, only PwC was eligible for an award. Tab 8, AR 270.
In justifying E&Y’s rating of “Marginal,” the SSEB stated:
E[&]Y’s staffing levels and labor mix8 shown for the proposed plan showed a vague
understanding of the complexity and size of the task at hand.
6
The VA defined “Good” as: “[t]horough understanding.” Tab 18, AR 689.
7
The VA defined “Marginal” as: “[s]uperficial or vague understanding; could not award
without further communications.” Tab 18, AR 689.
8
E&Y proposed “ [VISN] teams each composed of
[.]” Tab 10, AR 404. E&Y explained that
[e]ach [VISN] team [would] have
. Each [VISN] team will also have
Each site team will also use
15
Tab 18, AR 700.
The SSEB expressed concern about the proposed staffing level for E&Y’s VISN teams,
because . Tab 10, AR 404; Tab 18, AR 701;
see also Tab 18, AR 702 (“
”).9 The SSEB also noted a “weakness” in “staffing” for Deloitte, Huron, and McKinsey,
. Tab 18, AR 699, 704, 706, 737.
In contrast, PwC proposed members for each of the VISN teams. Tab 11, AR 519.
As to PwC’s Technical Factor rating of “Good,” the SSEB stated:
P[w]C’s technical write up and staffing levels/labor mix10 shown for the proposed
plan demonstrated a thorough understanding of the complexity and size of the task
at hand. Their overall focus/approach and plan show that PWC can accomplish the
BPA tasks requirement above minimal standards. Explanation of staffing levels
.
Tab 18, AR 707.
Regarding PwC’s proposed “staffing” and “labor mix” the SSEB concluded that “P[w]C
has presented/prepared a team that . P[w]C
presented a good overall management plan that showed a good labor mix. There was some
concern[, however,] . . . that .” Tab 18, AR 709.
Tab 10, AR 420.
9
In the evaluation of E&Y’s technical proposal, the SSEB mistakenly referred to E&Y as
“Deloitte,” stating that E&Y’s “[q]uote did not provide enough detail to show that Deloitte
understood the VA[’]s efforts or the data to be made available.” Tab 18, AR 701 (emphasis added).
10
PwC proposed VISN teams composed of
Tab 11,
AR 519.
16
b. The Corporate Experience Factor.
Regarding the Corporate Experience Factor, only PwC received a “Substantial
Confidence”11 rating; the other offerors received a less than “Satisfactory Confidence” rating of
“Limited Confidence.”12 Tab 18, AR 710–15. As a result, only PwC was eligible for an award.
Tab 8, AR 270.
PwC submitted three corporate experience examples:
Tab 11, AR 553–59. The SSEB noted that “[o]verall P[w]C ha[d] the corporate
experience needed for a project of this magnitude and
.” Tab 8, AR 714. In contrast, regarding E&Y’s
Corporate Experience rating of “Limited Confidence,” the SSEB observed that “[o]verall
E[&]Y presented a lack of needed experience,
.” Tab 18, AR 711.
c. The Past Performance Factor.
Regarding the Past Performance Factor, only PwC received a “Low Risk”13 rating;
Deloitte, E&Y, Huron, and McKinsey each received a “Moderate Risk”14 rating. Tab 18, AR 716–
22.
With regard to E&Y’s past performance, the SSEB determined that “[a]ll of [E&Y’s]
example[s] . . . .” Tab 18,
AR 717. In contrast, the SSEB was impressed that PwC “[d]emonstrated past performance to
meet[] the needs of the BPA and .” Tab 18, AR 721.
PwC submitted three past performance examples: “
;“
; and “
. Tab 11, AR 564–66. Each
of these projects, however, was performed by
(“ ”), not PwC. Tab 11, AR 564–66 (each project was performed by the contractor
associated with CAGE Code and DUNS Number ); see also SAM Search
11
The VA defined “Substantial Confidence” as: “[b]ased on the quoter's recent/relevant
record of experience, the [VA] has a high expectation that the quoter will successfully perform the
required effort.” Tab 18, AR 689.
12
The VA defined “Limited Confidence” as: “[b]ased on the quoter’s recent/relevant
record of experience, the [VA] has a low expectation that the quoter will successfully perform the
required effort.” Tab 18, AR 689.
13
The VA defined “Low Risk” as: “[l]ittle doubt exists, based on the quoter's performance
record, that the quoter can perform the proposed effort.” Tab 18, AR 690.
14
The VA defined “Moderate Risk” as: “[s]ome doubt exists, based on the quoter's
performance record, that the quoter can perform the proposed effort.” Tab 18, AR 690.
17
Results, , SYS. FOR AWARD MGMT.,
https://www.sam.gov/portal/SAM/#1 (follow the “SEARCH RECORDS” hyperlink; then perform
a “CAGE Code Search” for “ ” or a “DUNS Number Search” for “ ”) (showing
that is associated with CAGE Code and DUNS Number ). PwC,
however, did not list as a “major subcontractor.” Tab 11, AR 571. PwC’s proposal
indicated, however, that
PwC will . . . draw on the staff and expertise of its teaming partners and the
experience, resources, and capabilities of its affiliate, . . . [.] Both
PwC and . . . are partners in their common parent
PricewaterhouseCoopers LLP (“PwC US”) and report ultimately to PwC US
management. resources will be directly and meaningfully involved
in this effort.
Tab 11, AR 519.
d. The Veterans Involvement Factor.
Regarding the Veterans Involvement Factor, each offeror received a rating of “Some
Consideration.” Tab 18, AR 723–26.
3. The Price Factor.
Regarding PwC’s proposed price of $11,981,646.00 for Task Order One (Tab 11, AR
580.4), the SSEB concluded that
[t]he overall level of effort basis was evaluated and determined to be acceptable for
accomplishing the tasks identified. The [VA] estimate lists approximately
[l]abor hours needed to complete [Task Order One’s] associated tasks and PwC
proposed for labor hours putting them of the estimated hours
needed to complete the tasks. PwC presented a good mix of labor categories to
develop their teams and properly estimated the appropriate level of staffing/effort
needed to complete this large and complex task.
Given that PwC’s level of effort to perform the [MAHSO Project] has been
determined . . . acceptable, the total price of $11,981,646.00 is fair and reasonable.
PwC[’s] proposed costs are than the [VA’s IGCE]. The difference
between PWC’s fixed price after discounts of and the IGCE is driven by the
fact that the IGCE applies discount assumed for all vendors.
Tab 18, AR 734.
Accordingly, the SSEB determined that PwC’s price was “Fair and Reasonable.” Tab 18,
AR 733–35.
18
In contrast, as to E&Y’s proposed price of $ for Task Order One (Tab 10, AR
467.7), the SSEB concluded that
[t]he overall level of effort basis was evaluated and determined [by the SSEB] to
not be acceptable for accomplishing the tasks identified. The [VA] assumed
level of effort to be involved to ensure a
. The [VA] estimate list[s]
approximately [l]abor hours needed to complete [Task Order One’s]
associated tasks and E[&]Y proposed . . . labor hours. Although E[&]Y
presented
.
Given that E[&]Y’s level of effort to perform the [MAHSO Project] has
been determined not acceptable, the total price of $ is not fair and
reasonable. The difference between E[&]Y’s fixed price and the IGCE
.
Tab 18, AR 730.
For Task Order One, Deloitte’s proposed price was $ , Huron’s proposed price
was $ , and McKinsey’s proposed price was $ . Tab 18, AR 736. The
SSEB, however, found similar “staffing” and “level of effort” problems in each of their proposals.
Tab 18, AR 699, 704, 706; see also Tab 18, AR 736 (“Although, Individual labor rates were
and determined fair and reasonable by [the] GSA and the SSEB, the labor mix[/]level
of effort were by [Deloitte, E&Y, Huron, and McKinsey]. Since
[Task Order One] was indicative of future [task] orders, and all four quoters provided staffing in
their level of effort that would , there was
”). Therefore, the SSEB concluded that
it could not determine whether the prices proposed by Deloitte, E&Y, Huron, and McKinsey were
“Fair and Reasonable.” Tab 18, AR 727–33, 735. As a result, these offerors were not eligible for
an award. Tab 8, AR 270.
19
4. Summary Of The Source Selection Evaluation Board’s Evaluation.
The SSEB’s “findings from evaluations” are summarized in the following table:
Tab 18, AR 736.
F. The Contracting Officer’s “Best Value Trade-Off” Determination And Award
Of The Market Area Health System Optimization Contract To
PricewaterhouseCoopers Public Sector, LLP.
On August 30, 2017, the CO issued a “Best Value Determination and Award Decision”
(Tab 18, AR 675), wherein the CO “concur[red] with the [SSEB’s] evaluations” and summarized
the “best value trade-off” determination, as follows:
The [Solicitation] stated that “To receive consideration for award, a rating
of no less than [‘]Satisfactory[’] must be achieved for the Technical and Corporate
Experience Factors.” For the Corporate Experience Factor, one quoter, PwC,
earned confidence ratings of Satisfactory or above. For the Technical Factor, only
one quoter, PwC, achieved a rating of Satisfactory or above. As a result, all quoters
are ineligible for award except for PwC.
The [VA] provided in the [S]olicitation that it “intends to establish a BPA
and award [Task ]Order [One] without further communicating with [c]ontractors.”
Based on the evaluations of each quote against all evaluation criteria, the [CO] has
determined that award can be made on the basis of the initial quotes to PwC and
that it is in the best interest of the [VA] to do so. Although, four of the five quoters
presented problems within their technical [proposals] and [Task Order One] pricing
quotes that raised concerns, it was determined by the [CO] that discussions would
only allow the unsuccessful quoters to better their technical quotes and pricing to
become more competitive with PwC and not actually provide any real benefit to the
[VA]. Several quoters provided
based on the scope and methodology provided.
Enough detailed information was provided to the quoters throughout the
20
solicitation for them to understand the importance of staffing and the level of
effort/methodology needed to accomplish the stated tasks and it would be unfair to
PwC for properly following the [S]olicitation[’s] requirements, by opening
discussions and allowing quoters a second chance. In addition, since every quoter
other than PwC received a less than satisfactory rating for corporate experience,
they would not have been eligible for award if discussions for technical and price
were opened.
PwC’s technical quote was good, with many strengths identified in their
quote that will benefit [the] VA. They provided a superb delineation
. PwC made an effort to clearly distil[l] and detail the
composition of the individual VISN . . . teams. The other vendors
.
PwC’s detailed labor mix of
is in line with the
level of effort experienced in the Pilot [S]tud[y], and more importantly in line with
what would be expected of a contract of this scale.
PwC’s corporate experience was stronger than that of each of the other
[q]uoters. PwC’s corporate experience examples demonstrated comparable scale
and complexity to the [MAHSO P]roject. Additionally, the corporate experience
examples demonstrated national scope, and included experience relevant to all the
critical portfolios. The relevancy of PwC’s experience will translate into a
reduction in overall project risk and reduced risk of a delayed National Realignment
Strategy.
PwC’s past performance was relevant with high quality, and resulted in low
past performance risk.
* * *
PwC’s [Task Order One] price is fair and reasonable and an excellent value
to the [VA]. Its price is
. At the same time, the hours
are to the [VA’s] original expectation.
Tab 18, AR 737–38 (emphasis added).
Accordingly, the CO concluded that
PwC[’]s quote is technically the strongest among all quotes and its corporate
experience offers to the [VA] the greatest level of confidence. Its past performance
offers low risk to the [VA] due to the recency, relevance, and quality of its past
work. . . . Its fair and reasonable price is supported by an appropriate labor mix and
level of effort to perform the work under [Task Order One]. Its proposed BPA
hourly rates are published GSA schedule rates for the base and all
21
Option Periods. No other quoter, based on evaluation results, is eligible for award.
PwC’s quote is therefore the best value to the [VA].
* * *
The [VA] will therefore establish a [BPA] with [PwC] covering a base
period and two option periods. . . . The estimated BPA amount will be established
at $110,000,000.00 to reflect BPA [task orders] over the base and two option
periods.
[Task Order One] will be awarded to PwC in the amount of $11,981,646.00.
Fiscal Year 2017 funds are available to cover the price for [Task Order One].
Tab 18, AR 738.
On August 31, 2017, the VA issued PwC a “Notification of BPA Award,” indicating that
PwC was the successful awardee. Tab 23, AR 814–17. The CO asked PwC to “sign [the task
order] and return [it] in an expedited manner in order to allow for a September 1st award.” Tab 23,
AR 816–17.
On September 1, 2017, PwC was awarded the BPA, including Task Order One, Order No.
VA101F-17-J-3076 under BPA No. VA101F-17-A-3074 (the “MAHSO Contract”).15 Tab 20, AR
752; Tab 21, AR 799. On that same day, the VA issued E&Y a “Notification to Unsuccessful
Offerors,” stating E&Y16 was “an unsuccessful offeror” and identifying PwC as the awardee. Tab
24, AR 818.
PwC’s proposal assumed that the “VA [would] support the proposed VISNs
15
, and being performed in [Task Order One] to help meet the accelerated timeline of Phase 1
delivery. These proposed VISNs represent
.” Tab 11, AR 587. The proposal also assumed that “
.” Tab 11, AR 587.
16
The VA’s September 1, 2017 letter to E&Y mistakenly referred to E&Y as “Deloitte,”
stating that “[t]his letter constitutes official notification to Deloitte . . . that it is an unsuccessful
offeror.” Tab 24, AR 818 (emphasis added).
22
The following court exhibit depicts a timeline of the Pilot Study and the MAHSO
procurement.
