In the United States Court of Federal Claims
No. 18-963C
Filed: September 24, 2018
Redacted Version Issued for Publication: October 22, 20181
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AMERICAN RELOCATION *
CONNECTIONS, L.L.C., *
Pre-Award Bid Protest; Cross-
*
Protestor, Motions for Judgment on the
*
Administrative Record; Acquisition
*
v. Planning; Market Research; 13
*
C.F.R. § 125.2; Federal Supply
UNITED STATES, *
Schedule; NAICS Codes.
*
Defendant. *
* * * * * * * * * * * * * * * * * **
Bret S. Wacker, Clark Hill PLC, Detroit, MI. Of counsel was Emily Baldwin, Clark
Hill PLC, Detroit, MI, and W. Barron A. Avery and William B. O’Reilly, Baker Hostetler,
Washington, D.C.
Margaret J. Jantzen, Trial Attorney, Commercial Litigation Branch, Civil Division,
United States Department of Justice, Washington, D.C., for defendant. With her were
Steven J. Gillingham, Assistant Director, Commercial Litigation Branch, Robert E.
Kirschman, Jr., Director, Commercial Litigation Branch, and Joseph H. Hunt, Assistant
Attorney General. Of counsel was Kimberly L. Cohen, Attorney, Office of Assistant Chief
Counsel, U.S. Customs and Border Protection, Indianapolis, IN.
OPINION
HORN, J.
In the above-captioned bid protest, American Relocation Connections, L.L.C.
(ARC) asserts that the United States Customs and Border Protection (CBP) violated
federal procurement law, including the Federal Acquisition Regulation (FAR) and
regulations promulgated by the Small Business Administration (SBA), when it issued an
1 This opinion was issued under seal on September 24, 2018. The parties were asked to
propose redactions prior to public release of the opinion. Protestor responded that
protestor “proposes no redactions to the Court’s September 24, 2018 Opinion,” and
defendant proposed to redact information defendant identified as “government cost
estimates” and “offeror information.” This opinion is issued with all of the redactions that
the parties proposed in response to the court’s request. Words which are redacted are
reflected with the notation: “[redacted].”
unrestricted solicitation requesting employee relocation services under the Federal
Supply Schedule (FSS) program, allegedly without engaging in any acquisition planning
or conducting any market research.
FINDINGS OF FACT
According to ARC’s complaint, “ARC is a nationally recognized small business that
is an industry leader in government and commercial sectors for the provision of employee
relocation and related services.” On April 1, 2014, CBP awarded ARC Order No.
HSBP1014A00027 under Contract No. GS-33F-0054V (the ARC Contract), which was
set aside for small businesses. The ARC Contract had a base period of performance
beginning on April 1, 2014 and ending on September 30, 2014. The ARC Contract
contained three one-year option periods of performance, all of which were exercised by
the CBP. Subsequently, CBP and ARC executed three bilateral modifications extending
ARC’s period of performance under the ARC Contract to July 31, 2018. Under the ARC
Contract, ARC was to provide professional relocation services “in order to facilitate the
real estate transactions and household goods moving services” of the approximately
1,000 CBP employees who CBP relocates on an annual basis. The parties have
stipulated that the ARC Contract “requested services listed under GSA [General Services
Administration] Federal Supply Schedule[2] 48, SINS [Special Item Numbers] 653-1, 653-
4, 653-5 and 653-7,” as defined below. ARC asserts that it “has received consistently high
accolades for its performance under the Existing Contract.”
On March 30, 2017, Joe Ohene, a Contract Specialist with CBP, sent an email
message to Thomas Ischkum, a Branch Chief at the GSA, indicating that CBP planned
“to use GSA Schedule 48 Transportation, Delivery, and Relocation Solutions for the
recompete. It was used successfully for the last acquisition.” On May 8, 2018, the CBP
posted a Request for Information for employee relocation services. In response to
questions received by CBP regarding CBP’s May 8, 2018 Request for Information, CBP
indicated that, for its upcoming acquisition of employee relocation services, the North
American Industry Classification System (NAICS) Code “to be utilized is 484210,” which
has a small business size standard of $27,500,000.00.
The CBP subsequently created an Acquisition Plan, which was dated June 19,
2017, addressing the requirements and potential risks associated with CBP’s upcoming
acquisition of employee relocation services. The CBP’s June 19, 2017 Acquisition Plan
indicates that it was prepared by Iris Reeves, Lead Staff Accountant and Contracting
2 “The Federal Supply Schedule program is also known as the GSA Schedules Program
or the Multiple Award Schedule Program.” FAR § 8.402(a) (2018). The FSS is “directed
and managed by GSA and provides Federal agencies (see [FAR §] 8.004 [(2018)]) with
a simplified process for obtaining commercial supplies and services at prices associated
with volume buying.” FAR § 8.402(a). “A GSA Schedule is a list of product and service
items and of indefinite-delivery indefinite-quantity contracts for a particular class of
products or services against which agencies may issue task and delivery orders.” JOHN
CIBINIC, JR. ET AL., FORMATION OF GOVERNMENT CONTRACTS 1144 (4th ed. 2011).
2
Officer Representative at the CBP, Francine Harris, Contracting Officer and Branch Chief
at the CBP, Herman Shivers, Lead Small Business Specialist at the CBP, Phillip
Landfried, Chief Information Officer at the CBP, and CBP Contract Specialist Joe Ohene.
The CBP’s June 19, 2017 Acquisition Plan provided the following description of CBP’s
requirements:
The Employee Relocation Program was established to provide enhanced
benefits to relocating employees and thus facilitate the retention of well-
qualified employees. The program provides relocation assistance to help
employees plan and complete moves to their new duty stations as quickly
and smoothly as possible.
CBP requires an experienced and dedicated professional relocation
services provider in order to facilitate the real estate transactions and
household goods moving services for transferring employees. Counseling
is provided throughout the process for selling, renting of old homes and
acquisition of new homes. The Contractor arranges for the household goods
to be packed, shipped and unpacked. In some cases, vehicles and/or
temporary support goods are shipped. Services may be provided to sell or
rent out the old home and to procure a new one.
This requirement fulfills the following critical gaps; CBP does not have the
in-house ability to support any of the functions that will be obtained through
this contract. Forcing personnel to make their own moving arrangements
would place undue burdens on them and their families creating discontent
and putting CBP at risk of losing quality employees. The contract to be
awarded provides relocation assistance to help employees plan and
complete their moves to new duty stations: afford eligible transferring
employees with access to relocation services: balance the effects that
availability of relocation services has on employee mobility and morale by
providing qualified home sale and move management services: provides
guidance and options for employees to take measures to assist in
expediting the home sale process.
As stated, CBP does not have the human resources and personnel to
conduct the operational activities associated with relocation services such
as moving and shipping employees’ household goods. A Government in-
[sic] house effort is therefore not a feasible acquisition alternative. Further,
using other agencies [sic] relocation contracts through a vehicle such as an
Interagency Agreement is also not a feasible acquisition alternative as CBP
employees may have relocation needs or requirements that may differ
significantly from other agencies’ employees relocating requirements.
With respect to the acquisition history, a relocation services contract was
awarded in 2014. This is the current contract, which expires in FY17. Prior
to this contract, another relocation contract was awarded in April 2008 and
3
expired in May 2014. CBP received satisfactory services under both
contracts. As a result of these prior acquisitions and the satisfactory
services received the [sic] resultant contracts, there is no need to pursue
other acquisition alternatives.
The CBP’s June 19, 2017 Acquisition Plan also states that:
CBP experienced some degree of performance constraint on the move
management aspect of the current contract, specifically pertaining to goods
of some CBP employees being damaged during transit resulting in unpaid
claims to the said employees. Language is being included on the new
contract to mitigate issues pertaining to the move management service.
The CBP’s June 19, 2017 Acquisition Plan states that “the acquisition will be
competed via GSA Relocation Services schedule holders,” specifically “GSA Schedule
48- Transportation, Delivery and Relocation Solutions,” and that small business vendors
“will be utilized for this acquisition.” According to the June 19, 2017 Acquisition Plan,
“[b]ased on a review of GSA Schedule 48, 5 proposals submissions from small business
companies are anticipated in response to the Request for Quotation.” The CBP’s June
19, 2017 Acquisition Plan identified five Special Item Numbers (SINs) that the CBP
anticipated obtaining under a future acquisition: SIN 653-1, “Relocation Service
Package;” SIN 653-3, “Relocation Software, Technology Tools, and Services;” SIN 653-
4, “Additional Services;” SIN 653-5, “Agency Customization Service;” and SIN 653-7,
“Move Management Services.”3 According to defendant, “[e]ach GSA schedule is
comprised of SINs. This is a categorization method that groups together similar products,
services, and solution to aid in the acquisition process.” (citing FAR § 8.401 (2018)). In
the parties’ joint statement of stipulated facts, the parties state:
SIN 653-1 is for “Relocation Service Package,” which includes home sale
services to ensure the employee’s home will be sold, including assistance
in marketing the home, negotiating with potential outside buyers, helping
the employee become familiar with their new duty location, providing
renter/buyer assistance, spousal and mortgage counseling and reports.
SIN 653-4 is for “Additional Services,” which includes extra services
available such as Cost of Living Analysis, Closing Assistance, Expense
Management, Rental Management, Entitlement Counseling, Group Move
Assistance and International Move Assistance, Property Management and
Training.
SIN 653-5 is for “Agency Customization Services,” which includes handling
property that is not eligible for the home sale services including special
3 Although the CBP’s June 19, 2017 Acquisition Plan indicated that CBP anticipated that
it would be requesting services under SIN 653-3, the 2017 RFQ did not request services
under SIN 653-3.
4
property that is difficult to sell. Also included are special home sale and
marketing assistance, and international services involving acclimating the
family to the new area.
SIN 653-7 is for “Move Management Services,” which includes a total
package of move management services including transferee entitlement
and pre-move counseling; carrier selection; preparation of bills of lading;
shipment booking; service performance and prepayment audits; claims
preparation assistance; and on-site quality control.
(internal references omitted).
The June 19, 2017 Acquisition Plan states that a “small business set-aside[4] is
contemplated given the sizable number of small business vendors found under GSA
Schedule 48 that show the capability to provide employee relocation services.” The June
19, 2017 Acquisition Plan indicates that the CBP anticipates awarding a firm-fixed price
contract with a base period of performance of one year and with four one-year option
periods of performance. If all option periods were to be exercised, the Acquisition Plan
indicates the “Total Value” of the resulting contract would be [redacted].
On August 21, 2017, the CBP issued Request for Quotation (RFQ) No.
HSBP1017Q0046 (the 2017 RFQ) for employee relocation services under GSA’s
“Relocation Services Schedule 48 SSIN 653.” The 2017 RFQ indicated that the
underlying procurement was set aside for small businesses. On August 22, 2017, the
CBP issued Amendment No. A0001 to the 2017 RFQ, which indicated that SIN 653-1,
Relocation Service Package, SIN 653-4, Additional Services, SIN 653-5, Agency
Customization Services, and SIN 653-7, Move Management Services, were the SINS
applicable to the 2017 RFQ. The 2017 RFQ stated:
For Move Management service, apart from showing data that it has the
technical capability to provide this service, the offeror shall also include a
carrier evaluation plan as part of its submission. The carrier evaluation plan
must show how the offeror evaluates the carrier’s performance in terms of
meeting required delivery dates, professionalism of personnel, ability to
provide timely reports and information.
Attachment 2 to the 2017 RFQ, which was titled “Price Sheet,” provided two hypothetical
scenarios and tables containing line items with estimated quantities. For each line item in
the CBP’s Price Sheet, offerors were to provide a unit price. Offerors were to address the
hypothetical scenarios and complete the tables “for the purpose of the price competition
comparison with other vendors.”
4 “A ‘set-aside for small business’ is the reserving of an acquisition exclusively for
participation by small business concerns.” FAR § 19.501(a) (2018).
5
On August 23, 2017, Terri Shaffer, a GSA Program Analyst, sent an email
message to CBP contracting personnel stating:
I understand that your agency issued an RFQ for relocation services. It
looks like the solicitation refers to an earlier version of the 653-7 SOW
[Statement of Work] that included commercial pricing as an option for move
management services. The recent change to the Schedule which is
reflected in the attached process maps offers move management services
through the Schedule in combination with the household goods moving
services being managed under the terms, conditions, and pricing of the
Centralized Household Goods Traffic Management Program (CHAMP).
Would you have an opportunity to discuss today? I can further explain the
purpose of the change.
On August 24, 2017, the CBP issued a modification to the 2017 RFQ postponing
the submission deadline for offers under the 2017 RFQ and stating that “OFFERORS
SHOULD CONTINUE TO MONITOR GSA EBUY FOR FURTHER UDDATES [sic].”
(capitalization in original). On September 5, 2017, the CBP issued an additional
modification cancelling the 2017 RFQ.
On November 9, 2017, Ms. Shaffer, the GSA Program Analyst, sent an email
message to CBP Contract Specialist Joe Ohene stating that “[w]e’ve been working closely
with Iris [Reeves] on the requirements for your BPA and are nearing the final stretch. She
has been very thorough reviewing all of the requirements compared to your previous
SOW as well as the policies for employees.” On November 16, 2017, Mr. Ohene sent an
email message to Ms. Reeves, requesting that Ms. Reeves send the names of
“Relocation Vendors that showed good capability and can be used as part our [sic] Market
Research.” Ms. Reeves responded that same day and stated that “[t]he list of vendors
that we identified when preparing for the DHS Relocation Service Contract were:
American Relocation Connection[,] Brookfield[,] Caprelo[,] Interstate Service Group[,]
Relocation NW[, and] Sirva.” On Tuesday, November 28, 2017, Ms. Reeves sent an email
message to Mr. Ohene stating “[s]till on track to getting you the SOW by COB [close of
business] Thursday [November 30, 2017]. Is there anything else that I should be working
on? If so, could you provide me with a list of expected deliverables so I can plan
accordingly.” Mr. Ohene responded:
Thanks for the information. I look forward to the SOW. We will have to tweak
some of the initial documents used in FY17 due to the change in the
acquisition strategy.
Market Research
Acquisition Plan
6
I will work on the above two and send them to you. In addition, we will have
to work on the Evaluation Factors that will be used to make the award. Terri
provided a Sample Evaluation Factors that we can tweak for our acquisition.
We may also need to tweak the attached Independent Government Cost
Estimate. According to Terri, we will be paying fees to the Contractor who
will be coordinating the HHG [Household Goods] shipping with a CHAMP
carrier so our IGCE [Independent Government Cost Estimate] needs to
reflect the estimated fee and not the actual HHG amount as it is currently
listed in the attached. We can use an average of fees off the GSA
Relocation Schedule for our IGCE.
The attached independent government cost estimate (the 2017 Independent Government
Cost Estimate) referenced in Mr. Ohene’s email message, which appears to have been
created in connection with the CBP’s issuance of the 2017 RFQ, projected expenditures
of [redacted] in Fiscal Year 2018, [redacted] in Fiscal Year 2019, [redacted] in Fiscal Year
2020, [redacted] in Fiscal Year 2021, and [redacted] in Fiscal Year 2022, which amounts
to a total of [redacted].5
On December 5, 2017, Ms. Shaffer of the GSA sent an email message to Mr.
Ohene and Ms. Reeves of CBP providing Mr. Ohene and Ms. Reeves with an
email introduction to Kim Spangler, our CO [contracting officer] who
oversees the relocation contracts. Her team manages these contracts. Iris
inquired earlier today about the companies that are currently identified as
small business.
Kim put together information that includes small business as it relates to
these contracts and can provide this to you directly. It’s a great resource so
wanted [sic] to be sure you had all of the information.
Subsequently on December 5, 2017, Ms. Spangler sent an email message to Mr. Ohene
and Ms. Reeves which stated:
To support your research please find attached a pricing sheet for the
Schedule 48 employee relocation contracts. This sheet includes the NAICS
for each SIN and contractor business size classification by SIN as of today.
As you can see, Schedule 48 employee relocation contracts may include
multiple NAICS with different business classifications. The Schedule COs
made NAICS determinations for these contracts based on the
preponderance of work to be performed under the contract at time of award.
5 The 2017 Independent Government Cost Estimate projected a total award value that
differed from the amount projected by CBP’s June 19, 2017 Acquisition Plan, as well as
CBP’s 2018 Independent Government Cost Estimate, as discussed below.
7
FAR 8.405-5(b) states that “Ordering activities should rely on the small
business representations made by schedule contractors at the contract
level.” However, in situations where a MAS contract includes multiple
NAICS, the ordering CO’s are responsible for assigning the order level
NAICS which best corresponds to the work being performed. The order
level CO should be re-certifying businesses at the order level per SBA at 71
Federal Register 220 (November 15, 2006), Page 66439. Due to the fact
that a contractor’s business size may be different at the MAS level from the
Ordering Level, with regards to schedule SB set-asides competitors have
an avenue for business size protest through the ordering CO.
I’m hoping the attachment will provide the documentation needed for your
market research and resulting decision for acquisition strategy.