PILOT STUDY AND MAHSO PROCUREMENT TIMELINE
Pilot Study Contract Awarded
December 6, 2016
Awarded to Craddock
MAHSO Solicitation Developed
Pilot Study Performed Developed by the VA and the CO
April 2017–August 2017
Performed by Craddock and PWC
MAHSO Solicitation Issued
June 30, 2017
Requests for Information and
Amendments Issued
Methodology
July 7, 2017: Amendment A00001
July 20, 2017: Amendment A00002
(draft Methodology produced)
Proposals Due
July 27, 2017
Deloitte, E&Y, Huron, Mckinsey, and
PwC submit proposals
SSEB Evaluation
Deloitte, E&Y, Huron, and Mckinsey are
rendered not eligible for an award
“Best Value Trade-Off” Determination
August 30, 2017
The CO selects PwC
MAHSO Contract Awarded
September 1, 2017
Awarded to PwC
23
II. PROCEDURAL HISTORY.
On September 25, 2017, E&Y (“Plaintiff”) filed a Complaint (“Compl.”) in the United
States Court of Federal Claims alleging that the VA improperly awarded PwC the MAHSO
Contract, because: (1) the VA’s evaluation of E&Y’s proposal was “arbitrary, capricious, and
lacked reason,” Compl. ¶¶ 75–92; (2) the VA’s decision to issue the award to PwC “involved [the]
application of . . . unstated evaluation criteri[a],” Compl. ¶¶ 93–103; (3) PwC is “ineligible for
award[,] because of . . . OCI[s],” Compl. ¶¶ 104–15; (4) the VA’s evaluation of PwC’s proposal
was “unreasonable,” Compl. ¶¶ 116–23; and (5) the VA’s “[best value trade-off] determination is
arbitrary, capricious, and lacks a rational basis.” Compl. ¶¶ 124–28. ECF No. 1. On that same
day, Plaintiff filed a Motion For Protective Order. ECF No. 5.
On September 26, 2017, the court issued a Protective Order. ECF No. 8. On that same
day, the court issued an Order directing PwC, “as a prospective intervenor,” to comply with the
same terms and conditions set forth in the Protective Order. ECF No. 9.
On September 27, 2017, PwC filed an unopposed Motion To Intervene. ECF No. 15. On
that same day, the court issued an Order granting PwC’s Motion To Intervene pursuant to Rule of
the United States Court of Federal Claims (“RCFC”) 24(a)(2). ECF No. 21.
On September 28, 2017, the court issued an Order reflecting the VA’s representation that
it would not “permit the performance of any work under either BPA [No.] VA101F-17-A-3074
or . . . [O]rder [No.] VA101F-17-J-3076 prior to and including December 1, 2017.” ECF No. 22.
On October 3, 2017, the Government filed an unopposed Motion To Remand requesting
the court to “remand this case to the [VA] . . . for 14 days to reconsider, and to make further inquiry
regarding, certain allegations of [an OCI] . . . contained in the [C]omplaint[.]” ECF No. 24.
On October 4, 2017, the court issued an Order remanding this case to the VA for fourteen
(14) days to allow the CO to investigate potential OCIs and consider whether remedial measures
were necessary and directing the “parties [to] file a Joint Status Report with the court on, or by,
October 20, 2017[.]” ECF No. 25. On that same day, the Clerk of Court issued a Remand Letter
to the VA. ECF No. 26.
On October 18, 2017, the Government filed an unopposed Motion To Extend The
Voluntary Remand requesting the court to extend the remand until October 25, 2017. ECF No.
27. On that same day, the court issued an Order granting the Government’s Motion To Extend
The Voluntary Remand and directing the “parties [to] file a Joint Status Report with the court on,
or by, October 27, 2017[.]” ECF No. 28.
On October 27, 2017, the parties filed a Joint Status Report, wherein the parties provided
the CO’s “OCI Assessment,” proposed a briefing schedule, and indicated that the VA would
voluntarily continue to stay performance through January 12, 2018. ECF No. 29. The CO’s OCI
Assessment stated, in part, as follows:
During planning activities associated with the [MAHSO Solicitation], the
[VA] . . . informed the CO on or around May 17, 2017, that . . . Craddock . . . , with
PwC as a sub-contractor, was currently working on [the P]ilot [S]tudy . . . under
24
contract # VA101F-17-C-2843 [and] was performing market analysis activities and
developing the [M]ethodology listed in the [SOW] that would be used
for the upcoming [MAHSO Project]. Under th[e P]ilot [S]tudy
[C]ontract, . . . Craddock . . . worked closely with the [VA], off-site, using
[g]overnment issued data from three out of ninety [six] geographically unique
locations (markets) the VA serves . . . to develop a prototype for Healthcare
Delivery System Design. The prototype was refined through extensive market
analysis activities and [VA] oversight resulting in [the] final developed
[M]ethodology to be used as a guide for future consulting firms to follow and
maintain consistency during the anticipated national “roll out” of ninety [six]
market-level assessments needed to inform the [VA] for creation of [the] National
Realignment Strategy.
Other than working closely with the [VA] to provide the [M]ethodology to
be used as a guide for market analysis activities, . . . Craddock . . . would not be
involved in developing the procurement package, oversight, provide expertise
during the BPA market assessments, or assist in establishing the resulting National
Realignment Strategy. Issues identified during the initial study and ongoing
activities to develop the [M]ethodology helped the [VA] define the SOW based on
their own experience, but . . . Craddock . . . did not have a hand in or provide input
for the SOW’s development, other than developing the [M]ethodology itself.
The [VA] further informed the [CO] that . . . Craddock . . . will likely bid
as a sub-contractor on the subject anticipated acquisition . . . . After being informed
of . . . Craddock[’s] . . . involvement, and gaining a better understanding of the
[M]ethodology, it was advised to the [VA] around the beginning of June 2017 while
developing the solicitation package by the CO, that the [M]ethodology should be
provided to the market in order to avoid an unfair competitive advantage situation
or the appearance of one. The [VA] agreed and worked diligently
with . . . Craddock . . . to complete the [M]ethodology since it was not completed
at the time of procurement package receipt by the CO.
While the [M]ethodology was not complete at the time of solicitation
issuance, due to strict timelines set forth for this procurement it was discussed with
the [VA] and determined by th[e] CO, that the SOW and attached documentation
had enough information for a [prospective offeror] to provide a quote, even without
the [M]ethodology, the SOW was developed based on the extensive knowledge the
[VA] gained during the oversight of the pilot study contract. Sufficient information
was determined based on the premise that the SOW provided enough information
on the services required without including the [M]ethodology and any [offeror]
with VA experience applying basic market analysis techniques, as required by the
[S]olicitation at the time, would be on equal ground. Because of this, the
[S]olicitation was issued without the [M]ethodology and the [M]ethodology was
later included under Amendment A00002.
Additionally, several other steps were taken prior to solicitation issuance to
avoid any OCI concerns or the appearance of [an] OCI by developing the
25
procurement package in house (by the [VA]), making revisions to and broadening
the . . . [SOW] based on CO and [VA] input, and the Inclusion of VAAR provision
852.209-70 ORGANIZATIONAL CONFLICTS OF INTEREST in the
[S]olicitation. After the [S]olicitation was issued, the CO provided
Craddock[’s] . . . information to the market under Amendment A00001 as a
response to Requests for Information[.]
* * *
Based on the above review of Craddock[’s] . . . pilot contract . . . , the CO
determined that by providing a quote for [the MAHSO S]olicitation . . . , the
contractor for the pilot study, . . . Craddock . . . and their sub-contractor, PwC,
other than having prior knowledge of the method for analysis, would have no other
competitive advantage. The SOW was not developed by . . . Craddock . . . or
PwC . . . , nor was any other portion of the solicitation other than the
[M]ethodology, as the majority of the solicitation was developed by the CO with
input from the [VA]. The developed evaluation factors listed in the solicitation and
used during the source selection process were general in nature and not unique
regarding the pilot contract other than the technical evaluation criteria that
discussed understanding methods of approach and how to staff those methods. In
order to minimize any OCI concerns that may refer to the technical
evaluations, . . . the [M]ethodology was issued to potential quoters in order to
mitigate any advantage or perceived advantage by PwC and . . . Craddock . . . for
work on the pilot contract.
In addition, the [Pilot Study Data] provided to PwC and . . . Craddock . . .
during the pilot contract was unique to the specific markets and would not benefit
them in providing a quote for the resulting solicitation as each market is
independent and the general approach for analyzing each market is specifically
spelled out in the [M]ethodology provided to all potential quoters. The
development of the [M]ethodology was performed under the strict oversight and
control of [VA] officials indicating . . . Craddock . . . participated in the
development of the [M]ethodology with the [VA] . . . to create an end product that
could be used on future market analysis activities.
Based on the facts above, [and] the supporting documents . . . my analysis
shows that FAR 9.505-2(a)(3)17 is relevant, there is no evidence that [VA] worked
17
FAR 9.505-2(a)(3) provides that
[i]n development work, it is normal to select firms that have done the most
advanced work in the field. These firms can be expected to design and develop
around their own prior knowledge. Development contractors can frequently start
production earlier and more knowledgeably than firms that did not participate in
the development, and this can affect the time and quality of production, both of
which are important to the [g]overnment. In many instances the [g]overnment may
have financed the development. Thus, while the development contractor has a
26
with . . . Craddock . . . to develop the procurement package, other than the
[M]ethodology, and while the development contractor has a minor competitive
advantage because of that, it has been determined by the CO that it is an
unavoidable one that is not considered unfair; hence no prohibition should be
imposed.
* * *
To minimize any OCI concerns that may refer to the technical
evaluations, . . . the [M]ethodology was issued to all potential quoters in order to
mitigate any advantage or perceived advantage by PwC and . . . Craddock . . . for
work on the pilot contract. The [M]ethodology is a straightforward step-by-step
process that outlines the high level approach, activities, and data that will be used
for each market assessment and was issued to all vendors to mitigate any OCI
concerns seven days prior to proposals being due. After issuance, there were no
further questions or requests for time extensions due to the new information. This
led to the CO determination that the vendors had enough time to evaluate the
[M]ethodology and incorporate it into their quote.
* * *
The . . . [CO] . . . has considered the facts surrounding the acquisition and
finds no significant [OCI] exists. If an advantage for either . . . Craddock . . . or
PwC exists, it is a fair competitive advantage under FAR 9.505-2(a)(3) as an
incumbent contractor due to the success of the [P]ilot [S]tudy and any additional
instances of OCI were mitigated by the multiple steps addressed above, most
importantly by providing extensive information to all vendors under the
competitive procurement. It is understood by the CO that not including the
[M]ethodology with the solicitation when it was issued on July 7, 2017 may have
raised some initial concerns. But this concern was mitigated since it was issued
under [A]mendment A00002 seven days prior to quotes being due, it is a
straightforward methodology that gives clear direction and no vendor expressed
concerns about the timeframe after issuance.
Tab 27, AR 831–37 (emphasis added).
On October 30, 2017, the court issued an Amended Scheduling Order. ECF No. 30.
On November 2, 2017, the Government filed the Administrative Record. ECF No. 31. On
November 8, 2017, the Government filed a First Corrected Administrative Record. ECF No. 32.
competitive advantage, it is an unavoidable one that is not considered unfair; hence
no prohibition should be imposed.
48 C.F.R. § 9.505-2(a)(3) (emphasis added).
27
On November 20, 2017, Plaintiff filed a Motion For Leave To File Amended Complaint.
ECF No. 36. On that same day, Plaintiff filed a Motion For Judgment On The Administrative
Record. ECF No. 37.
On November 21, 2017, the court issued an Order granting Plaintiff’s November 20, 2017
Motion For Leave To File Amended Complaint. ECF No. 38. On that same day, the Government
filed a Second Corrected Administrative Record. ECF No. 39.
On November 29, 2017, PwC filed an unopposed Motion For Modification Of Scheduling
Order. ECF No. 41. On November 30, 2017, the court issued an Order granting PwC’s Motion
For Modification Of Scheduling Order. ECF No. 42. On that same day, Plaintiff filed an Amended
Complaint (“Am. Compl.”), further detailing Counts I and IV. ECF No. 43.
On December 8, 2017, the Government filed a Response And Cross-Motion For Judgment
On The Administrative Record. ECF No. 45. On that same day, PwC filed a Cross-Motion For
Judgment On The Administrative Record. ECF No. 46.
On December 14, 2017, Plaintiff filed a Reply And Opposition To Defendant’s And
Defendant-Intervenor’s Cross-Motions For Judgment On The Administrative Record. ECF No.
48.
On December 20, 2017, the Government filed a Reply. ECF No. 50. On that same day,
PwC filed a Reply. ECF No. 51.
On January 12, 2018, the Government filed a Notice of Voluntary Stay Extension
indicating that the VA would extend the voluntary stay of performance “for thirty-one days, to and
including Monday, February 12, 2018.” ECF No. 52.
On February 12, 2018, the Government filed a Notice Regarding Extension Of Voluntary
Stay stating that the VA would extend the voluntary stay of performance “through Tuesday,
February 20, 2018.” ECF No. 53.
On February 15, 2018, the court issued an Order reflecting the Government’s
representation that the VA would extend the voluntary stay of performance through Tuesday,
February 20, 2018. ECF No. 54.
On February 21, 2018, the Government filed another Notice Regarding Extension Of
Voluntary Stay stating that the VA would extend the voluntary stay of performance “for three
days, to and including Friday, February 23, 2018.” ECF No. 55.
On February 22, 2018, the court issued an Order reflecting the Government’s
representation that the VA would extend the voluntary stay of performance through Friday,
February 23, 2018. ECF No. 56.
28
III. DISCUSSION.
A. Subject Matter Jurisdiction.
Subject matter jurisdiction is a threshold issue that a court must determine at the outset of
a case. See Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94–95 (1998) (“The requirement
that jurisdiction be established as a threshold matter ‘spring[s] from the nature and limits of the
judicial power of the United States’ and is ‘inflexible and without exception.’” (quoting Mansfield,
C. & L.M.R. Co. v. Swan, 111 U.S. 379, 382 (1884))).
Pursuant to the Administrative Dispute Resolution Act of 1995, the United States Court of
Federal Claims has jurisdiction
to render judgment on an action by an interested party objecting to a solicitation by
a [f]ederal agency or proposals for a proposed contract or to a proposed award of a
contract or any alleged violation of statute or regulation in connection with a
procurement or a proposed procurement. . . . [T]he United States Court of Federal
Claims . . . shall have jurisdiction to entertain such an action without regard to
whether suit is instituted before or after the contract is awarded.
28 U.S.C. § 1491(b)(1) (emphasis added).
In this case, E&Y’s November 30, 2017 Amended Complaint alleges that: (1) the VA’s
evaluation of E&Y’s proposal was “arbitrary, capricious, and lacked reason,” Am. Compl. ¶¶ 75–
94; (2) the VA’s decision to issue the award to PwC “involved [the] application of . . . unstated
evaluation criteri[a],” Am. Compl. ¶¶ 95–105; (3) PwC is “ineligible for award because
of . . . OCI[s],” Am. Compl. ¶¶ 106–17; (4) the VA’s evaluation of PwC’s proposal was
“unreasonable,” Am. Compl. ¶¶ 118–27; and (5) the VA’s “[best value trade-off] determination is
arbitrary, capricious, and lacks a rational basis.” Am. Compl. ¶¶ 128–32.
For these reasons, the court has determined that it has subject matter jurisdiction, under 28
U.S.C. § 1491(b)(1), to adjudicate the claims alleged in E&Y’s November 30, 2017 Amended
Complaint.
B. Standing.
“Standing is a threshold jurisdictional issue.” Myers Investigative & Sec. Servs. v. United
States, 275 F.3d 1366, 1369 (Fed. Cir. 2002). “The party invoking federal jurisdiction bears the
burden of establishing the[ ] elements [of standing].” Lujan v. Defs. of Wildlife, 504 U.S. 555, 561
(1992). To establish standing under 28 U.S.C. § 1491(b)(1), a complaint must allege sufficient
facts to show that the plaintiff: (1) is an interested party; and (2) was prejudiced by alleged errors
in the procurement process. See Myers, 275 F.3d at 1370 (holding that standing under § 1491(b)(1)
is limited to “interested parties”); see also Labatt Food Serv., Inc. v. United States, 577 F.3d 1375,
1378–79 (Fed. Cir. 2009) (“[T]he question of prejudice goes directly to the question of
standing[.]”).
The United States Court of Appeals for the Federal Circuit has held that the term “interested
party” in 28 U.S.C. § 1491(b)(1) “is construed in accordance with the Competition in Contracting
29
Act.” Rex Serv. Corp. v. United States, 448 F.3d 1305, 1307 (Fed. Cir. 2006) (citing 31 U.S.C. §§
3551–3556). Therefore, to qualify as an interested party, “a protestor must show that: (1) it was
an actual or prospective bidder or offeror[;] and (2) it had a direct economic interest in the
procurement or proposed procurement.” Distributed Sols., Inc. v. United States, 539 F.3d 1340,
1344 (Fed. Cir. 2008). A protestor has a “direct economic interest” if, after a successful protest,
“the government would be obligated to rebid the contract, and [the protestor] could compete for
the contract once again.” Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d
1324, 1334 (Fed. Cir. 2001).
In this case, E&Y submitted a timely and “responsive” proposal for the MAHSO Project.
Tab 11, AR 486595. Therefore, E&Y was “an actual . . . offeror.” See Distributed Sols., 539 F.3d
at 1344. In addition, E&Y’s November 30, 2017 Amended Complaint alleges that the VA’s
decision to award the MAHSO Contract to PwC violated the FAR and was “arbitrary, capricious,
an abuse of discretion, or otherwise not in accordance with law.” Am. Compl. ¶¶ 75–132. If
established, these allegations would render the VA’s decision unlawful and “the [VA] would be
obligated to rebid the contract.” See Impresa, 238 F.3d at 1334. Accordingly, E&Y has established
that it is an “interested party.” See Distributed Sols., 539 F.3d at 1344.
To establish standing, a protestor also must demonstrate prejudice. See Myers, 275 F.3d at
1370 (“[P]rejudice (or injury) is a necessary element of standing.”). “A party has been prejudiced
when it can show that[,] but for the error, it would have had a substantial chance of securing the
contract.” Labatt, 577 F.3d at 1378; see also Bannum, Inc. v. United States, 404 F.3d 1346, 1353
(Fed. Cir. 2005) (“To establish ‘significant prejudice’ [the protestor] must show that there was a
‘substantial chance’ it would have received the contract award[,] but for the [alleged] errors[.]”).
Our appellate court has held that the test for prejudice “is more lenient than showing actual
causation,” because the plaintiff need not “show[] that[,] but for the errors[, it] would have won
the contract.” Bannum, 404 F.3d at 1358 (emphasis added). Instead, the complaint must allege
that the plaintiff has a “greater than insubstantial chance of securing the contract if successful on
the merits of the bid protest.” See Info. Tech. & Applications Corp. v. United States, 316 F.3d
1312, 1319 (Fed. Cir. 2003) (“In other words, the protestor’s chance of securing the award must
not have been insubstantial.”)
In this case, the CO determined that only PwC was eligible for award of the MAHSO
Contact. Tab 18, AR 737. E&Y’s November 30, 2017 Amended Complaint, however, alleges
that PwC was “ineligible for award because of . . . OCI[s]” and that the CO’s failure to timely and
adequately mitigate these OCIs violated FAR 9.504(a) and 9.505. Am. Compl. ¶¶ 106–17. In
addition, the Amended Complaint alleges that the SSEB’s evaluation of E&Y’s proposal was
“arbitrary, capricious, and lacked reason.” Am. Compl. ¶¶ 75–94. Finally, the Amended
Complaint alleges that the CO’s “best value trade-off” determination violated FAR 8.405-3. Am.
Compl. ¶¶ 128–32. If these FAR violations are established, PwC would not be eligible for an
award. The remaining offerors, Deloitte, E&Y, Huron, and McKinsey, however, each received
identical ratings from the SSEB. Tab 18, AR 736 (table summarizing the SSEB’s “findings from
evaluations”). As such, E&Y would have an equal chance, i.e., a “substantial chance,” of being
awarded the MAHSO Contract. See Bannum, 404 F.3d at 1353; see also Cyios Corp. v. United
States, 122 Fed. Cl. 726, 735 (Fed. Cl. 2015). Under these circumstances, E&Y has
“demonstrate[d] prejudice.” See Myers, 275 F.3d at 1370.
30
For these reasons, the court has determined that E&Y has standing to challenge the VA’s
award of the MAHSO Contract.
C. Whether The United States Department of Veterans Affairs’s Award to
PricewaterhouseCoopers Public Sector, LLP Was Contrary To Law, Not
Rational, Or Arbitrary And Capricious.
1. Standard Of Review For Judgment On The Administrative Record,
Pursuant To RCFC 52.1.
In this case, the parties filed Cross-Motions For Judgment On The Administrative Record,
pursuant to RCFC 52.1. The United States Court of Appeals for the Federal Circuit requires that
the court treat a judgment on the administrative record as if it were an expedited trial on the record.
See Bannum, 404 F.3d at 1356. Therefore, the existence of material issues of fact does not prohibit
the court from granting a RCFC 52.1 motion. Id. at 1354. Instead, the court can base a
determination on “factual findings from the record evidence.” Id.
2. Standard Of Review For A Bid Protest.
Congress amended the Tucker Act through the Administrative Dispute Resolution Act,
Pub. L. No. 104-320, § 12, 110 Stat. 3870, 3874 (Oct. 19, 1996), to authorize the United States
Court of Federal Claims to adjudicate bid protests under the standards set forth in the
Administrative Procedure Act (“APA”), 5 U.S.C. § 706. See 28 U.S.C. § 1491(b)(4) (“In any
action under this subsection, the courts shall review the agency’s decision pursuant to the standards
set forth in section 706 of title 5.”); see also 5 U.S.C. § 706(2)(A) (“The reviewing court
shall . . . hold unlawful and set aside agency action, findings, and conclusions found to
be . . . arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law[.]”);
Banknote Corp. of Am., Inc. v. United States, 365 F.3d 1345, 1350 (Fed. Cir. 2004) (“Among the
various APA standards of review in section 706, the proper standard to be applied in bid protest
cases is provided by 5 U.S.C. § 706(2)(A): a reviewing court shall set aside the agency action if it
is ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.’”
(citations omitted)).
Therefore, the trial court’s first responsibility in a bid protest is to determine whether a
federal agency violated a federal statute or regulation in the procurement process and whether any
such violation was prejudicial. See Axiom Res. Mgmt. v. United States, 564 F.3d 1374, 1381 (Fed.
Cir. 2009) (holding that “the disappointed bidder must show a clear and prejudicial violation of
applicable statutes or regulations” (internal quotation marks and citations omitted)).
If no prejudicial violation of law or regulation is found, however, the court next is required
to determine whether the agency decision evidences a rational basis. See Savantage Fin. Servs.
Inc. v. United States, 595 F.3d. 1282, 1286 (Fed. Cir. 2010) (holding that a court “must sustain an
agency action unless the action does not evidence rational reasoning and consideration of relevant
factors” (quotations omitted)); see also Bowman Transp., Inc. v. Ark.-Best Freight Sys., Inc., 419
U.S. 281, 285–86 (1974) (holding that as long as a rational basis is articulated and relevant factors
are considered, the agency’s action must be upheld). In this respect, “contracting officers are
‘entitled to exercise discretion upon a broad range of issues confronting them’ in the procurement
process.” Impresa, 238 F.3d at 1332. “Accordingly, the test for reviewing courts is to determine
31
whether the contracting agency provided a coherent and reasonable explanation of its exercise of
discretion, and the disappointed bidder bears a heavy burden of showing that the award decision
had no rational basis.” Id. at 1332–33 (internal quotations omitted).
Finally, the court is required to ascertain whether the federal agency otherwise acted in an
arbitrary or capricious manner with respect to the procurement at issue. See Banknote, 365 F.3d
at 1350 (“[A] reviewing court shall set aside the agency action if it is ‘arbitrary, capricious, [or] an
abuse of discretion.’”). The United States Supreme Court has held that a federal agency’s decision
is “arbitrary and capricious,” when an agency “entirely fail[s] to consider an important aspect of
the problem, offer[s] an explanation for its decision that runs counter to the evidence before the
agency, or [the decision] is so implausible that it could not be ascribed to a difference in view or
the product of agency expertise.” Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co.,
463 U.S. 29, 43 (1983).
3. Ernst & Young, LLP’s Amended Complaint.
Count I of E&Y’s November 30, 2017 Amended Complaint alleges that “the VA’s
evaluation of E[&]Y’s proposal was arbitrary, capricious, and lacked reason.” Am. Compl. ¶¶ 75–
94. The VA arbitrarily evaluated portions of E&Y’s proposal, resulting in the wrongful
assignment of marginal ratings under the Technical and Corporate Experience Factors. Am.
Compl. ¶¶ 75–90. The VA also ignored several circumstances surrounding the Solicitation that
necessitated discussions. Am. Compl. ¶ 92. Finally, the VA “unreasonably concluded that it
could not determine whether E[&]Y’s [Task Order One] fixed price of $ was fair and
reasonable.” Am. Compl. ¶ 93.
Count II of E&Y’s November 30, 2017 Amended Complaint alleges that the VA employed
unstated evaluation criteria to analyze E&Y’s proposal. Am. Compl. ¶¶ 95–105. The VA’s basis
for evaluating proposals is limited to information and standards stated in the Solicitation. Am.
Compl. ¶ 97. Despite the Solicitation requiring five-person VISN teams, the VA assigned E&Y
“a weakness for dedicating team to each VISN.” Am. Compl. ¶¶ 98–102.
Without providing staffing guidelines or team lead specifications, the VA assigned E&Y additional
weaknesses for
” Am. Compl. ¶¶ 103–04. “The VA’s improper application of unstated criteria” led to
E&Y’s proposal not being eligible for an award. Am. Compl. ¶ 105.
Count III of E&Y’s November 30, 2017 Amended Complaint alleges that “PwC is
ineligible for award because of . . . OCI[s].” Am. Compl. ¶¶ 106–17. Craddock and PwC had an
existing contract with the VA to develop the Methodology, i.e., the Pilot Study Contract. Am.
Compl. ¶ 108. PwC’s “deep, unequal, and unfair access to non-public information that other
[offerors] did not have[,]” presented an unequal access to information OCI. Am. Compl. ¶ 114.
Months of early access to the Methodology and the underlying Pilot Study Data allowed PwC to
use additional information relevant to the Solicitation and better understand the Solicitation’s
requirements. Am. Compl. ¶ 115. “Further, . . . Craddock[’s] . . . work in developing the
[M]ethodology meant that it drafted a key aspect of the [Solicitation’s SOWs]. Thus, PwC had
both unequal access to information and biased ground rules OCIs.” Am. Compl. ¶ 114.
Count IV of E&Y’s November 30, 2017 Amended Complaint alleges that “the [SSEB’s]
evaluation of PwC’s proposal was unreasonable” because the SSEB arbitrarily evaluated the
32
Technical, Corporate Experience, and Past Performance Factors of PwC’s proposal. Am.
Compl. ¶¶ 119–24. PwC’s inexperience in conducting federal health market assessments, labor
inefficiencies, and price difference called for the SSEB’s assignment of weaknesses to
PwC’s proposal. Am. Compl. ¶¶ 120–22. Additionally, the SSEB “unreasonably credited PwC
with the [c]orporate [e]xperience and [p]ast [p]erformance of its affiliate ” and
“failed to reject PwC’s proposal as ineligible for its inclusion of assumptions that contradict[ed]
requirements of the [Solicitation].” Am. Compl. ¶¶ 123–24.