The parties have stipulated that the attachment to Ms. Spangler’s December 5, 2017
email message was “an excel spreadsheet identifying the contractors under Schedule 48
for SIN 653-1, -4, -5, and -7 and the contractors that were then identified as small
businesses (‘S’) for each SIN.” The parties also have stipulated that the December 5,
2017 spreadsheet “lists one NAICS Code for each SIN,” and that the December 5, 2017
spreadsheet listed:
SIN 653-1: NAICS Code 531210, with two businesses listed as small
business certified: Choice Relocation Management and Sibcy Cline
Relocation Services
SIN 653-4: NAICS Code 531390, with two businesses listed as small
business certified: Choice Relocation Management and Sibcy Cline
Relocation Services
SIN 653-5: NAICS Code 531210, with two businesses listed as small
business certified: Choice Relocation Management and Sibcy Cline
Relocation Services
SIN 653-7: NAICS Code 484210, with nine business listed as small
business certified: American Relocation Connections, Choice Relocation
Management, Sibcy Cline Relocation Services, TRF Global Mobility, Life
International Companies, Move Management Center, Relocation
Worldwide, and Weleski Transfer[.]
Although the parties have correctly stipulated that, under NAICS Code 484210, the
December 5, 2017 spreadsheet listed nine small business, the parties’ joint statement of
stipulated facts omitted Reliance Relocation Services from the list of small business under
NAICS Code 484210.
Also on December 5, 2017, Ms. Spangler sent another email message to Mr.
Ohene and Ms. Reeves that stated “I meant to share that Sibcy [Cline Relocation
8
Services] provided notification that it will not renew its option and will expire 3/17/18. Relo
Direct[6] has also provided notification that it is recertifying as [sic] large business.”
Consequently, with Sibcy Cline Relocation Services, one of the two contractors identified
as a certified small business under NAICS Codes 531210 and 531390, indicating to the
GSA that it would not be renewing its option, Choice Relocation Management was the
only remaining certified small business under NAICS Codes 531210 and 531390.
On December 6, 2017, Mr. Ohene responded:
Thanks for the pricing sheet and the additional information regarding Sibcy
[Cline Relocation Services] and Relo Direct. We plan on opening up the
acquisition to both large and small business probably - [redacted] vendors
based on market research information. As we move further in the
acquisition, I will let you know if anything else is needed.
Two days later, on December 8, 2017, Ms. Reeves sent an email message to Mr. Ohene
regarding her preparation of an independent government cost estimate, stating “I believe
that the estimates on our volumes for the next 4 years should still be the same. This was
based off of statistical information. From a contracting viewpoint can you share with me
why this information would change if we are sticking with the same services that we
previously had.” That same day, Mr. Ohene replied:
Yes- very good question! I will try to a give succinct explanation.
Vendors will be submitting pricing in addition to technical proposals. Their
respective pricing is typically compared to the IGCE in determining fair and
reasonable pricing and more importantly may be a variable in determining
the winning vendor. I am working on the Price Sheet that will be sent to the
vendors. The Price Sheet (base period) will look similar to the table below.
As it [sic] now, the vendors won’t be submitting pricing for Shipment of
Household Goods as you have on the ICCE [sic] as CHAMP will be handling
this. Instead, the vendors will be charging a fixed fee for Move Management
(see highlighted red). In addition, line items like Shipment of POV and also
Direct billing as you have on the IGCE won’t be on the Price Sheet to be
sent to the vendors.
So in essence, there will a big discrepancy between the IGCE and Offeror’s
submitted pricing as the itemized items on the former won’t be on the latter.
On December 13, 2017, Ms. Spangler sent an email message to Mr. Ohene and
Ms. Reeves, attached to which was a spreadsheet that “was updated to correct NAICS
6 The parties have stipulated that the “System of Award Management database shows
that, Reliance Relocation Services, Inc, dba Relo Direct, was certified as other than small
under NAICS code 531210, with certification validity dates from July 31, 2017 to July 31,
2018.”
9
codes & add comments on expiration dates.” The parties have stipulated that the
December 13, 2017 spreadsheet
listed the following NAICS Codes for each SIN:
SIN 653-1: NAICS Codes 531210 and 531190, with two businesses listed
as small business certified: Choice Relocation Management and Sibcy
Cline Relocation Services
SIN 653-4: NAICS Codes 531390, 531210 and 541511, with two
businesses listed as small business certified: Choice Relocation
Management and Sibcy Cline Relocation Services
SIN 653-5: NAICS Codes 531210 and 531190, with two businesses listed
as small business certified: Choice Relocation Management and Sibcy
Cline Relocation Services
SIN 653-7: NAICS Code 484210, with nine business listed as small
business certified: American Relocation Connections, Choice Relocation
Management, Reliance Relocation Services, Sibcy Cline Relocation
Services, TRF Global Mobility, Life International Companies, Move
Management Center, Relocation Management Worldwide, and Weleski
Transfer.
As discussed above, Sibcy Cline Relocation Services had indicated to the GSA that it “will
not renew its option” that was set to “expire” in March 2018, which results in Choice
Relocation Management being the only small business identified in the December 13,
2017 spreadsheet under NAICS Codes 531210, 531190, 531390, and 541511.
According to ARC, however, the December 5, 2017 spreadsheet and the
December 13, 2017 spreadsheet provided a “skewed” and incomplete view of the NAICS
Codes available under each SIN identified in the spreadsheets. According to ARC’s
motion for judgment on the administrative record:
The NAICS Codes under each of the SINs for the [2018] RFQ[7] are as
follows:
a. SIN 653-1: 484210 (Used Household and Office Goods Moving);
531210 (Offices of Real Estate Agents and Brokers); 531390 (Other
Activities Related to Real Estate); and 541511 (Custom Computer
Programming Services);
b. SIN 653-4: 484210 (Used Household and Office Goods Moving);
531210 (Offices of Real Estate Agents and Brokers); 531390 (Other
7 As discussed below, on January 19, 2018, CBP issued RFQ No. 70B05C18Q00000021.
10
Activities Related to Real Estate); and 541511 (Custom Computer
Programming Services);
c. SIN 653-5: 484210 (Used Household and Office Goods Moving);
531210 (Offices of Real Estate Agents and Brokers); 531390 (Other
Activities Related to Real Estate); and 541511 (Custom Computer
Programming Services); and
d. SIN 653-7: 484210 (Used Household and Office Goods Moving).[8]
ARC contends that CBP should have, but failed to include NAICS Code 484210 as a
NAICS Code under SIN 653-1, 653-4, and 653-5, although NAICS Code 484210 was
included as a NAICS Code under SIN 653-7, and that CBP failed to include NAICS Code
541511 as a NAICS Code under SIN 653-1 and SIN 653-5, although NAICS Code 541511
was included as a NAICS Code under SIN 653-4. The administrative record does not
appear to address why the agency chose the NAICS Codes it did or did not include as
being NAICS Codes under the SINs listed in the December 5, 2017 spreadsheet or in the
December 13, 2017 spreadsheet.
According to a July 17, 2018 declaration signed by Mr. Ohene,9 an undated
document titled “RELOCATION SERVICES MARKET RESEARCH REPORT” (the First
8 The NAICS Codes identified by ARC in its motion for judgment on the administrative
record as being applicable to SINS 653-1, 653-4, 653-5, and 653-7 are consistent with
the NAICS Codes listed on GSA’s website. See NAICS schedule/SIN crosswalk, GEN.
SERVS. ADMIN., https://www.gsaelibrary.gsa.gov/docs/Schedule-SIN-NAICS-
crosswalk.xlsx (last visited Sept. 24, 2018).
9 Although review under the Administrative Procedure Act (APA) is to be applied to an
agency’s decision based on the record the agency presents to the court, the court may
supplement the administrative record when omission of the supplemental material
precludes effective judicial review. See AugustaWestland N. Am., Inc. v. United States,
880 F.3d 1326, 1331-32 (Fed. Cir. 2018); see also Axiom Res. Mgmt., Inc. v. United
States, 564 F.3d 1374, 1380 (Fed. Cir. 2009). In the above-captioned protest, the parties
dispute when the undated First Market Research Report, the Second Market Research
Report, dated December 18, 2017, and the undated 2018 Independent Government Cost
Estimate were created. The declaration signed by Mr. Ohene is necessary for effective
judicial review because, in his declaration, Mr. Ohene discusses his recollection of the
dates when each of the documents was created. Mr. Ohene offers an explanation of the
differences between the undated First Market Research Report and the Second Market
Research Report, dated December 18, 2017, and indicates that he did not rely on the
Second Market Research Report, dated December 18, 2017, “in making my decision to
solicit the effort on an unrestricted basis.” The court, therefore, supplements the
administrative record with the July 17, 2018 declaration signed by Mr. Ohene because it
contains information necessary for the court’s review regarding the extent and nature of
the acquisition planning and market research undertaken by the CBP prior to issuing the
2018 RFQ. See AugustaWestland N. Am., Inc. v. United States, 880 F.3d at 1331-32.
11
Market Research Report) was created “in December 2017” as “the result of a
collaborative effort between Iris Reeves and me using a standard DHS template form,”
which Mr. Ohene states “includes certain pre-checked boxes.” (capitalization in original).