Count V of E&Y’s November 30, 2017 Amended Complaint alleges that “[t]he VA’s [best
value trade-off] determination is arbitrary, capricious, and lacks a rational basis.” Am.
Compl. ¶¶ 128–32. Contracting officers have broad discretion to conduct a best value trade-off
determination, provided that the determination is not arbitrary and capricious or a violation of law.
Am. Compl. ¶ 130. By applying unstated evaluation criteria and ignoring PwC’s higher
price, the VA “conducted an unreasonable [best value] trade[-]off [determination].” Am.
Compl. ¶ 131.
4. Ernst & Young, LLP’s Motion For Judgment On The Administrative
Record.
a. The Source Selection Evaluation Board’s Evaluation Failed
To Comply With The Solicitation Or Otherwise Was
Arbitrary And Capricious.
E&Y argues that federal agencies are required to evaluate proposals in accordance with the
solicitation. Pl. Br. at 18–19. The MAHSO Solicitation’s SOWs required six VISN teams
of five members each to conduct site visits and assessments. Pl. Br. at 19. Pursuant
to this requirement, E&Y “proposed to provide in
its . . . Staffing/Management proposal.” Pl. Br. at 19 (emphasis and bold in original). The SSEB,
however, assigned E&Y a weakness, based on the proposed number of team members in each
VISN team although E&Y’s proposed “staffing level” met the requirements of the Solicitation.
Pl. Br. at 19–20. In addition, notwithstanding the Solicitation’s requirement that one Architect
and one Healthcare Planner would lead each VISN team, the SSEB assigned E&Y’s proposal an
additional weakness for . Pl. Br. at 20. Moreover, although
E&Y’s proposal included
, the SSEB assigned E&Y technical weaknesses for
. Pl.
Br. at 23–24. The SSEB’s assignment of these weaknesses was inconsistent with the Solicitation’s
evaluation criteria and also unfairly affected the evaluation of every offeror, except PwC. Pl. Br.
at 21.
The SSEB also failed to evaluate PwC’s proposal as required by the Solicitation, by
crediting PwC with the corporate experience and past performance of even though
the Solicitation limited the SSEB’s evaluation to the “prime contractor” and “major
subcontractors.” Pl. Br. at 34. PwC did not list as a “major subcontractor” in its
proposal, but the SSEB nevertheless credited PwC with the past performance of .
Pl. Br. at 35–36. In addition, despite the SSEB’s indication that PwC’s staffing levels
, the SSEB assigned PwC a “Good” rating under the Technical Factor. Pl. Br. at 43.
33
Finally, in evaluating PwC’s Price, the SSEB also overlooked the difference
between PwC’s proposed price and that of all the other offerors. Pl. Br. at 44.
b. PricewaterhouseCoopers Public Sector, LLP’s Assumptions
Did Not Comply With The Solicitation.
PwC’s proposal failed to comply with the Solicitation by making “two
substantial . . . assumptions that conflict with the [Solicitation] and [that] should have rendered
PwC’s proposal unacceptable.” Pl. Br. at 38. Specifically, PwC’s proposal assumed that data
provided by the VA ” and that the VA would “support
[PwC’s] proposed VISNs.” Pl. Br. at 38–39. These assumptions, however, are inconsistent with
the Solicitation, because the VA “did not warrant” to be provided and did not
indicate which VISNs would be supported in Task Order One. Pl. Br. at 38–40. Consequently,
PwC’s proposal was unacceptable. Pl. Br. at 37–38; see also Centech Grp., Inc. v. United States,
554 F.3d 1029, 1037 (Fed. Cir. 2009) (“To be acceptable, a proposal must represent an offer to
provide the exact thing called for in the request for proposals, so that acceptance of the proposal
will bind the contractor in accordance with the material terms and conditions of the request for
proposals.”).
c. The Contracting Officer Failed To Conduct Discussions.
Although the VA reserved the right to award the MAHSO Contract without conducting
discussions, an agency’s discretion not to engage in discussions must be “reasonably based on the
particular circumstances of the procurement, including consideration of the proposals received and
the basis for selection decision.” Pl. Br. at 40–41 (quoting Day & Zimmerman Servs. v. United
States, 38 Fed. Cl. 591, 604 (Fed. Cl. 1997)). E&Y argues that the discrepancies in proposed
pricing and the fact that three of the “largest and most successful consulting firms in the world”
were determined not to be eligible for a contract award, rendered the CO’s decision to make an
award without conducting discussions arbitrary and capricious. Pl. Br. at 42. Specifically, the VA
failed to “notice that it potentially could save the taxpayers more than $ due to the
‘excessive’ staffing proposed by PwC, if it reopened discussions.” Pl. Br. at 42.
d. The Contracting Officer Failed Adequately To Mitigate
Organizational Conflicts Of Interest.
E&Y also argues that the CO failed adequately to mitigate two OCIs. Pl. Br. at 46. First,
Craddock and PwC had access to the Pilot Study Data, which was not disclosed to the other
offerors. Pl. Br. at 47. VA correspondence shows that VA data sets and other “proprietary” non-
public government information was used to create the Methodology. Pl. Br. at 48–49 (citing Tab
27, AR 978). Although the CO ultimately provided the Methodology to all prospective offerors,
seven days before proposals were due, the CO’s failure to provide all the offerors with the
underlying Pilot Study Data resulted in an unequal access to information OCI. Pl Br. at 50–51. In
addition, PwC also is ineligible for an award, because of a biased ground rules OCI. Pl. Br. at 51.
The VA admitted that the Methodology developed by Craddock and PwC was the basis for the
Solicitation’s SOWs and evaluation criteria, but decided that no conflict existed, because PwC and
Craddock qualified as “development contractor[s]” under FAR 9.505-2. Pl. Br. at 53–56. PwC’s
work on the Pilot Study, however, “fits neatly under the definition for ‘nondevelopmental’ work
34
set forth in . . . FAR [2.101]” rendering PwC not eligible to work on the MAHSO Project. Pl. Br.
at 56. Therefore, E&Y contends that the VA did not mitigate two OCIs that gave PwC an unfair
competitive advantage over E&Y and the other offerors. Pl. Br. at 57.
e. Injunctive Relief Is Appropriate.
Because of these FAR violations and arbitrary and capricious decisions made by the SSEB
and CO, E&Y argues that it has established the “requirements for permanent injunctive relief.” Pl.
Br. at 58. “A protest[o]r suffers irreparable injury when it has been deprived the opportunity to
compete fairly for a contract[, and] . . . the VA has deprived E[&]Y of the opportunity to compete
fairly in a number of ways.” Pl. Br. at 59. In addition, “[t]he public has no interest in paying PwC
a higher price[,] based upon an unreasonable and unequally applied evaluation.” Pl. Br. at
59. The public does, however, have an interest in “insuring that public officials treat contractors
fairly and generally obey procurement laws and regulations.” Pl. Br. at 59 (quoting Transatlantic
Lines LLC v. United States, 68 Fed. Cl. 48, 57 (Fed. Cl. 2005)). In addition, “the balance of
hardships falls squarely in favor of injunctive relief.” Pl. Br. at 60. Specifically, “[i]njunctive
relief would not harm the [VA’s] interests at all. Indeed, the [VA] would avoid the wasteful
performance of PwC at an exorbitant cost.” Pl. Br. at 60. And, “[g]iven the irreparable harm to
E[&]Y caused by the deprivation of the opportunity to compete fairly for th[e MAHSO C]ontract,
the balance of interests falls decidedly in E[&]Y’s favor.” Pl. Br. at 60.
5. The Government’s Response And Cross-Motion For Judgment On The
Administrative Record.
a. The Source Selection Evaluation Board’s Evaluation Was
Proper.
The Government responds that, because procurement officials apply technical knowledge
in evaluating proposals, the courts must review procurement decisions with a great deal of
deference. Gov’t Br. at 19. This is particularly true in this case, where E&Y failed to meet the
burden of proving that the VA improperly evaluated E&Y’s proposal. Gov’t Br. at 19; see also
CRAssociates, Inc. v. United States, 102 Fed. Cl. 698, 717 (Fed. Cl. 2011) (“[T]he evaluation of
proposals for their technical excellence or quality is a process that often requires the special
expertise of the procurement officials, and thus reviewing courts give [the] greatest deference
possible to these determinations.”).
The SSEB properly evaluated E&Y’s technical proposal as “Marginal.” Gov’t Br. at 18–
19. Although the Solicitation provided that there must be “at least six teams of five health care
planners and data analysts,” the qualifier “at least” modified the phrase “five health care planners
and data analysts.” Gov’t Br. at 21. Therefore, E&Y’s proposed “
reflect E&Y’s misunderstanding of the scope of the Task Order One SOW and
justify E&Y’s poor ratings. Gov’t Br. at 21–22. The SSEB’s ratings also were justified, because
portions of E&Y’s proposal
. Gov’t Br. at 22–23. Although the SSEB believed that PwC’s proposed
staffing levels , the SSEB determined that PwC exhibited
. Gov’t Br. at
31. Moreover, the VA’s reference to “Deloitte” in E&Y’s technical evaluation was a typographical
35
error, evidenced by the absence of any reference to a similar weakness in Deloitte’s evaluation.
Gov’t Br. at 23–24.
In addition, the SSEB properly evaluated E&Y’s corporate experience. Gov’t Br. at 24.
E&Y’s failure to focus on
led the SSEB to conclude that E&Y lacked adequate experience. Gov’t Br. at 24. Therefore, E&Y
was found not to be eligible for an award, because the SSEB properly determined that E&Y’s
proposal received less than “Satisfactory” technical and corporate experience ratings. Gov’t Br.
at 28.
The SSEB properly also rated E&Y’s past performance as entailing a “Moderate Risk,”
because E&Y’s past performance examples “
.” Gov’t Br. at 30 (quoting Tab 14, AR 643). And, the SSEB correctly credited
PwC with the corporate experience and past performance of , because PwC’s
proposal confirmed the availability of resources and “a contracting officer has
discretion to take offerors at their word that the resources of their affiliates will be made available.”
Gov’t Br. at 32–33 (quoting PricewaterhouseCoopers Pub. Sector, LLP v. United States, 126 Fed.
Cl. 328, 353 (Fed. Cl. 2016)). Moreover, the VA’s overall evaluation of PwC’s proposal properly
concluded that PwC’s price was “fair and reasonable,” because it offered an “excellent value,”
including . Gov’t Br. at 35–36.
b. PricewaterhouseCoopers Public Sector, LLP’s Assumptions
Complied With The Solicitation.
The Government argues that the VA also was free to accept the assumptions included in
PwC’s proposal, because they did not violate or conflict with the terms of the Solicitation, since
the Solicitation “sa[id] nothing about which VISNs would be included in [Task Order One]” and
the “VA [did not] .” Gov’t Br. at 37.
c. The Contracting Officer Was Not Required To Conduct
Discussions.
The Government argues that FAR Part 15 is inapplicable in this case, because it does not
govern BPAs. Gov’t Br. at 38 (citing FAR 8.404(a)18). Moreover, “[w]here the applicable
procurement regulations do not require discussions, the procuring agency is not required to
conduct them.” Gov’t Br. at 39. As such, the terms of the Solicitation control the CO’s discretion
in deciding whether to conduct discussions. Gov’t Br. at 38–39. In this case, the CO appropriately
proceeded without conducting discussions, because the Solicitation stated that a “[c]ontractor may
be eliminated from consideration without further communication[,] if its non-price and/or pricing
quotes are not among those [c]ontractors considered most advantageous to the [VA] based on a
best value determination.” Gov’t Br. at 38–39 (quoting Tab 8, AR 269).
18
FAR 8.404(a) provides, in relevant part, that “[p]arts 13 . . . , 14, 15, and 19 . . . do not
apply to BPAs[.]” 48 C.F.R. § 8.404(a).
36
d. Ernst & Young, LLP’s Organizational Conflict Of Interest
Claims Are Untimely And Unsupported.
The Government also argues that E&Y’s OCI claims are untimely and not supported.
Gov’t Br. at 40–43. Requests for information during the solicitation process evidence that
prospective offerors, including E&Y, had knowledge of at least Craddock’s involvement in
developing the Methodology. Gov’t Br. at 42 (citing Tab 8, AR 298). The United States Court of
Appeals for the Federal Circuit has held that “a party who has the opportunity to object . . . and
fails to do so prior to the close of the bidding process waives its ability to raise the same objection
subsequently . . . in the [United States] Court of Federal Claims.” Gov’t Br. at 41 (quoting Blue
& Gold Fleet, L.P. v. United States, 492 F.3d 1308, 1313 (Fed. Cir. 2007)). The United States
Court of Federal Claims has observed that “[l]ogically, the waiver rule . . . applies where a
[protestor] fails to raise OCI claims before the close of the bidding process.” Gov’t Br. at 41
(quoting Concourse Grp., LLC v. United States, 131 Fed. Cl. 26, 29 (Fed. Cl. 2017)). As a result,
E&Y’s OCI claims are waived as a matter of law, because E&Y failed to raise OCI claims prior
to close of the MAHSO Solicitation. Gov’t Br. at 43. In the alternative, E&Y did not establish
that the CO’s OCI Assessment and mitigation efforts were “arbitrary, capricious, or otherwise
contrary to law.” Gov’t Br. at 43 (quoting PAI Corp. v. United States, 614 F.3d 1347, 1352 (Fed.
Cir. 2010)). In addition, because PwC did not assist in preparing the Solicitation’s SOWs or gain
access to information other than the Methodology, any informational advantage the PwC may have
had did not rise to the level of an unfair competitive advantage. Gov’t Br. at 45–46.
6. PricewaterhouseCoopers Public Sector, LLP’s Response And Cross-
Motion For Judgment On The Administrative Record.
PwC emphasizes that the CO’s “best value trade-off” determination was reasonable, and
thus, E&Y is not entitled to injunctive relief. Int. Br. at 43–44. Although a determination was not
required, “because there [was] only one acceptable offeror,” the CO nevertheless proceeded to
conduct a “best value trade-off” analysis. Int. Br. at 43–44. In this regard, E&Y “failed to
demonstrate that the CO erred in evaluating E[&]Y’s Technical Approach, Corporate Experience,
and Past Performance.” Int. Br. at 43. Moreover, the CO also applied the appropriate evaluation
criteria in concluding that PwC was the only offeror eligible for an award. Int. Br. at 44.
A party seeking injunctive relief must demonstrate that “it has actually succeeded on the
merits.” Int. Br. at 44 (quoting Ceres Gulf, Inc. v. United States, 94 Fed. Cl. 303, 322 (Fed. Cl.
2010)). Therefore, E&Y’s failure to establish success on the merits bars it from obtaining
injunctive relief. Int. Br. at 44–45. In addition, public interest and hardship concerns in this case
prevent the court from granting injunctive relief. Int. Br. at 45–46. The public interest is not
served by injunctive relief where the VA did not abuse its discretion or act in an arbitrary and
capricious manner. Int. Br. at 45–46. In addition, an injunction is not appropriate where it would
cause undue hardship to the VA and other interested parties, and the administrative burden of
reopening the MAHSO Solicitation would harm veterans by further delaying commencement of
the MAHSO Project. Int. Br. at 46.
37
7. Ernst & Young, LLP’s Reply In Support Of Motion For Judgment On
The Administrative Record And Opposition To The Government’s
And PricewaterhouseCoopers Public Sector, LLP’s Cross-Motions For
Judgment On The Administrative Record.
a. The Extent To Which
Will Be Involved Is Uncertain.
E&Y replies that the VA “improperly credited PwC . . . with the corporate experience and
past performance of . . . [ ].” Pl. Reply at 14. Although PwC’s proposal suggests
that resources will be available, PwC “lack[s] . . . concrete support for this
statement . . . , [and] Reuters News has reported that PwC [US] is selling its government services
practice, disproving any assertions that [ ] . . . will have involvement, let alone ‘direct
and meaningful involvement,’ in PwC[’s] . . . performance.” Pl. Reply at 17–19 (citing Tab 11,
AR 513).
b. Ernst & Young, LLP Did Not Waive Organizational Conflict
Of Interest Claims.
E&Y did not waive any OCI claims by protesting the VA’s OCI determination after the
contract award. Pl. Reply at 28. The general rule is that “a protestor is not required to protest an
agency’s OCI determination until after contract award.” Pl. Reply at 29 (quoting REEP, Inc., B-
290688, 2002 WL 31103566 (Comp. Gen. Sept. 20, 2002)).
In this case, E&Y did not have any knowledge of PwC’s involvement in drafting the
MAHSO Solicitation or intent to submit a proposal until after the MAHSO Contract was awarded.
Pl. Reply at 29 (citing Tab 8, AR 298). PwC’s involvement in the Pilot Study permitted it to gain
access to “proprietary” non-public government information that was more than that acquired
through “mere incumbency.” Pl. Reply at 31 (quoting Gov’t Br. at 44). In addition to the Pilot
Study Data, PwC also received information discussed in team and data orientation meetings,
internal metrics, and input from VA leadership. Pl. Reply at 31 (citing Tab 27, AR 978–80). This
additional access to specific Solicitation-related information created an unequal access to
information OCI that the VA failed to adequately mitigate. Pl. Reply at 31–32.
c. Permanent Injunctive Relief Is Appropriate.
E&Y is entitled to injunctive relief, because it has demonstrated that all offerors did not
compete for the MAHSO Contract on a level playing field. Pl. Reply at 34. Moreover, it is in the
public’s best interest to “secure the best value for the [VA]” and avoid payment of a price
premium. Pl. Reply at 34–35.
8. The Government’s Reply In Support Of Cross-Motion For Judgment
On The Administrative Record.
The Government adds that the SSEB appropriately evaluated E&Y’s past performance
examples. Gov’t Reply at 8. The VA conducted a “size, scope, and complexity” analysis of
E&Y’s past performance examples. Gov’t Reply at 9. E&Y’s examples were
,” particularly when contrasted with the cost
38
and substance of a “
.” Gov’t Reply at 9.
In addition, PwC appropriately was credited with the corporate experience of
, because the potential divestiture of is not “imminent and essentially
certain.” Gov’t Reply at 12–13. Thus, is available to assist PwC in the MAHSO
Project as a corporate affiliate. Gov’t Reply at 12.
9. PricewaterhouseCoopers Public Sector, LLP’s Reply In Support Of
Cross-Motion For Judgment On The Administrative Record.
PwC adds that the VA appropriately assigned E&Y weaknesses under the Technical Factor.
Int. Reply at 7. In fact, the “ambiguous and confusing” nature of E&Y’s proposal alone merits the
VA’s assignment of weaknesses. Int. Reply at 10.
10. The Court’s Resolution.
a. Ernst & Young, LLP Did Not Waive Any Organizational
Conflict Of Interest Claims.
In Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308, 1313 (Fed. Cir. 2007), the
United States Court of Appeals for 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 subsequently in a bid protest action in
the [United States] Court of Federal Claims.
Id. at 1313 (emphasis added); see also Patent, BLACK’S LAW DICTIONARY (10th ed. 2014)
(defining “patent” as “[o]bvious [or] apparent”).
In CRAssociates, the United States Court of Federal Claims observed that
the rationale of Blue [&] Gold [Fleet] leads to the conclusion that a contractor
should not be allowed to protest an agency's failure to identify and mitigate an OCI
when the contractor knew about the alleged OCI from the start, but failed to assert
it, via protest, prior to the award.
CRAssociates, 102 Fed. Cl. at 712 (emphasis added); see also Concourse Grp., 131 Fed. Cl. at 29
(“Logically, the waiver rule also applies where a [protestor] fails to raise OCI claims before the
close of the bidding process.”).
In this case, prior to the award of the MAHSO Contract, other prospective offerors were
not informed by the CO or otherwise of PwC’s involvement in the Pilot Study or intent to bid on
the MAHSO Contract. Tab 8, AR 298–300, 302. Nor were other prospective offerors informed
that PwC received “proprietary” non-public government information from the VA that was used
to develop the Methodology, i.e., the Pilot Study Data. Tab 8, AR 298–300, 302. Consequently,
neither E&Y nor the other prospective offerors had any information from which they could assert
39
OCI claims prior to submitting their proposals. Although one prospective offeror expressed
concern that the Pilot Study “contractors” had an unfair competitive advantage (Tab 9, AR 345),
the CO represented that “any advantage or perceived advantage” was mitigated by releasing the
Methodology, albeit seven days before final offers were due. Tab 27, AR 833; see also Tab 9, AR
345. The deficiency of this mitigation effort, however, was not immediately recognized, but
became apparent only when the proposals were examined and showed that every offeror, except
PwC, made identical “mistaken” assumptions in their technical proposals. Tab 11, AR 519; Tab
18, AR 737. As such, the bases for E&Y’s OCI claims were not “patent . . . prior to the close of
the bidding process.” See Blue & Gold Fleet, 492 F.3d at 1313.
For these reasons, the court has determined that E&Y did not waive any OCI claims alleged
in the November 30, 2017 Amended Complaint.
b. The Contracting Officer Violated FAR 9.504(a), By Failing To
Identify, Evaluate, And Mitigate A Significant Unequal Access
To Information Organizational Conflict Of Interest Prior To
Award Of The Market Area Health System Optimization
Contract.
Count III of E&Y’s November 30, 2017 Amended Complaint19 alleges that “PwC is
ineligible for award because of . . . OCI[s].” Am. Compl. ¶¶ 106–17. Specifically, the Amended
Complaint alleges that “PwC’s team had deep, unequal, and unfair access to non-public
information that the other [offerors] did not have. [And, this] non-public information provided
PwC with an unfair competitive advantage.” Am. Compl. ¶ 114. “Thus, PwC had [an] unequal
access to information . . . OCI[].” Am. Compl. ¶ 114; see also Pl. Br. at 46.
“An unequal access to information OCI may arise in situations where an offeror, by virtue
of [prior] performance on a government contract, obtains access to non-public information that
other offerors do not have, which provides it an unfair competitive advantage on a new
procurement.” Jacobs Tech. Inc. v. United States, 100 Fed. Cl. 198, 210 (Fed. Cl. 2011) (citing
Turner Constr. Co. v. United States, 94 Fed. Cl. 561, 569 (Fed. Cl. 2010), aff’d 645 F.3d 1377
(Fed. Cir. 2011)).
FAR 9.504(a) requires a contracting officer to “analyze planned acquisitions in order
to . . . [a]void, neutralize, or mitigate significant potential [OCIs] before contract award.” 48
C.F.R. § 9.504(a) (emphasis added). To that end, the “contracting officer must analyze each
procurement to determine if there are any potential or actual OCIs.” Jacobs Tech., 100 Fed. Cl.
at 210 (emphasis added). And, FAR 9.504(a) requires the contracting officer to “[i]dentify and
evaluate potential [OCIs] as early in the acquisition process as possible.” 48 C.F.R. § 9.504(a)
19
Regarding the merits of E&Y’s November 30, 2017 Amended Complaint, the court does
not address Counts I-V in order. Instead, the court’s analysis begins with Count III, because it is
relevant to each of the remaining Counts. Next, Counts II and IV are discussed, because the court
reads these Counts to allege violations of the same FAR provision. Then, the court analyzes Count
I, as it also encompasses elements of the court’s discussion of Counts II-IV. Finally, the court
analyzes Count V.
40
(emphasis added); see also PAI Corp., 614 F.3d at 1352; Jacobs Tech., 100 Fed. Cl. at 210. If a
potential or actual OCI is identified, the contracting officer must determine if it is “significant.”
48 C.F.R. § 9.504(a); see also Jacobs Tech., 100 Fed. Cl. at 210. “A significant . . . [OCI] is one
which provides the bidding party a substantial and unfair competitive advantage during the
procurement process on information or data not necessarily available to other bidders.” PAI
Corp., 614 F.3d at 1352 (emphasis added). “If the contracting officer decides that a particular
acquisition involves a significant potential [OCI],” the contracting officer must document the
analysis and submit a recommendation for corrective action to the head of the contracting agency.
See 48 C.F.R. § 9.506(b); see also Jacobs Tech., 100 Fed. Cl. at 210–11 (“The head of the
contracting agency will determine the appropriate action[,] based on the contracting officer’s
recommendation, FAR 9.506(c), and may decide to disqualify a government contractor[,] if
significant OCIs cannot be mitigated[.]”).
On or about May 17, 2017, the CO was informed that PwC would “likely bid” on the
MAHSO Solicitation. Tab 27, AR 831. At that time, the CO knew that the VA had provided
“proprietary” non-public government information, i.e., the Pilot Study Data, “directly” to
Craddock and PwC for use in developing the Methodology. Tab 27, AR 831, 835; see also Tab
27, AR 906 (PwC confirming that “much of [the information used during the Pilot Study] was
generated by the [VA]”). Initially, however, neither the Pilot Study Data nor the Methodology
were provided to the other prospective offerors, including E&Y. Tab 9, AR 337. Although several
offerors subsequently requested the Methodology (Tab 8, AR 298–300, 302), the CO refused,
stating that it would “be provided after award of the BPA.” Tab 8, AR 298. Seven days before
proposals were due, however, the CO changed course and provided the Methodology to all
prospective offerors “to minimize any OCI concerns[.]” Tab 27, AR 833. But, the underlying
Pilot Study Data was never provided. Tab 27, AR 833. That decision by the VA created a
“significant” unequal access to information OCI. And, although the CO admitted that the Pilot
Study Data may have provided PwC with a “minor competitive advantage,” the CO minimized
this advantage by describing the Pilot Study Data as “unique” only to the three Pilot Study Market
Areas, and concluded that the Pilot Study Data would not “benefit [PwC] in providing a quote for
the resulting solicitation as each market is independent.” Tab 27, AR 833. The Administrative
Record, however, evidences the contrary.
As the CO admitted, the Methodology included only “general” or “high level” information
(Tab 27, AR 833, 835 (emphasis added)) and would “require extensive input/customization” from
the successful offeror. Tab 8, AR 299. In contrast, the Pilot Study Data was “very robust.” Tab
27, AR 978 (explaining that PwC was “oriented to data conventions, data workbooks, automated
data tools and several very robust data sets”); see also Tab 27, AR 979–81 (“Data Distribution
Example”). Although it may be true that the Pilot Study Data consisted of information about only
the three Pilot Study Market Areas (Tab 27, AR 833, 979–81 (“Data Distribution Example”)), this
“robust” information, contained “proprietary” non-public government information that was
provided by the VA to Craddock and PwC, and then used to develop the Methodology, i.e., the
“general approach for analyzing each [VHA] market [area].” Tab 27, AR 833 (emphasis added);
see also Tab 27, AR 831, 835 (describing the Methodology, as a “step-by-step process that
outline[d] the high level approach, activities, and data that [would] be used for each [VHA] market
[area]” (emphasis added)). The competitive advantage to PwC in having access to the Pilot Study
Data prior to submitting its proposal was that the VA provided PwC with access to “proprietary”
non-public government information that was necessarily representative of every VHA market area.
41
Tab 9, AR 351 (The “[M]ethodology consist[s] of proven analytical tools and applications to assess
access, quality, and cost of available community care, conduct market assessments for all V[H]A
markets across the nation.” (emphasis added)).