Mr. Ohene states in his July 17, 2018 declaration that “I reviewed this market research
report in December 2017 and made some changes to the document.” The First Market
Research Report indicates that “market research is required in accordance with: FAR
7.102, Acquisition Planning Policy” and “FAR 10.001, Market Research Policy.” According
to the First Market Research Report, Mr. Ohene and Ms. Reeves were the “Participants
in Market Research,” although Ms. Reeves is the only individual who signed the Market
Research Report. The First Market Research Report states that the CBP “is seeking a
contractor support [sic] to provide relocation assistance to help employees plan and
complete moves to their new duty stations as quickly and smoothly as possible. The
contractor shall provide relocation services, facilitate real estate transactions and
household goods moving services for relocating employees.” Under a section titled
“Market Research Techniques and Sources,” boxes were marked indicating that the
“Sources Used in Market Research” include “DHS Advance Acquisition Plan reviewed,”
“Acquisition history reviewed,” “Reviewed requirements with Small Business Specialist,”
“Reviewed existing DHS-wide and Multi-Component Contract Vehicles with DHS
Strategic Sourcing Program Office and/or on DHS Enterprise-wide Contract Vehicle
Portal,” “Services: Mandatory Federal Supply Schedules,” the “Past Performance
Information Retrieval System,” and the “Excluded Parties List System.”
In a section of the First Market Research Report titled “Identify Product/Services
and Sources Able to Meet the Requirement,” the First Market Research Report states:
GSA schedule 48-Transportation, Delivery, and Relocation Solutions
vehicle is able to meet this requirement based on market research.
Schedule 48 was created to assist federal agencies with respect to
relocation services. The schedule contains the following applicable
SINs/NAICS for the CBP Relocation Services acquisition:
SIN 653-1, Relocation Services Package (Homesale Assistance) NAICS
531210 & 531390
SIN 653-4, Additional Services NAICS 531210 & 531390
SIN 653-5, Agency Customization Service NAICS 531210 & 531390
SIN 653-7, Move Management Services NAICS 484210
The CBP Relocation acquisition encompasses the above SINs/NAICS.
Given the multiple NAICS associated with the above reference [sic] SINs,
the applicable NAICS at the order level for the preponderance of work ($
value) to be performed under the resultant contract is NAICS 531210 (Office
of Real Estates and Brokers). NAICS 531210 is being utilized given the
higher estimated value of work to be performed under the NAICS relative to
the other NAICS being utilized for this acquisition as supported by
Independent Government Cost Estimate.
12
(capitalization in original). In a section titled “Other Considerations,” the First Market
Research Report provides:
A consideration gathered during market research is whether to continue the
small business set aside strategy utilized for the predecessor contract. The
solicitation requires services on all 4 relevant SINs applicable to the
acquisition.; [sic] SIN 653-1- Relocation Services Package (Homesale
Assistance SIN 653-4, Additional Services SIN 653-5, Agency
Customization Service SIN 653-7, Move Management Services.
Experience during contract performance has shown that the requirement is
best opened to all GSA vendors due to the experience with the current
contractor (ARC) needing to excessively invoice and the requirement of a
guaranteed home buyout. If a small businesses [sic] need to invoice so
frequently, there is no way they could sustain buying homes, if required.
Further, based on information obtained through the GSA Contracting Officer
in charge of Relocation Program, there was a not reasonable expectation
that CBP would receive three small business proposals needed for
maximum competition. Specifically, a number of small business [sic] were
exiting the GSA Relocation program. The requirement is such the contractor
would have to provide services across 4 SINs relevant to the acquisition,
and the market research done did not show sufficient small businesses
required to obtain at [sic] 2 to 3 proposals[.10]
(capitalization in original). Additionally, in a section of the undated First Market Research
Report titled “Provide Market Research Conclusions and Recommendations,” the
undated First Market Research Report states:
The Federal Supply Schedule provides CBP with a flexibility of meeting the
relocation acquisition needs quickly, efficiently, and cost effectively.
Other benefits include competitive market-based pricing that leverages the
buying power of CBP, with the ability to negotiate further discounts at the
order level; the ability of the agency to tailor orders to get what it needs by
customizing terms and conditions at the order level; alternatives such as
blanket purchase agreements and contractor team arrangements and
allows CBP to achieve best value at the lowest overall cost alternative to
meet the relocation services requirement.
10 When a proposed order under the FSS exceeds the simplified acquisition threshold
and requires a statement of work, an agency is required to provide the RFQ “to as many
schedule contractors as practicable, consistent with market research appropriate to the
circumstances, to reasonably ensure that quotes will be received from at least three
contractors that can fulfill the requirements.” See FAR § 8.405-2(c)(3)(iii) (2018).
13
The Federal Supply Schedule, specifically Schedule 48- Transportation,
Delivery, and Relocation Solutions is the preferred contract vehicle for the
Relocation Services requirement based on market research information,
which show [sic] sources available from the referenced vehicle to meet the
requirements. In conclusion, a recommendation is made that GSA
Schedule 48 Relocation Services be used for the CBP relocation services
requirements as supported by the narrative and analysis provided in this
document.
(capitalization in original). The First Market Research Report also notes that “IBIS World,
a renowned magazine that publishes the largest collection of reports, analysis, statistics
and future trends in various industries, provides a positive assessment of the relocation
services commercial market place.”
Additionally, a second document dated December 18, 2017, which also is titled
“RELOCATION SERVICES MARKET RESEARCH REPORT” (capitalization in original)
(the Second Market Research Report), appears in the administrative record and is
substantially similar to the undated First Market Research Report discussed above, with
exception of the differences noted below. The Second Market Research Report indicates
that “[m]arket research is required in accordance with: FAR 7.102, Acquisition Planning
Policy,” as opposed to being required by both “FAR 7.102” and “FAR 10.001,” as the
undated First Market Research Report indicates. Unlike the undated First Market
Research Report, which indicates that the CBP’s market research techniques included
reviewing the CBP’s requirements with a small business specialist and reviewing an
existing “DHS Advance Acquisition Plan,” the Second Market Research Report does not
mention that the CBP reviewed its requirements with a small business specialist or
reviewed a “DHS Advance Acquisition Plan.” The Second Market Research Report also
omitted a sentence providing that “[t]he estimated cost of the new relocation contract was
developed based on FY16-17 historical spend on the current relocation contract,” which
was included in the First Market Research Report. In the signature block on the Second
Market Research Report, the date “12/18/2017” appears next to Ms. Reeves’ electronic
signature.
In the July 17, 2018 declaration signed by Mr. Ohene, Mr. Ohene that:
At some point in time after the decision was made to issue the solicitation
as unrestricted (i.e., not set aside for small businesses), I revised that
document [the undated First Market Research Report] to correct certain
information upon further review given that the market research is dynamic
in nature. For instance, some of the pre-checked boxes on Tab 13 should
have been unchecked but were not due to inadvertent error. I also removed
a sentence on pricing because the information was not developed. I placed
a prior date on the revised document to reflect when I believed the market
research activity had occurred as reflected by email correspondence with
the GSA Contracting Officer (CO) in December 2017. This revised market
research report was not relied upon [sic] me in making my decision to solicit
14
the effort on an unrestricted basis, but rather, was corrected to reflect errors
discovered in the Tab 13 document [the undated First Market Research
Report].
In general, the market research report is used to document the market
research process. For purposes of determining whether to set aside this
acquisition, I relied on email correspondence between the Schedule 48
GSA CO Branch Chief [Ms. Spangler] and me in December 2017, and
verification of this information by a review of the public database known as
System of Award Management (SAM). The information obtained in GSA’s
emails/spreadsheets was then referenced in the [undated First] market
research [Report] document.
(internal references omitted).
According to the July 17, 2018 declaration signed by Mr. Ohene, “[a]fter having
several discussions with Ms. Reeves on the values for the Independent Government Cost
Estimate (IGCE), the IGCE was sent to me on January 19, 2018, a few hours before
issuance of the solicitation.” To support the statement, in his declaration, Mr. Ohene
references an email message sent from Ms. Reeves to Mr. Ohene on January 19, 2018,
which has a subject line of “CBP Historical Transactions Spend and Projected Contract
Value” and which states, in its entirety, “[a]s requested. [sic] Estimate is based on FY17
numbers at an annually 2% increase. Please let me know if you require anything further.”
The document the government identifies in the administrative record and cross-motion
for judgment on the administrative record as the independent government cost estimate
used to support the 2018 RFQ (the 2018 Independent Government Cost Estimate), which
was attached to Ms. Reeves’ January 19, 2018 email message, is an undated document
that does not contain a cover sheet identifying the document as the independent
government cost estimate, nor a narrative explaining what the document contains.
Rather, the 2018 Independent Government Cost Estimate contains five charts providing
what appear to be the CBP’s estimates of costs for a base period of performance and
four one-year option periods of performance. For each period of performance, the 2018
Independent Government Cost Estimate identifies a “Service Type” for SINS 653-1, 653-
4, 653-5, and 653-7, “Projected Transaction Count,” and a projected cost on a “[redacted]
Home Value.” (capitalization in original). The 2018 Independent Government Cost
Estimate indicates that the CBP anticipates the value of the base period of performance
to be [redacted], the first option period of performance to be [redacted], the second option
period of performance to be [redacted], the third option period of performance to be
[redacted], and the fourth option period of performance to be [redacted], thereby
amounting to a total of [redacted] if all option periods were to be exercised.
On January 19, 2018, the CBP issued RFQ No. 70B05C18Q00000021 (the 2018
RFQ), which is the RFQ at issue in the above-captioned bid protest. The parties have
stipulated that the 2018 RFQ was “publically released . . . to certain Schedule 48 holders,
including ARC, for a single-award Blanket Purchase Agreement. The RFQ indicated that
the underlying procurement was unrestricted, i.e., the procurement was not set aside for
15
small businesses.” The 2018 RFQ includes FAR Clause 52.212-2 (2018), titled
“Evaluation – Commercial Items,” which states that the CBP intends to award a single
blanket purchase agreement “to the responsible Offeror whose quote conforming to the
solicitation will be most advantageous to the Government, price and other factors
considered.” The parties have stipulated that, “[w]hen released, the [2018] RFQ did not
reference any NAICS Code under which the underlying procurement was being issued,”
and that a “separate acquisition plan [different from the June 19, 2017 Acquisition Plan]
was not drafted for the 2018 RFQ.”
The parties also have stipulated that the 2018 RFQ “requested services listed
under the same SINs as the 2017 RFQ, i.e., GSA Federal Supply Schedule 48, SINS
653-1, 653-4, 653-5 and 653-7,” and, that “[t]he predecessor BPA procurement requested
services listed under GSA Federal Supply Schedule 48, SINS 653-1, 653-4, 653-5 and
653-7.” The 2018 RFQ indicates that Move Management Services are to be provided
through GSA’s CHAMP, and that offerors must demonstrate an ability to manage “the
household goods moving services.” In a section of the 2018 RFQ regarding invoicing, the
2018 RFQ states:
Contractor shall bill CBP bi-monthly for all SINs and services described
within the Statement of Work and referenced in the BPA. To promote cost
efficiency for both CBP and the Contractor, the Contractor shall submit a
maximum of two (2) invoices per employee per month. Invoices shall be
itemized with SIN’s clearly identified for each itemized line. CHAMP line
items should be identified as CHAMP and separately itemized from SIN
653-7.
In the Price Sheet attached to the 2018 RFQ, the CBP requests that offerors provide
“proposed BASE PERIOD fees/rates” for SINs 653-1, 653-4, 653-5, and 653-7.
(capitalization for original). For SIN 653-7, the CBP only requests that offerors provide a
“Service Fee.” When discussing the difference in offeror pricing under the 2017 RFQ and
offeror pricing under the 2018 RFQ, defendant states that, under the 2018 RFQ, “the unite
[sic] costs for shipment of household goods would no longer be part of the contractor’s
overall contract price. Rather, a pre-approved CHAMP service provider must perform
these services.” ARC states that the 2018 RFQ “simply changed the pricing the contractor
could charge for move management services, i.e., such charges were limited to the
CHAMP tariffs,” and that “CHAMP is not an organization or entity; it’s nothing more than
a pricing scheme, which has the effect of, inter alia, increasing the Industrial Funding Fee
collected by the GSA for the performance of the services.” (emphasis in original).
According to the parties’ joint statement of stipulated facts, on February 1, 2018,
ARC contacted the DHS Office of Small & Disadvantaged Business Utilization “to discuss
the ongoing contract, for which ARC is the contractor, and to discuss follow-on work.” The
parties indicate in their joint statement of stipulated facts that, “[d]uring this discussion,
ARC requested information as to why the RFQ was not set aside for small businesses,
as it had been with the predecessor BPA procurement.” The parties also stipulated that
the CBP did not consult with the DHS Office of Small & Disadvantaged Business
16
Utilization “prior to withdrawing the procurement from a small business set-aside” and did
not “provide a written statement to the SBA [Small Business Administration] at least 30
days prior to the issuance of the solicitation that explained why small business prime
contract participation was unlikely.”
On February 2, 2018, Anthony Bell, a Small Business Advisor with the DHS Office
of Small & Disadvantaged Business Utilization sent an email message to contracting
personnel at the CBP. In his February 2, 2018 email message, Mr. Bell stated:
Yesterday morning I had a call with ARC to discuss their contract with CBP
regarding invoices and follow on work. I asked Arc [sic] to continue the
dialogue with CBP to resolve the invoice issue. The focus of my office is the
planned unrestricted acquisition strategy for the follow‐on work. ARC is
questioning why after 10 years of this work being a set aside, is the follow‐
on work going out as unrestricted? ARC stated that they are a small
business in SINs 653‐1, 653‐4, 653‐5 and 653‐7 on GSA Schedule 48. ARC
mentioned there are three other small businesses on Schedule 48 with all
four SINs. Please see the below information provided by ARC.
I have verified this information to be correct. If these are the SINs required
for this work, there [sic] four small businesses on GSA Schedule 48 that
meet the criteria. However, we realize there’s more to a set aside than just
having all the required SINs. Responsibility has to be taken into account
and my office can’t speak on whether these small businesses have been
deemed responsible. Market research should determine that. With this said,
and the rule of two being met, predicated on these four firms being deemed
responsible, what factor(s) determined an unrestricted acquisition strategy?
Rick – Kevin Boshears acknowledges the trillion set asides you have done
and views you as a friend to the small business community. So, we know
you know small business. This email is just to ensure we have done our due
diligence as it relates to the acquisition strategy here. I’m not clear on what
GSA was saying about not doing a set aside, but I am clear that GSA does
have the most small business friendly procedures and the DHS [Department
of Homeland Security] OSDBU [Office of Small & Disadvantaged Business
Utilization] takes their advice with a heaping of skepticism.
The “information provided by ARC” consisted of four screenshots of eligible small
businesses under SINs 653-1, 653-4, 653-5, and 653-7. Mr. Bell noted that the
“companies that are on all 4 SINs [in the screenshots from ARC] are: 1. American
Relocation Connections 2. Reliance Relocation Services 3. Sibcy Cline Relocation
Services 4. TRC Global Mobility.”
Mr. Ohene responded to Mr. Bell’s email message approximately forty-five minutes
later, stating:
17
Thanks for the email. Attached is a spreadsheet of the Schedule 48
employee relocation contracts NAICS for each SIN and contractor business
size classification by SIN as of December 5, 2017. I received this
spreadsheet from the GSA Contracting Officer in charge of the Relocation
contracts. As you can see, there are some discrepancies between the
attached spreadsheet and the schedule screenshots provided in your email.
I am also aware GSA tends to delay in updating its schedule information so
the Agency’s website schedule/SIN/business size classification information
may not necessary [sic] be the most current. You stated that information
provided by ARC has been verified to be correct. So I assume that
information has been verified with the SBA office?
(emphasis in original). That same day, on February 2, 2018, Mr. Bell replied to Mr.
Ohene’s email message and stated:
Agree, there is some discrepancy which GSA needs to clarified [sic]. Rick
will discuss this matter with Francine next week.
No, I have not verified this information with SBA. SBA will only verify small
business status when an official size protest is submitted. I reviewed ARC’s
information in SAM [System for Award Management] for NAICS code
484210 (please see the below screen shot). Is this the NAICS code
assigned to this requirement? Please understand, I’m not advocating for
ARC, as mentioned earlier, we are here just to ensure the SB [small
business] community gets a fair opportunity. At the end of the day, if the
data does not support a set aside, my office will be the first to tell small
businesses to stand down. I’m standing by to offer any additional assistance
needed.
Also on February 2, 2018, Mr. Ohene sent an email message to Ms. Spangler, the
GSA Contracting Officer, which stated:
We have an issue with our acquisition strategy with regard to the recompete
for the CBP Relocation Services requirements and would appreciate your
assistance. Based on market research, we decided to pursue an
unrestricted acquisition strategy for the CBP relocation requirements. You
sent me the attached spreadsheet comprising the Schedule 48 employee
relocation contracts NAICS for each SIN and contractor business size
classification by SIN as of December 5, 2017. On the attached spreadsheet,
American Relocation Connections (ARC), our current contractor, is large for
all the SINS with exception of Move Management Service 653-7. ARC,
however, has indicated they are still small business in SINs 653-1, 653-4,
653-5 on GSA Schedule 48, and sent the below screenshots to our Small
Business Office to ‘confirm’ their small business status. Essentially, ARC is
complaining that we are not doing a set- aside [sic]. We, however, based
on market research and in addition to our experience with the contractor
18
believe that the unrestricted acquisition strategy is appropriate for our
recompete.