The competitive significance of the Pilot Study Data is further evidenced by the fact that
every other offeror made “staffing level” assumptions that were to PwC’s, i.e.,
PwC’s proposed “staffing level” was than that of the other offerors.20
Tab 11, AR 519; Tab 18, AR 737. In fact, the “staffing level” assumptions by Deloitte, E&Y,
Huron, and McKinsey were determined by the SSEB and the CO to be mistaken, thereby
contributing to all of the aforementioned offerors being not eligible for an award. Tab 27, AR 737.
In contrast, the CO touted that PwC was able to properly estimate the “level of effort . . . to perform
the tasks identified in . . . [Task Order One.]” Tab 27, AR 835. But, the fact that every offeror,
except PwC, made identical “mistaken” “staffing level” assumptions, evidences a significant
unequal access to information OCI attributable to PwC’s access to the Pilot Study Data. The CO
even admitted that PwC’s access to the Pilot Study Data may have provided PwC with a better
understanding of the MAHSO Project’s technical requirements, including “staffing level.” Tab
27, AR 833 (“The developed evaluation factors listed in the [MAHSO S]olicitation and used
during the source selection process were general in nature and not unique regarding the pilot
contract other than the technical evaluation criteria that discussed understanding methods of
approach and how to staff those methods.” (emphasis added)). The CO, however, attributed
PwC’s better understanding of the appropriate “staffing level” primarily to PwC’s experience
as an “incumbent contractor.” Tab 27, AR 837. But, PwC explained that any “incumbent
advantage . . . from working on the [Pilot Study], . . . was neutralized/mitigated through the [VA]’s
sharing of the [M]ethodology.” Tab 27, AR 906. This statement refutes the CO’s conclusion and
supports the fact that something more than mere incumbency, i.e., the Pilot Study Data, was the
source of PwC’s better understanding.
The United States Court of Appeals for the Federal Circuit has held that “[t]he mere
existence of a prior or current contractual relationship between a contracting agency and a firm
does not create an unfair competitive advantage, and an agency is not required to compensate for
every competitive advantage gleaned by a potential offeror’s prior performance of a particular
requirement.” PAI Corp., 614 F.3d at 1353 (emphasis added). But, in that case, the protestor
“failed to introduce any evidence before the trial court showing . . . a substantial and unfair
competitive advantage through unequal access to information.” Id. (emphasis added). Therefore,
the protestor’s “bare allegation [of] . . . a prior contractual relationship . . . [was] insufficient to
show a significant potential conflict.” Id. (emphasis added). In this case, however, the
Administrative Record evidences more than E&Y’s “bare allegation[s of] . . . a prior contractual
relationship;” instead, it reflects that PwC had access to “proprietary” non-public government
information, not available to the other prospective offerors, that gave PwC a “substantial and unfair
competitive advantage during the procurement process.” Id. at 1352.
20
Deloitte, E&Y, Huron, and McKinsey proposed VISN teams of members each,
or VISN staff members; in contrast, PwC proposed VISN teams of members each, or
VISN staff members. Tab 11, AR 519; Tab 18, AR 737.
42
On October 9, 2017, the CO sent “an email . . . to PwC referencing several questions
concerning [PwC’s] . . . involvement with [the Pilot Study.]” Tab 27, AR 836; see also Tab 27,
AR 905–10. Therein, the CO offered “PwC the opportunity to explain why they did or did not
enjoy a competitive advantage by working . . . to develop the Methodology.” Tab 27, AR 836.
PwC responded that, “[t]hrough the provision of the . . . [M]ethodology, all [prospective offerors]
were privy to the same information PwC . . . w[as] prior to proposal submission.” Tab 27, AR 906
(emphasis added). PwC, however, did not address the Pilot Study Data. Tab 27, AR 833. Not
surprisingly, the CO agreed with PwC and concluded that “any . . . information gathered during
the [Pilot Study] . . . was included in the [M]ethodology . . . , [thereby] eliminating any OCI
concerns.” Tab 27, AR 836. The court, however, does not view this type of post hoc
rationalization to be either relevant or persuasive. See Citizens to Preserve Overton Park v. Volpe,
401 U.S. 402, 419 (1971) (“The lower courts based their review on the litigation affidavits that
were presented. These affidavits were merely ‘post hoc’ rationalizations, which have traditionally
been found to be an inadequate basis for review.” (internal citations omitted)); see also Al Ghanim
Combined Grp. Co. Gen. Trad. & Cont. W.L.L. v. United States, 56 Fed. Cl. 502, 508 (Fed. Cl.
2003) (“The Supreme Court has made clear that post hoc rationalizations offered by the agency
should be afforded limited importance in the court’s analysis.”).
Rather the Administrative Record evidences that, the CO failed to “identify and evaluate”
PwC’s access to the Pilot Study Data as a “significant” unequal access to information OCI prior
to awarding the MAHSO Contract. Tab 27, AR 833. The Administrative Record also evidences
that the CO failed to document or provide any analysis or submit any recommendations to his VA
superiors to mitigate this OCI. Consequently, no effort was made to mitigate PwC’s exclusive
access to “proprietary” non-public government information, i.e., the Pilot Study Data, prior to
awarding the MAHSO Contract. In sum, the CO failed to adequately “analyze [the] planned
acquisition[,]” i.e., the MAHSO procurement, “in order to . . . [i]dentify and evaluate potential
[OCIs] as early in the acquisition process as possible,” and “[a]void, neutralize, or mitigate
significant potential [OCIs] before contract award.” 48 C.F.R. § 9.504(a) (emphasis added).
For these reasons, the court has determined that PwC had a “significant” unequal access to
information OCI and the CO’s failure to identify, document, and mitigate this OCI prior to
awarding the MAHSO Contract violated FAR 9.504(a). See 48 C.F.R. § 9.504(a)(2); see also
Turner Const. Co., Inc. v. United States, 645 F.3d 1377, 1386 (Fed. Cir. 2011) (“If . . . the
[contracting officer’s] post-award evaluation shows that a significant potential OCI did exist and
went unmitigated in violation of [FAR] 9.504(a)(2), then serious remedial actions are
appropriate.).
c. A Biased Ground Rules Organizational Conflict Of Interest,
However, Did Not Exist.
Count III of E&Y’s November 30, 2017 Amended Complaint alleges that PwC’s “work in
developing the [M]ethodology meant that it drafted a key aspect of the [SOW]. Thus, PwC
had . . . [a] biased ground rules OCI[].” Am. Compl. ¶ 114; see also Pl. Br. at 46.
A “biased ground rules” OCI “may occur in situations where an offeror, as part of [prior]
performance of a government contract, has provided input to the statement of work or
specifications of a [solicitation] in such a way as to provide the firm a competitive advantage in
43
responding to the [solicitation].” Jacobs Tech., 100 Fed. Cl. at 210 (citing Turner Constr., 94 Fed.
Cl. at 569).
FAR 9.505-2(b)(1)21 provides that “[i]f a contractor prepares, or assists in preparing, a
work statement to be used in competitively acquiring . . . services—or provides material leading
directly, predictably, and without delay to such a work statement—that contractor may not
supply . . . the services.” 48 C.F.R. § 9.505-2(b)(1); see also Sys. Plus, Inc. v. United States, 69
Fed. Cl. 757, 773 (Fed. Cl. 2006) (“The [‘biased ground rules’] group consists of situations in
which a firm, as part of its performance of a government contract, has in some sense set the ground
rules for another government contract by, for example, writing the statement of work or the
specifications. In these ‘biased ground rules’ cases, the primary concern is that the firm could
skew the competition, whether intentionally or not, in favor of itself.” (emphasis added)).
FAR 9.505-2(b)(1)(ii),22 however, “excepts certain government contractors from the
prohibitions of FAR 9.505-2(b)(1)—specifically, contractors who have participated in the
development and design work of the contract under which the work statement was drafted.” United
States ex rel. Ervin & Assocs., Inc. v. Hamilton Sec. Grp., Inc., 370 F. Supp. 2d 18, 54 (D.D.C.
2005). The text of FAR 9.505-2(b)(1)(ii) “plainly contemplates the situation where a firm wishes
to compete for a contract for . . . services based on that firm’s earlier development and design
work.” Id. at 54. The rationale underlying FAR 9.505-2(b)(1)(ii)’s exception is set forth in FAR
9.505-2(a)(3):
In development work, it is normal to select firms that have done the most advanced
work in the field. These firms can be expected to design and develop around their
own prior knowledge. Development contractors can frequently start production
earlier and more knowledgeably than firms that did not participate in the
development, and this can affect the time and quality of production, both of which
are important to the [g]overnment. In many instances the [g]overnment may have
financed the development. Thus, while the development contractor has a
competitive advantage, it is an unavoidable one that is not considered unfair; hence
no prohibition should be imposed.
48 C.F.R. § 9.505-2(a)(3). As such, “the competitive advantages afforded the contractor in such
situations are not prohibited as unfair[,] because they are both unavoidable and advantageous to
the government.” Ervin & Assocs., Inc., 370 F. Supp. 2d at 55.
21
E&Y’s citation to FAR 9.505-1 as governing biased ground rules OCIs is in error, as that
provision concerns “systems engineering and technical direction,” neither of which are relevant to
PwC’s work on the Pilot Study. See 48 C.F.R. § 9.505-1.
22
FAR 9.505-2(b)(1)(ii) excludes contractors that have “participated in the development
and design work” from the prohibitions of FAR 9.505-2(b)(1)). 48 C.F.R. § 9.505-2(b)(1)(ii); see
also 48 C.F.R. § 9.505-2(b)(3) (“For the reasons given in 9.505-2(a)(3), no prohibitions are
imposed on development and design contractors.”).
44
In this case, the Administrative Record reflects that PwC served as a development and
design contractor for the MAHSO Project. Under the Pilot Study Contract, Craddock and PwC
were required to “[d]efine the ideal healthcare delivery system design processes and outputs.” Tab
27, AR 934. In doing so, Craddock and PwC were “to evaluate feasibility, time, costs, adverse
events, strengths, and weakness of the proposed [MAHSO Project] to improve upon the study
design.” Tab 1, AR 5. In short, they advised the VA how best to “establish high performing health
care networks for VHA services and facilities.” Tab 1, AR 4. After months of “extensive market
analysis activities,” Craddock and PwC developed an “ideal” method, i.e., the Methodology, and
provided it to the VA for use during performance of the MAHSO Project. Tab 27, AR 830–31,
934. Accordingly, PwC’s work on the Pilot Study was “development and design work” under
FAR 9.505-2(b)(1)(ii).
In addition, PwC was not directly involved in drafting the MAHSO Solicitation. Tab 27,
AR 831, 834. And, although the Solicitation required offerors to comply with the Methodology
(Tab 9, AR 339, 341–42), because the Methodology is “generic” in nature, it does not present the
“primary concern” underlying biased ground rules OCIs, i.e., that PwC could skew the competition
in favor of itself. See Sys. Made Simple, Inc., B-412948.2, 2016 WL 4158119 (Comp. Gen. July
20, 2016) (explaining that a contractor “did not have the ability to shape the playing field of later
procurements on behalf of [itself], because [the contractor] had prepared a generic assessment”).
Instead, the Methodology describes only a “general approach for analyzing each [VHA] market
[area].” Tab 27, AR 833. The Methodology does not require the use of proprietary products or
services and the Administrative Record does not reflect that the Methodology was written such
that only PwC could comply with the requirements.
For these reasons, the court has determined that, because PwC’s work on the Pilot Study
was “development and design work,” and since the VA drafted the MAHSO Solicitation without
direct involvement from PwC, the VA did not violate FAR 9.505-2(b)(1).
d. The Source Selection Evaluation Board Violated FAR 8.405-
3(b)(2), By Failing To Evaluate Proposals, Pursuant To The
Requirements Of The Solicitation.
FAR 8.405-3(b)(2) provides, when “establish[ing] . . . a BPA . . . [t]he . . . contracting
officer shall ensure all quotes received are fairly considered and award is made in accordance with
the basis for selection in the [solicitation].” 48 C.F.R. § 8.405-3(b)(2)(vi) (emphasis added); see
also Elec. Data Sys., LLC v. United States, 93 Fed. Cl. 416, 430 (Fed. Cl. 2010) (“[A]n agency
shall evaluate proposals and assess their qualities solely based on the factors and subfactors
specified in the solicitation.”); AshBritt, Inc. v. United States, 87 Fed. Cl. 344, 374 (Fed. Cl. 2009)
(“It is a fundamental tenet of procurement law that proposals must be evaluated in accordance with
the terms of the solicitation.”); Hunt Building Co., Ltd. v. United States, 61 Fed. Cl. 243, 273 (Fed.
Cl. 2004) (An “agency’s failure to follow its own selection process embodied in the [s]olicitation
is . . . a prejudicial violation of a procurement procedure established for the benefit of offerors.”).
i. As To Ernst & Young, LLP’s Technical Proposal.
Count II of E&Y’s November 30, 2017 Amended Complaint alleges that the VA’s
“deci[s]ion to issue the award to PwC involved [the] application of . . . unstated evaluation
45
criteri[a].” Am. Compl. ¶¶ 95–105. Specifically, the Solicitation’s SOWs required VISN teams
of five members. Am. Compl. ¶ 102. The SSEB, however, assigned E&Y a weakness for
. Am. Compl. ¶ 102. The Amended Complaint also alleges that,
despite complying with the requirements of the Solicitation, the SSEB improperly assigned
weaknesses to E&Y, .” Am. Compl. ¶¶ 98–
105. The court reads Count II as challenging the SSEB’s evaluation of E&Y’s technical proposal
as a violation of FAR 8.405-3(b)(2), for failing to evaluate E&Y’s proposal, pursuant to the
requirements of the MAHSO Solicitation.