Given the situation, I feel that our unrestricted acquisition strategy may have
to be put on hold until ARC’s small business status is adjudicated. Would
you be available next week to discuss ARC’s small business status or send
me something in writing to confirm the information on the attached EEAC
spreadsheet is the most current with respect to the Schedule 48 contractors’
business size classification?
That same day, Ms. Spangler responded:
I can certainly discuss with you next week.
I’m sure you are aware that SB [small business] set asides are not required
under FAR Part 8 for FSS [Federal Supply Schedule] BPA/orders. So the
concern I’m guessing is coming from your OSDBU review of the acquisition
strategy decision not to set-aside relative to goals and advocacy.
Referencing the email sent to you on 12/5/17, due to the ERRC [Employee
Relocation Resource Center] contracts having 4 SINs which have multiple
NAICS, the ordering agency must determine and identify the applicable
NAICS at the order level for the preponderance of work ($ value) to be
performed. This is instruction from the Small Business Administration found
at 71 Federal Register 220 (November 15, 2006), Page 66439. This same
information was provided at GSA’s Supplier meeting on 12/13/17 (see bullet
3 on attached meeting notes). I think ARC was in attendance.
The SBA determines business size according to NAICS, not the GSA
contract. See page 5 of ARC’s SAM_Reps & Certs (attached).
Which NAICS did you issue your solicitation under?
If your solicitation was issued and appropriately falls under a NAICS other
than 653-7 and you decide to change strategy for SB set aside, you will
have issues with all other contractors. Why? Because according to SAM
there are no small businesses eligible to compete (Sibcy & Choice are both
expiring this quarter).
(emphasis in original).
On February 5, 2018, the CBP issued Amendment No. 1 to the 2018 RFQ.
Amendment No. 1 stated that the NAICS Code for the 2018 RFQ “is 531210-Offices of
19
Real Estate Agents and Brokers,” which has a size standard of $7,500,000.00.11
Amendment No. 1 also made administrative and typographical revisions, responded to
questions from potential offerors, and extended the quotation submission due date from
February 8, 2018 to February 13, 2018.
The next day, on February 6, 2018, Mr. Ohene sent an email message to Mr. Bell
of the DHS Office of Small & Disadvantaged Business Utilization that stated:
The GSA Relocation Point of Contract [sic] has provided additional
clarification and information that addresses ARC’s ‘small business’ issue.
As indicated in the spreadsheet I sent last week, the GSA Employee
Relocation Service Center contracts has 4 SINs with multiple NAICS as
follows:
SIN 653-1 NAICS 531210 & 531390
SIN 653-4 NAICS 531210 & 531390
SIN 653-5 NAICS 531210 & 531390
SIN 653-7 NAICS 484210
The CBP Relocation acquisition encompasses the above SINs/NAICS.
Given the multiple NAICS, the Ordering Agency must determine and identify
the applicable NAICS at the order level for the preponderance of work ($
value) to be performed. The CBP Relocation solicitation was issued under
NAICS 531210 (Office of Real Estates and Brokers) , [sic] and
appropriately falls under that code given its higher estimated value relative
to the as supported by our IGCE. Please note ARC is large business under
NAICS 531210 as shown in your SAM screenshot.
Second, contemplating a set aside for the reference NAICS is a moot point
as I was informed by the GSA POC [point of contact] that some of the small
business vendors provided in your email are leaving the Relocation program
this quarter. Sibcy Cline and Choice Relocaton [sic] are both expiring this
11 As discussed below, according to the December 13, 2017 spreadsheet and Sibcy Cline
Relocation Services’ statement that it would not be renewing its contract that was set to
expire in March 2018, at the time the 2018 RFQ was issued on January 19, 2018, there
was only one certified small business under NAICS Code 531210, the NAICS Code
applicable to the 2018 RFQ. According to the December 13, 2017 spreadsheet, Sibcy
Cline Relocation Services’ statement that it would not be renewing its contract, and
Reliance Relocation Services’ statement that it was certifying as an other than small
business, under the NAICS Code applicable to the 2017 RFQ, NAICS Code 484210,
which has a size standard of $27,500,000.00, there were seven certified small
businesses. In the December 13, 2017 spreadsheet, Reliance Relocation Services was
listed as a small business under NAICS Code 484210, but as an other than small
business under NAICS Code 531210.
20
quarter. Further, Reliance Relocation Services has recertified as large
business. TRC Global Mobility is also large. So even [sic] ARC were to be
small business for the sake of argument under NAICS 531210 , [sic] there
won’t be enough small businesses [sic] vendors to meet the competition
threshold[.]
Third, I inquired why ARC’s GSA schedule information lists the Contractor
to be small business under SIN 653-1, 653-4, 653-5 as shown in the
screenshot you sent last week Friday. According to the GSA Relocation
POC, this is unfortunately a system issue in that it is picking up on the
“Schedule” awarded NAICS not the SIN NAICS (fed by SAM). So one has
to further research by clicking on the Contractor to reach the Contractor
Information page. This page identifies the “Schedule” level NAICS of that
particular contract. For ARC, you will see that the contract was awarded
with the 484210 NAICS (SIN 653-7). That is why the NAICS must be
identified and verified at the ordering level to determine the contractor’s size
in relation to the order. As stated, The NAICS at the ordering level for our
Relocation acquisition is 531210 for which ARC is designated as large
business in SAMS [sic].
(emphasis in original). Mr. Bell responded on February 6, 2018, stating “[t]hanks for the
additional information/research. Unless Kevin and Darlene have any objections, I have
no objections to this requirement going unrestricted.”
On February 7, 2018, Richard Travis, a CBP Contracting Officer, completed a
Small Business Review Form, at the request of Ms. Reeves, for the employee relocation
services that were to be acquired under the 2018 RFQ. In a section titled “Procurement
Information/History,” the Small Business Review Form indicates that the CBP previously
had used NAICS Code 48210, which has a small business size standard of
$27,500,000.00. The Small Business Form, however, states that NAICS Code 531210,
which has a small business size standard of $7,500,000.00, is being utilized in the 2018
RFQ “given the higher estimated value of work to be performed under the NAICS relative
to the other NAICS being utilized for this acquisition.” The Small Business Review Form
also states that “there was a not reasonable expectation that CBP would receive two to
three small business proposals needed for maximum competition.” On February 9, 2018,
a DHS Small Business Specialist marked a box indicating his “[c]oncurrence” with the
CBP’s decision, and, on February 12, 2018, a SBA Procurement Center Representative
marked a box indicating his “[c]oncurrence” with the CBP’s decision.
On February 12, 2018, ARC filed a bid protest at the United States Government
Accountability Office (GAO), in which ARC alleged that the CBP violated the FAR, the
SBA’s regulations, and the DHS’ small business procurement policies. The contracting
officer’s statement of facts was submitted to the GAO on February 13, 2018 and stated
that ARC submitted a proposal in response to the 2018 RFQ. On February 21, 2018, the
CBP requested summary dismissal of ARC’s February 12, 2018 bid protest to the GAO,
alleging that ARC was not an interested party. The CBP noted that the NAICS Code for
21
the 2018 RFQ was NAICS Code 531210 and argued that “ARC has certified in the SAM
that it is not a small business under NAICS code 531210. Thus, if ARC succeeded in this
protest and the BPA solicitation were [sic] set aside for small business concerns, ARC
would be ineligible to compete.” On February 26, 2018, ARC filed an opposition to the
CBP’s request for summary dismissal, in which ARC argued that it was an interested
party because ARC is not required to certify its small-business size in an unrestricted
procurement and stated that the CBP’s argument in “the Agency’s Request for Summary
Dismissal alerted ARC to an administrative error in its SAM registration, which it has
promptly researched and corrected. ARC has updated its certifications to reflect that it is
a small business under NAICS Code 531210.” On February 27, 2018, ARC filed a
supplemental response to the CBP’s request for summary dismissal at the GAO, in which
ARC noted that it was “not protesting whether the Agency has selected the proper NAICS
Code for the instant RFQ, which was issued an [sic] unrestricted solicitation.” ARC,
however, reasserted that it was an interested party because “(1) it was an actual bidder
under the unrestricted RFQ and would be a prospective bidder under a newly issued set-
aside RFQ using NAICS Code 531210; and (2) it would be in line for award in either
situation as both a responsible and responsive bidder.”