The Task Order One SOW required that the successful offeror develop Phase I of the
National Realignment Strategy for 32 VHA market areas across six VISNs. Tab 9, AR 339. In
turn, the Solicitation stated that the VA would evaluate the feasibility of each offeror’s technical
approach, by considering the “labor mix,” “management,” and “staffing level.” Tab 8, AR 272
(“Additionally, . . . the evaluation will consider the level o[f] effort and mix of labor proposed to
perform the tasks identified in [Task Order One].”); Tab 8, AR 282 (explaining that offerors were
to propose a “staffing/management plan tailored to [Task Order One]”).
Regarding the “labor mix,” the Task Order One SOW provided only that “[t]eams shall be
supported by . . . disciplines and specialists[,] as needed.” Tab 9, AR 344. It did not, however,
provide any other information about the composition of the “labor mix.” Tab 9, AR 344. The
Task Order One SOW also required that “[c]ore team leads include a Senior Medical Facility
Planner (Architect) and a Senior Medical Services Planner (Healthcare Planner).” Tab 9, AR 344.
But, it did not indicate whether each VISN team was to be led by an Architect, a Healthcare
Planner, or both. Tab 9, AR 344. In the absence of a definition or more specific information, the
SSEB was afforded substantial latitude in its evaluation of E&Y’s proposed “labor mix” and “team
leads.” See E.W. Bliss Co. v. United States, 77 F.3d 445, 449 (Fed. Cir. 1996) (explaining that “a
court will not second guess . . . discretionary determinations of procurement officials); see also ST
Net, Inc. v. United States, 112 Fed. Cl. 99, 108 (Fed. Cl. 2013) (“This deferential standard reflects
the substantial latitude afforded to agency officials to determine which proposal represents the best
value for the government.” (internal quotations omitted)).
In contrast, as to “staffing level,” the Task Order One SOW required each offeror to “have
one team per VISN,” or six VISN teams. Tab 9, AR 339; see also Tab 9, AR 344 (“The number
of teams shall be determined by the number of Markets and VAMCs.”). In addition, as a “General
Requirement,” the Task Order One SOW stated that “[t]ravel is required for at least six teams of
five healthcare planners and data analysts to assess . . . [market areas] within each of the six (6)
VISNs[.]” Tab 9, AR 344 (emphasis added). Therefore, the Task Order One SOW specified the
minimum “staffing level” requirement, i.e., “at least” six VISN teams of five members each23 (Tab
23
Although the Government argues that the qualifier “at least” modifies the phrase “five
health care planners and data analysts,” this is inconsistent with the plain meaning of the Task
Order One SOW. Cf. Barron Bancshares, Inc. v. United States, 366 F.3d 1360, 1375 (Fed. Cir.
2004) (“If the terms of a contract are clear and unambiguous, they must be given their plain
meaning.”). The Task Order One SOW states that there should be “at least six [VISN] teams” with
“five healthcare planners and data analysts” each. If the VA intended to construe the Task Order
46
9, AR 339, 344), and the SSEB was required to evaluate proposals in accordance with this
requirement. See 48 C.F.R. § 8.405-3(b)(2)(vi).
Although Deloitte’s, E&Y’s, Huron’s, and McKinsey’s proposals complied with the Task
Order One SOW’s minimum “staffing level” requirement, they were assessed weaknesses by the
SSEB, because of “ ” Tab 18, AR 699, 701,
704, 706 (emphasis added). Regarding E&Y’s proposal in particular, the SSEB stated that,
“
.” Tab 18, AR 700 (emphasis added). In contrast, PwC’s proposal of -member
VISN teams was lauded by the CO as “superb” and touted by the SSEB as “demonstrat[ing] a
thorough understanding of the complexity and size of the task at hand.” Tab 18, AR 707, 737.
PwC’s proposed “staffing level,” however, was almost that required by the Task Order
One SOW. Tab 9, AR 339, 344. Although the SSEB’s positive evaluation of PwC’s proposed
“staffing level” was not inconsistent with the Solicitation, the SSEB’s assignment of a weakness
for E&Y’s proposed “staffing level” was, because E&Y’s proposed “staffing level”
. Accordingly, the SSEB did not “fairly
consider” E&Y’s technical proposal “in accordance with the basis for selection in the
[Solicitation].” See 48 C.F.R. § 8.405-3(b)(2)(vi).
For these reasons, the court has determined that the SSEB’s evaluation of E&Y’s technical
proposal violated FAR 8.405-3(b)(2)(vi). See 48 C.F.R. § 8.405-3(b)(2)(vi).
ii. As To PricewaterhouseCoopers Public Sector, LLP’s
Past Performance Examples.
Count IV of E&Y’s November 30, 2017 Amended Complaint alleges that the SSEB’s
evaluation of PwC’s proposal was “unreasonable.” Am. Compl. ¶¶ 118–27. Specifically, the
SSEB “unreasonably credited PwC with the . . . [p]ast [p]erformance of its affiliate [
]” and improperly “assign[ed] PwC a strong evaluation rating despite that PwC lacks
experience providing federal health market assessments.” Am. Compl. ¶¶ 120, 123. The court
reads these portions of Count IV as challenging the SSEB’s evaluation of PwC’s past performance
examples as a violation of FAR 8.405-3(b)(2), for failing to evaluate E&Y’s proposal, pursuant to
the requirements of the MAHSO Solicitation.
The Solicitation allowed offerors to submit “a narrative detailing up to three (3) contracts
(prime contracts, task/delivery orders, and/or major subcontracts) in performance during the past
three (3) years from the date of issuance of the . . . [S]olicitation, which are relevant to the efforts
required by the [Solicitation].” Tab 8, AR 284. In evaluating each offeror’s past performance, the
SSEB was to “assess the relative risks associated with a quoter’s likelihood of success in fulfilling
the [S]olicitation’s requirements as indicated by that quoter’s record of past performance.” Tab 8,
AR 274. The Solicitation stated, however, that “[i]n this context, ‘quoter’ refers to the prime
One SOW as the Government suggests, it would have required: “six teams of at least five
healthcare planners and data analysts.”
47
[c]ontractor and all proposed major subcontractor(s).” Tab 8, AR 274 (emphasis added). Each
offeror was responsible for “identify[ing] their major subcontractors.” Tab 8, AR 303.
On PwC’s “Standard Form (SF 1449),” PwC identified “PricewaterhouseCoopers Public
Sector LLP,” i.e., PwC, as the “prime contractor.” Tab 11, AR 584; see also Tab 11, AR 571
(PwC identifying the “[p]rime” contractor to be associated with CAGE Code 783T6 and DUNS
Number 079529872); Tab 2, AR 53 (associating “PricewaterhouseCoopers Public Sector LLP”
with CAGE Code 783T6 and DUNS Number 079529872). PwC also identified
, and
as “[m]ajor subcontractors.” Tab 11, AR 571. PwC, however,
did not list as a “major subcontractor.” Tab 11, AR 571. Therefore, pursuant to
the terms of the Solicitation, the VA could consider past performance examples of PwC, as the
“prime contractor,” and , and , as PwC’s “major
subcontractors.” The VA, however, could not consider past performance examples of
.
PwC submitted three examples of past performance:
; and . Tab 11, AR 564–66. Each
of these projects, however, was performed by , not PwC or the “major
subcontractors” identified in PwC’s proposal.24 Tab 11, AR 564–66. Nevertheless, the SSEB
credited PwC with “past performance” for each of these projects. Tab 18, AR 721–22. And, the
SSEB concluded that, based on the projects, PwC “[d]emonstrated past performance to meet[] the
needs of the BPA and experience in area’s relevant to the [SOW]” and rated PwC as “Low Risk.”
Tab 18, AR 721–22. The CO also determined that “PwC’s past performance was relevant with
high quality, and resulted in low past performance risk.” Tab 18, AR 738. The SSEB’s
consideration of projects, however, was contrary to the Solicitation’s instructions,
because was neither the “prime contractor” nor one of PwC’s “major
subcontractors.” Accordingly, the SSEB did not “fairly consider” PwC’s past performance
examples “in accordance with the basis for selection in the [Solicitation].” See 48 C.F.R. § 8.405-
3(b)(2)(vi).
PwC’s proposal, however, stated that
PwC will . . . draw on the staff and expertise of its teaming partners and the
experience, resources, and capabilities of its affiliate, . . . [.] Both
24
E&Y argues that the same is true for at least some of PwC’s “Corporate Experience
Examples.” Pl. Br. at 36 (“Similarly, the Corporate Experience examples offered in PwC’s
proposal include clients of , not PwC[.]”). It is unclear
from the Administrative Record, however, which entity performed these projects, because PwC’s
proposal does not include any information other than PwC’s representations. Tab 11, AR 553–59.
Therefore, it is not clear how the VA was able to verify that PwC’s “Corporate Experience
Examples” were performed by PwC or its “major subcontractors,” as required by the Solicitation.
Tab 8, AR 273; see also Tab 19, AR 739 (admitting that the “[Past Performance Information
Retrieval System] was not reviewed because none of the previous federal contracts were reported
to [Contractor Performance Assessment Reporting System]”).
48
PwC and . . . are partners in their common parent [PwC US] . . .
and report ultimately to PwC US management. resources will be
directly and meaningfully involved in this effort.
Tab 11, AR 519 (emphasis added).
The Government and PwC argue that this discussion was sufficient to satisfy the MAHSO
Solicitation, citing Am. Auto Logistics, LP v. United States, 117 Fed. Cl. 137 (Fed. Cl. 2014), and
Femme Comp Inc. v. United States, 83 Fed. Cl. 704 (Fed. Cl. 2008). Gov’t Br. at 32–33; Int. Br.
at 30–34. Reliance on these non-precedential opinions, however, is misplaced.
In this case, the Solicitation defined “quoter” as: “the prime [c]ontractor and all proposed
major subcontractor(s).” Tab 8, AR 274. In addition, the CO instructed prospective offerors that,
“[i]t [was] up to [each offeror] to identify their major subcontractors.” Tab 8, AR 303. In Am.
Auto Logistics and Femme Comp, the court determined that “there is no requirement that an offeror
must designate its affiliated corporations as subcontractors.” Am. Auto Logistics, 117 Fed. Cl. at
188; Femme Comp, 83 Fed. Cl. at 747. In both cases, however, the court relied on FAR
15.305(a)(2)(iii), which provides that “[t]he evaluation should take into account past performance
information regarding predecessor companies, key personnel who have relevant experience, or
subcontractors that will perform major or critical aspects of the requirement when such information
is relevant to the instant acquisition.” 48 C.F.R. § 15.305(a)(2)(iii) (emphasis added). FAR
15.305(a)(2)(iii), however, does not mandate consideration of an offeror’s past performance;
instead, it suggests that such information should be considered, not that it “must” or “shall.” See
Res Rei Dev., Inc. v. United States, 126 Fed. Cl. 535, 555–56 (Fed. Cl. 2016) (explaining that the
court has consistently interpreted FAR 15.305(a)(2)(iii) “as permissive, giving an agency
discretion to decide whether to consider such information”). In this case, the VA required that
each offeror identify “major subcontractors” and specified that only past performance of the
“prime contractor” and “major subcontractors” would be considered.25 As such, the text of the
Solicitation governs how the proposals are to be evaluated.
For these reasons, the court has determined that the SSEB’s evaluation of PwC’s past
performance examples violated FAR 8.405-3(b)(2)(vi). See 48 C.F.R. § 8.405-3(b)(2)(vi).
25
In Am. Auto Logistics and PricewaterhouseCoopers the “affiliates” were required to
work with the “prime contractor” through agreements. See Am. Auto Logistics, 117 Fed. Cl. at
187 (explaining that the two companies “had entered into a teaming agreement”); see also
PricewaterhouseCoopers, 126 Fed. Cl. at 353 (“Protestor argues that ‘there should be no doubt
that PwC was utilizing the resources of its parent’ because the task order was being issued against
a . . . contract that had previously been novated from the parent entity, PwC US, to PwC Public
Sector. Protestor argues that the ‘transfer of resources and assets from the parent to PwC is the
bedrock of a novation, which is why these resources of PwC US were appropriate[ly] evaluated
by DHA.’” (internal alterations omitted)). In this case, however, had no contractual
duty to assist PwC; instead, the two companies were simply described as “partners in their common
parent [PwC US].” Tab 11, AR 519.
49
e. The Contracting Officer Violated FAR 1.102-2(c)(3), By Failing
To Conduct Discussions Prior To Award Of The Market Area
Health System Optimization Contract.
Count I of E&Y’s November 30, 2017 Amended Complaint alleges that the CO’s
evaluation of E&Y’s proposal was “arbitrary, capricious, and lacked reason.” Am. Compl. ¶¶ 75–
94. Specifically, the CO “failed to conduct discussions with E[&]Y despite that the [Solicitation]
clearly confused the offerors.” Am. Compl. ¶ 92.
“[U]nder FAR Part 8, [an agency is] under no obligation to hold discussions.” Distributed
Sols., Inc. v. United States, 106 Fed. Cl. 1, 15 (Fed. Cl. 2012). And, “it is clear that . . . a contracting
agency retains discretion in determining whether or not to hold discussions in a particular
procurement.” Day & Zimmermann Servs., 38 Fed. Cl. at 604. The decision whether to conduct
discussions, however, cannot be “arbitrary, capricious, [or] an abuse of discretion.” See Banknote,
365 F.3d at 1350. In addition, the court must ensure that a procuring agency’s actions “comply
with [the] FAR’s requirement of fundamental fairness in the procurement process.” Distributed
Sols., 106 Fed. Cl. at 16 n.9 (“Although FAR Part 15 does not apply, the Court will review [the
agency’s] actions to ensure they comply with FAR’s requirement of fundamental fairness in the
procurement process.”). This requires that “[a]ll contractors and prospective contractors . . . be
treated fairly and impartially[.]” 48 C.F.R. § 1.102-2(c)(3).26 Therefore, an agency’s discretion
in deciding whether to conduct discussions is “not unfettered.” Day & Zimmermann Servs., 38
Fed. Cl. at 604.