On March 13, 2018, the government filed its Agency Report with the GAO. In its
March 13, 2018 Agency Report, the government asserted that the GAO should deny
ARC’s bid protest because the “‘Rule of Two’ is inapplicable to this type of acquisition and
even if it applied, the Agency properly conducted market research and determined that
two or more small businesses could not compete under the applicable North American
Industry Classification System (NAICS) code assigned to the procurement.” On May 18,
2018, the GAO dismissed ARC’s bid protest. See Am. Relocation Connections, LLC, B-
416035, 2018 WL 2316177, at *1 (Comp. Gen. May 18, 2018). The GAO stated that ARC
argued in its bid protest at the GAO that CBP “was required to set aside the solicitation,
which anticipates the establishment of a blanket purchase agreement (BPA) under the
General Services Administration’s (GSA) Federal Supply Schedule (FSS), for small
businesses,” and that CBP’s “market research and decision not to set aside the RFQ were
unreasonable.” Id. The GAO then determined that ARC was an interested party “[b]ased
on the protestor’s updated representation” in SAM. Id. at *3. The GAO also concluded
that CBP was not required to set-aside the 2018 RFQ because “the contracting officer
here has discretionary authority to set-aside an order against the FSS, but is not required
to do so.” Id. at *7. According to the GAO, “agencies are not required to follow the Small
Business Rule of Two[12] when issuing orders or establishing BPAs under the FSS.” Id.
at *4. When addressing ARC’s arguments concerning the CBP’s market research, the
GAO stated:
12 The GAO stated that the “Small Business Rule of Two” “requires agencies to set aside
for small business participation a procurement valued over the simplified acquisition
threshold if there is a reasonable expectation of receiving fair market offers from at least
two small business concerns.” Am. Relocation Connections, LLC, 2018 WL 2316177, at
*3 (citing 13 C.F.R. § 125.2(e)(6)(i) (2018); and FAR § 19.502-2 (2018)).
22
Next, ARC raises a number of challenges to CBP’s market research and its
conclusion that the agency was not likely to receive proposals from two or
more small businesses at fair market prices. However, as discussed above,
agencies have the discretion to set aside procurements under the FSS. FAR
§ 8.405-5(a)(2). Thus, even if our Office were to agree with ARC that CBP’s
market research was not reasonable, there would be no basis for our Office
to recommend any corrective action because the agency would not be
required to set aside the procurement. See AeroSage, LLC, B-414640, B-
414640.3, July 27, 2017, 2017 CPD ¶ 233 at 5 (agencies have the discretion
to seek a waiver of the nonmanufacturer rule, FAR § 19.102(f)(5); based on
this discretion, an agency’s refusal to seek a waiver of the nonmanufacturer
rule does not provide a basis to sustain a protest). We therefore find that
ARC’s argument fails to state adequate legal grounds of protest, and
therefore dismiss it on that basis. See 4 C.F.R. § 21.5(f).
Am. Relocation Connections, LLC, 2018 WL 2316177, at *7 (footnote omitted).
On July 3, 2018, ARC filed its complaint in this court in the above-captioned pre-
award bid protest. In its complaint in this court, ARC states that it is “challenging the terms
of the [2018] RFQ, and seeking an order declaring that the Agency [the CBP]
impermissibly failed to set-aside the Procurement for small businesses, and that the
Agency’s actions in releasing the [2018] RFQ as an unrestricted acquisition were arbitrary
and capricious and contrary to applicable procurement law and regulation.” ARC argues
that CBP “failed to undertake any advance acquisition planning or conduct any advance
market research for the Procurement prior to selecting the contract vehicle or prior to
making the decision to release the RFQ as an unrestricted acquisition,” and that CBP’s
decision to release the 2018 RFQ as an unrestricted procurement was based on “virtually
no information at all.” ARC also contends that:
The procurement record clearly shows that any acquisition planning or
market research that the Agency may have conducted with respect to the
Procurement was undertaken after the release of the RFQ; after reducing
the small business size standard; and after the Agency selected GSA FSS
48 as the procurement vehicle, each of which is a violation of procurement
law.
According to ARC, the CBP’s alleged failure to undertake advance acquisition planning
and market research violates the regulations of the SBA, as well as the “FAR, as
supplemented by the DHS HSAR [DHS Acquisition Regulations] and implemented by the
DHS HSAM [DHS Acquisition Manual].”
Regarding the GAO’s May 18, 2018 decision, ARC argues that:
The GAO failed to address whether the Agency’s contracting officer’s
exercise of its discretion in selecting FSS Schedule 48 and then
subsequently deciding to severely reduce the applicable size standard was
23
arbitrary or capricious, or in violation of procurement law when the
acquisition record was entirely deficient of any information, let alone reliable
or accurate information, upon which the decision was based.
ARC further asserts that the GAO’s decision incorrectly concluded that “the Agency’s
discretion cannot be challenged regardless of how unreasonably such discretion is
exercised.” In its requests for relief, ARC requested a temporary restraining order, a
preliminary injunction, and a permanent injunction enjoining award or performance of a
contract under the 2018 RFQ. Alternatively, ARC argues that “ARC is entitled to bid
preparation and other costs, attorney fees under the Equal Access to Justice Act or such
other and further relief as this Court deems just and proper.”
On the same day protestor filed its protest, July 3, 2018, the court held an initial
status conference with the parties in the above-captioned bid protest. During a
subsequent status conference on July 9, 2018, defendant indicated that the CBP would
voluntarily stay an award under the 2018 RFQ until the end of September 2018, and ARC
indicated that it was no longer seeking a temporary restraining order. Thereafter, on July
10, 2018, defendant submitted to the court the administrative record in the above-
captioned bid protest. On July 13, 2018, ARC filed a motion to strike documents from the
administrative record, or, in the alternative, a motion to compel or a motion for discovery,
as well as a motion to supplement the administrative record. In its July 13, 2018 motion,
ARC argued that the court should strike from the administrative record the undated First
Market Research Report, the Second Market Research Report dated December 18,
2017, and the undated 2018 Independent Government Cost Estimate “because they lack
proper evidentiary support” and “cannot be authenticated as being part of the
Government’s decision-making process.”
On July 16, 2018, the court held a hearing to discuss with the parties ARC’s July
13, 2018 motion. Subsequently, on July 16, 2018, the court issued an Order directing
defendant to submit any documents which potentially could be used to authenticate the
undated First Market Research Report, the Second Market Research Report dated
December 18, 2017, and the undated 2018 Independent Government Cost Estimate. On
July 17, 2018, defendant submitted the declaration signed by Mr. Ohene, discussed
above, in which Mr. Ohene described his recollection of when, according to him, the
undated First Market Research Report, the Second Market Research Report dated
December 18, 2017, and the undated 2018 Independent Government Cost Estimate were
created, as well as the differences between the undated First Market Research Report
and the Second Market Research Report dated December 18, 2017. Also on July 17,
2018, ARC submitted an unopposed motion to withdraw its motion to supplement the
administrative record. On July 18, 2018, the court issued an Order denying ARC’s motion
to strike and granting ARC’s unopposed motion to withdraw its motion to supplement the
administrative record. On July 20, 2018, ARC and defendant submitted a joint statement
of stipulated facts.
Subsequently, on July 25, 2018, ARC filed a motion for judgment on the
administrative record. In its motion for judgment on the administrative record, ARC
24
asserts that CBP failed to perform acquisition planning and market research in
accordance with FAR Part 7 (2018) and FAR Part 10 (2018). ARC also argues that the
CBP violated the SBA’s regulation at 13 C.F.R. § 125.2 (2018), which ARC argues
requires that a federal agency conduct market research concerning the extent of small
business participation in an acquisition. ARC asserts that CBP selected the “GSA FSS
Schedule 48 as the acquisition vehicle for the RFQ without undertaking any acquisition
planning or market research,” and that CBP’s “decision not to set aside the [2018] RFQ
for small business lacked a rational basis as the decision was not based on (1) any
acquisition plan, or (2) any advance market research.” According to ARC’s motion for
judgment on the administrative record:
Such research must precede decisions whether to utilize the GSA Federal
Supply Schedules (“FSS”), which NAICS code (and thus what size
standard) is applicable to the procurement, or whether or not to set-aside
an acquisition for small businesses. See e.g., FAR 8.404(c) [(2018)]
(“Orders placed under a Federal Supply Schedule contract are not exempt
from the development of acquisition plans (see subpart 7.1)”). Nor does
FAR Part 8 [(2018)] exempt FSS orders from the advance acquisition
planning requirements or market research requirements of the SBA
regulations.
ARC also contends that the administrative record “clearly indicates” that the undated First
Market Research Report, the Second Market Research Report dated December 18,
2017, the undated 2018 Independent Government Cost Estimate, the December 5, 2017
and December 13, 2017 spreadsheets that were sent from Ms. Spangler to CBP
contracting personnel, and the February 7, 2018 DHS Small Business Review Form “were
prepared after the RFQ was issued and likely after ARC registered its complaint with the
Agency regarding the RFQ being unrestricted.”