Although the Solicitation notified offerors of the VA’s intent to award the MAHSO
Contract without discussions, it also “reserve[d] the [VA’s] right to communicate with any or all
[c]ontractors submitting a quote, if it [was] determined advantageous to the [VA] to do so.” Tab
8, AR 269. Explaining the decision not to conduct discussions, the CO stated:
The [VA] provided in the solicitation that it “intends to establish a BPA and award
[Task Order One] without further communicating with [c]ontractors.” Based on
the evaluations of each quote against all evaluation criteria, the [CO] has
determined that award can be made on the basis of the initial quotes to PwC and
that it is in the best interest of the [VA] to do so. Although, four of the five quoters
presented problems within their technical [proposals] and [Task Order One] pricing
quotes that raised concerns, it was determined by the [CO] that discussions would
only allow the unsuccessful quoters to better their technical quotes and pricing to
become more competitive with PwC and not actually provide any real benefit to the
[VA]. Several quoters provided
based on the scope and methodology provided.
Enough detailed information was provided to the quoters throughout the
solicitation for them to understand the importance of staffing and the level of
26
FAR 1.102-2(c)(3) provides that, “[t]he [g]overnment shall exercise discretion, use
sound business judgment, and comply with applicable laws and regulations in dealing with
contractors and prospective contractors. All contractors and prospective contractors shall be
treated fairly and impartially but need not be treated the same.” 48 C.F.R. § 1.102-2(c)(3).
50
effort/methodology needed to accomplish the stated tasks and it would be unfair to
PwC for properly following the [S]olicitation[’s] requirements, by opening
discussions and allowing quoters a second chance. In addition, since every quoter
other than PwC received a less than satisfactory rating for corporate experience,
they would not have been eligible for award if discussions for technical and price
were opened.
Tab 18, AR 737.
The CO’s reasoning, however, is problematic for several reasons. First, the CO’s decision
not to conduct discussions was based on several mistaken conclusions. For example, the CO found
that “[e]nough detailed information was provided to the quoters throughout the [S]olicitation for
them to understand the importance of staffing and the level of effort/methodology needed to
accomplish the stated tasks.” Tab 18, AR 737. As previously discussed, however, there was a
significant unequal access to information OCI. The CO also mistakenly concluded that Deloitte,
E&Y, Huron, and McKinsey were not eligible for an award based, in part, on the SSEB’s
evaluation of their technical proposals. As previously discussed, however, the SSEB’s technical
evaluation violated FAR 8.405-3(b)(2)(vi), as it was not consistent with the requirements outlined
in the MAHSO Solicitation.
Second, the Solicitation required the CO to use “the best value trade-off process to
select . . . the most beneficial quote, price and other factors considered.” Tab 8, AR 269. The
nature of the “trade-off process” allowed the VA to award a contract to an offeror that proposes a
higher price than other offerors, if the technical benefits offset the additional cost. See 48 C.F.R.
§ 15.101-1(c) (“Th[e trade-off] process permits trade[-]offs among cost or price and non-cost
factors and allows the [g]overnment to accept other than the lowest priced proposal. The perceived
benefits of the higher priced proposal shall merit the additional cost, and the rationale for trade[-
]offs must be documented[.]”). And, the “primary objective of discussions is to maximize the
[g]overnment’s ability to obtain [the] best value[.]” 48 C.F.R. § 15.306(d)(2). In this case, the
CO determined that conducting discussions “would only allow the unsuccessful quoters to better
their technical quotes and pricing to become more competitive with PwC and not actually provide
any real benefit to the [VA].” Tab 18, AR 737 (emphasis added). These benefits, i.e.,
“better . . . technical quotes and pricing,” however, are the exact benefits to be obtained by the
trade-off process.
Third, the need to conduct discussions in this case became apparent early in the evaluation
process, because every offeror, except PwC, made identical “mistaken” assumptions regarding
“staffing level” and “level of effort.” Tab 11, AR 519; Tab 18, AR 737. To a reasonable
contracting officer, this should have suggested a problem with the Solicitation, the evaluation
process, or both. Discussions would have afforded the CO an opportunity to clarify the
Solicitation’s requirements and correct mistaken assumptions; possibly leading to more technically
beneficial proposals. The advantage of conducting discussions is also evidenced by the fact that
PwC’s proposed price of $11,981,646.00 for Task Order One was more than the next highest
price of $ . Tab 18, AR 736. Given this significant discrepancy, discussions would
have benefitted the VA. See Lockheed Martin Info. Sys., B-292836 et al., 2003 WL 23104713
(Comp. Gen. Dec. 18, 2003) (directing the agency to “engage in discussions [and] obtain revised
proposals” where the agency had evaluated proposals inconsistently); see also 48 C.F.R. §
51
15.306(d) (“[Discussions] are exchanges, in either a competitive or sole source environment,
between the [g]overnment and offerors, that are undertaken with the intent of allowing the offeror
to revise its proposal. These [discussions] may include bargaining. Bargaining includes
persuasion, alteration of assumptions and positions, give-and-take, and may apply to price,
schedule, technical requirements, type of contract, or other terms of a proposed contract.”).
Finally, the CO’s justification for not conducting discussions, because doing so “would be
unfair to PwC,” certainly does not evidence fair and equal treatment. Tab 18, AR 737. FAR 1.102-
2(c)(3) requires that all prospective offerors be treated fairly. See 48 C.F.R. § 1.102-2(c)(3). The
CO’s concern only for PwC conflicts with FAR 1.102-2(c)(3), as well as the purpose of the “trade-
off process,” which is to determine the “best value” for the agency.
For these reasons, the court has determined that the CO’s decision not to conduct
discussions under the circumstances in this case, violated FAR 1.102-2(c)(3)’s requirement that
“[a]ll contractors and prospective contractors shall be treated fairly and impartially.” 48 C.F.R. §
1.102-2(c)(3).
f. The Administrative Record Does Not Evidence That The
Contracting Officer’s Decision Not To Award The Market Area
Health System Optimization Contract To Ernst & Young, LLP
Was Arbitrary And Capricious, Or Lacked A Rational Basis.
Count V of E&Y’s November 30, 2017 Amended Complaint alleges that the CO’s “best
value trade-off” determination was “arbitrary, capricious, and lack[ed] a rational basis.” Am.
Compl. ¶¶ 128–132. Specifically, the Amended Complaint alleges that, but for, the SSEB’s
“arbitrary and capricious evaluation, E[&]Y would have received the contract award.” Am.
Compl. ¶ 132.
Although the SSEB’s evaluation of E&Y’s and PwC’s proposals violated FAR 8.405-
3(b)(2)(vi), the Administrative Record does not reflect that E&Y would have been awarded the
MAHSO Contract, but for these violations. This is because, even if PwC were to be excluded
from submitting a proposal, the remaining offerors, Deloitte, E&Y, Huron, and McKinsey, each
received identical ratings from the SSEB. Tab 18, AR 736. In addition, the CO did not
differentiate between the proposals from these offerors, because each was determined not be
eligible for an award, based on the SSEB’s evaluation. As such, there is no indication from the
SSEB or the CO as to which offeror’s proposal was viewed as the next best after PwC’s proposal.
See Cyios Corp., 122 Fed. Cl. at 735 (finding that, because “the agency did not rank
the . . . unsuccessful offerors” and “did not compare the unsuccessful offerors to each
other . . . there [was] no offeror in th[e] procurement clearly identified as next in line”).
For these reasons, the court has determined that the Administrative Record does not
evidence that the CO’s decision not to award the MAHSO Contract to E&Y was arbitrary and
capricious or lacked a rational basis.
52
g. Ernst & Young, LLP Was Prejudiced By The Contracting
Officer’s And The Source Selection Evaluation Board’s FAR
Violations.
Finally, the court must determine whether E&Y was prejudiced by the FAR violations
addressed herein. See Bannum, 404 F.3d at 1351 (“[I]f the trial court finds that the government’s
conduct fails the APA review under 5 U.S.C. § 706(2)(A), then it proceeds to determine, as a
factual matter, if the bid [protestor] was prejudiced by that conduct.”).
At the outset of this procurement, the SSEB found E&Y to be “responsive and included in
the competition.” Tab 18, AR 678. In this case, however, violations of FAR 1.102-2(c)(3), 8.405-
3(b)(2)(vi), and 9.504(a), individually and collectively, prejudiced E&Y, and were the cause, in
part, of E&Y being determined not to be eligible for an award. Tab 18, AR 737; compare Allied
Tech. Grp.. Inc. v. United States, 649 F.3d 1320, 1329 (Fed. Cir. 2011). If the VA decides to
reissue the MAHSO Solicitation, E&Y will be in a position to revise its proposal and will have a
“greater than insubstantial chance of securing the [MAHSO C]ontract.” See Info. Tech. &
Applications Corp., 316 F.3d at 1319. Accordingly, E&Y has demonstrated prejudice. See
Bannum, 404 F.3d at 1353.
h. Ernst & Young, LLP Is Entitled To Injunctive Relief.
“An injunction is a drastic and extraordinary remedy, which should not be granted as a
matter of course.” See Monsanto Co. v. Geertson Seed Farms, 561 U.S. 139, 165 (2010); see also
11A C. WRIGHT, A. MILLER, & M. KANE, FEDERAL PRACTICE AND PROCEDURE § 2948 (3d ed.
2004) (“a preliminary injunction is an extraordinary and drastic remedy, one that should not be
granted unless the movant, by a clear showing, carries the burden of persuasion”). The movant
bears the burden of persuasion, when requesting that the court grant an injunction. FMC Corp. v.
United States, 3 F.3d 424, 427 (Fed. Cir. 1993).
To determine whether an injunction is warranted, the court must consider whether: “(1) the
plaintiff has succeeded on the merits, (2) the plaintiff will suffer irreparable harm if the court
withholds injunctive relief, (3) the balance of hardships to the respective parties favors the grant
of injunctive relief, and (4) the public interest is served by a grant of injunctive relief.” Centech
Grp., 554 F.3d at 1037; see also FMC Corp., 3 F.3d at 427 (“No one factor, taken individually, is
necessarily dispositive . . . [T]he weakness of the showing regarding one factor may be overborne
by the strength of others.”); see also RCFC 65(a).
Based on a review of the Administrative Record as discussed herein, the court has
determined that E&Y has established success on the substantive merits as to Counts I, II, IV, and,
in part, III of the November 30, 2017 Amended Complaint.
As to irreparable harm, a movant that establishes likelihood of success on the merits
receives the benefit of a presumption of irreparable harm. See Reebok Int’l Ltd. v. J. Baker, Inc.,
32 F.3d 1552, 1556 (Fed. Cir. 1994) (“We recognize, of course, that a movant who clearly
establishes the first factor receives the benefit of a presumption on the second.”). In addition,
without an injunction, an award of the BPA at issue will preclude E&Y and other offerors from an
opportunity to compete fairly. See PGBA, LLC v. United States, 57 Fed. Cl. 655, 664 (Fed. Cl.
53
2003) (“This court has acknowledged that a lost opportunity to compete may constitute an
irreparable harm[.]”). Although the court cannot determine from the Administrative Record
whether E&Y is entitled to be awarded the MAHSO Contract, E&Y certainly is entitled to
demonstrate the competitive benefits of its proposal on a level playing field. See Cardinal Maint.
Serv., Inc. v. United States, 63 Fed. Cl. 98, 110 (Fed. Cl. 2004) (“It is well-settled that a party
suffers irreparable injury when it loses the opportunity to compete on a level playing field with
other bidders.”). Accordingly, E&Y has established that it would be irreparably harmed, if an
injunction was not issued.
As to the balance of hardships, the court has determined that the harm to E&Y outweighs
the harm to the VA. The FAR violations identified herein have deprived E&Y of an opportunity
to compete in a fair and impartial procurement process and improperly prejudiced E&Y’s
economic interests. Although the VA may suffer an administrative burden, in the event it decides
to reissue the MAHSO Solicitation, the technical and financial benefits of fair and impartial
competition would offset this burden.
As to the public interest, “[i]t is well established that there is an overriding public interest
in preserving the integrity of the federal procurement process by requiring government officials to
follow procurement statutes and regulations.” CW Gov’t Travel, Inc. v. United States, 61 Fed. Cl.
559, 576 (Fed. Cl. 2004). In light of the FAR violations identified herein, the court has determined
that the public interest is best served by the issuance of an injunction to set aside the award of the
MAHSO Contract to PwC.
For these reasons, the court has determined that E&Y is entitled to injunctive relief.
IV. CONCLUSION.
For the reasons discussed herein, Plaintiffs’ November 20, 2017 Motion For Judgment On
The Administrative Record is granted as to Counts I, II, IV, and, in part, III, and denied as to
Count V; the Government’s December 8, 2017 Cross-Motion For Judgment On The
Administrative Record is denied; and, PwC’s December 8, 2017 Cross-Motion For Judgment On
The Administrative Record is denied.
In addition, the VA’s decision to award Order No. VA101F-17-J-3076 and BPA No.
VA101F-17-A-3074 to PwC is set aside and this matter is remanded to the VA. As set forth in
RCFC 52.2(b)(1)(B), the remand will expire in six months, i.e., on August 23, 2018, during which
time the VA is enjoined from proceeding with performance under Order No. VA101F-17-J-3076
and BPA No. VA101F-17-A-3074. As set forth in RCFC 52.2(b)(1)(D), the Government is
directed to report the status of this matter “every 90 days or less,” until the remand expires.
The Clerk is directed to enter judgment accordingly.
IT IS SO ORDERED.
s/ Susan G. Braden
SUSAN G. BRADEN
Chief Judge
54