On August 8, 2018, defendant filed a response to protestor’s motion for judgment
on the administrative record and a cross-motion for judgment on the administrative
record. In its August 8, 2018 cross-motion, defendant argues that CBP’s decision to use
the FSS was reasonable because the CBP’s June 19, 2017 Acquisition Plan “identified
the reasons why using the FSS as an acquisition tool here was a reasonable exercise of
agency discretion.” Defendant asserts that “small business set-aside preferences do not
apply to FSS contracts,” and that CBP’s “prior, discretionary set-asides do not expand
CBP’s obligations under the current FSS solicitation.” Defendant also asserts that CBP’s
acquisition of employee relocation services did not qualify to be set-aside because, when
CBP issued the 2018 RFQ in January 2018, the only small business that qualified under
NAICS Code 531210, the NAICS Code that CBP chose to use for the procurement, was
Choice Relocation Management.
On August 13, 2018, ARC filed a response to defendant’s cross-motion for
judgment on the administrative record and a reply in support of its motion for judgment
on the administrative record. In its August 13, 2018 filing, ARC argues that the “crux” of
its complaint and motion for judgment on the administrative record is “that the Agency
25
made critical decisions about this procurement either without having performed the
requisite advance acquisition planning or market research, or prior to doing so.” ARC
again asserts that the CBP failed to perform acquisition planning or market research prior
to selecting the FSS as its “acquisition vehicle,” selecting the NAICS Code for the 2018
RFQ, and “removing the services from the small business program.” ARC also argues
that defendant has not addressed its failure to comply with the SBA’s regulations, which
ARC indicates requires the CBP to conduct market research to determine the type and
extent of possible small business participation in an acquisition.
On August 17, 2018, defendant filed a reply, in which defendant asserted that the
Acquisition Plan created in connection with the 2017 RFQ also supported the 2018 RFQ,
and that ARC “fails to acknowledge that the 2017 and 2018 RFQs were not separate
acquisitions. The 2017 RFQ was cancelled which resulted in issuance of the 2018 RFQ
for procurement of the relocation services identified in the plan.” Defendant also contends
that, “once CBP decided to use the FSS to purchase relocation services, it had no further
obligation to consider small business preferences – including the requirements of the
Small Business Act cited by ARC (13 C.F.R. § 125 et., [sic] seq.).” (emphasis in original).
According to defendant, the SBA regulation at 13 C.F.R. § 125.2(c) is inapplicable to the
CBP’s procurement.
On August 21, 2018, the court issued an Order directing the parties each to submit
a supplemental filing addressing whether and why the SBA regulation at 13 C.F.R.
§ 125.2(c) applies to CBP’s procurement in the above-captioned protest, whether the
CBP complied with 13 C.F.R. § 125.2, and whether failing to comply with 13 C.F.R. §
125.2 would be prejudicial to ARC. On August 29, 2018, ARC and defendant both
submitted their supplemental filings. In ARC’s August 29, 2018 filing, ARC asserts that
13 C.F.R. § 125.2(c) does apply to the procurement at issue in the above-captioned bid
protest, that CBP did not comply with 13 C.F.R. § 125.2 when issuing the 2018 RFQ, and
that CBP’s failure to comply with 13 C.F.R. § 125.2 was prejudicial to ARC. Defendant,
however, asserts in its August 29, 2018 filing that 13 C.F.R. § 125.2(c) does not apply to
the procurement at issue in the above-captioned bid protest and that “ARC was not
prejudiced by any alleged failure to engage with SBA.” On September 5, 2018, the court
heard oral argument in the above-captioned protest.
DISCUSSION
Rule 52.1(c)(1) (2018) of the Rules of the United States Court of Federal Claims
(RCFC) governs motions for judgment on the Administrative Record. The court’s inquiry
is directed to “‘whether, given all the disputed and undisputed facts, a party has met its
burden of proof based on the evidence in the record.’” Mgmt. & Training Corp. v. United
States, 115 Fed. Cl. 26, 40 (2014) (quoting A & D Fire Prot., Inc. v. United States, 72 Fed.
Cl. 126, 131 (2006) (citing Bannum, Inc. v. United States, 404 F.3d 1346, 1356-57 (Fed.
Cir. 2005))); see also Centerra Grp., LLC v. United States, 138 Fed. Cl. 407, 412 (2018)
(citing Bannum, Inc. v. United States, 404 F.3d at 1356-57); Informatics Applications Grp.,
Inc. v. United States, 132 Fed. Cl. 519, 524 (2017) (citation omitted); Strategic Bus. Sols.,
Inc. v. United States, 129 Fed. Cl. 621, 627 (2016), aff’d, 711 F. App’x 651 (Fed. Cir.
26
2018); Rotech Healthcare Inc. v. United States, 118 Fed. Cl. 408, 413 (2014); Eco Tour
Adventures, Inc. v. United States, 114 Fed. Cl. 6, 21 (2013); DMS All-Star Joint Venture
v. United States, 90 Fed. Cl. 653, 661 (2010). Pursuant to RCFC 52.1, in a bid protest,
the court reviews the agency’s procurement decision to determine whether it is supported
by the administrative record. See CW Gov’t Travel, Inc. v. United States, 110 Fed. Cl.
462, 481 (2013); see also CR/ZWS LLC v. United States, 138 Fed. Cl. 212, 223 (2018)
(citing Bannum, Inc. v. United States, 404 F.3d at 1353-54).
The Administrative Dispute Resolution Act of 1996 (ADRA), Pub. L. No. 104-320,
§§ 12(a), 12(b), 110 Stat. 3870, 3874 (1996) (codified at 28 U.S.C. § 1491(b)(1)–(4)
(2012)), amended the Tucker Act to establish a statutory basis for bid protests in the
United States Court of Federal Claims. See Impresa Construzioni Geom. Domenico
Garufi v. United States, 238 F.3d 1324, 1330-32 (Fed. Cir. 2001); see also Sys.
Application & Techs., Inc. v. United States, 691 F.3d 1374, 1380 (Fed. Cir. 2012)
(explaining that the Tucker Act expressly waives sovereign immunity for claims against
the United States in bid protests). The statute provides that protests of agency
procurement decisions are to be reviewed under APA standards, making applicable the
standards outlined in Scanwell Labs., Inc. v. Shaffer, 424 F.2d 859 (D.C. Cir. 1970), and
the line of cases following that decision. See, e.g., Per Aarsleff A/S v. United States, 829
F.3d 1303, 1309 (Fed. Cir. 2016) (“Protests of agency procurement decisions are
reviewed under the standards set forth in the Administrative Procedure Act (‘APA’), see
28 U.S.C. § 1491(b)(4) (citing 5 U.S.C. § 706), ‘by which an agency's decision is to be set
aside only if it is arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with law[.]’” (quoting NVT Techs., Inc. v. United States, 370 F.3d 1153, 1159
(Fed. Cir. 2004)) (citing PAI Corp. v. United States, 614 F.3d 1347, 1351 (Fed. Cir.
2010))); Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d at
1332; Res. Conservation Grp., LLC v. United States, 597 F.3d 1238, 1242 (Fed. Cir.
2010) (“Following passage of the APA in 1946, the District of Columbia Circuit in Scanwell
Labs., Inc. v. Shaffer, 424 F.2d 859 (D.C. Cir. 1970), held that challenges to awards of
government contracts were reviewable in federal district courts pursuant to the judicial
review provisions of the APA.”); Galen Med. Assocs., Inc. v. United States, 369 F.3d 1324,
1329 (Fed. Cir. 2004) (citing Scanwell Labs., Inc. v. Shaffer, 424 F.2d at 864, 868, for its
“reasoning that suits challenging the award process are in the public interest and
disappointed bidders are the parties with an incentive to enforce the law”); Banknote
Corp. of Am., Inc. v. United States, 365 F.3d 1345, 1351 (Fed. Cir. 2004) (“Under the
APA standard as applied in the Scanwell line of cases, and now in ADRA cases, ‘a bid
award may be set aside if either (1) the procurement official’s decision lacked a rational
basis; or (2) the procurement procedure involved a violation of regulation or procedure.’”
(quoting Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d at
1332)); Info. Tech. & Applications Corp. v. United States, 316 F.3d 1312, 1319 (Fed. Cir.
2003).
When discussing the appropriate standard of review for bid protest cases, the
United States Court of Appeals for the Federal Circuit addressed subsections (2)(A) and
(2)(D) of 5 U.S.C. § 706, see Impresa Construzioni Geom. Domenico Garufi v. United
States, 238 F.3d at 1332 n.5, but focused its attention primarily on subsection (2)(A). See
27
Croman Corp. v. United States, 724 F.3d 1357, 1363 (Fed. Cir.) (“‘[T]he proper standard
to be applied [to the merits of] bid protest cases is provided by 5 U.S.C. § 706(2)(A)
[(2006)]: a reviewing court shall set aside the agency action if it is “arbitrary, capricious,
an abuse of discretion, or otherwise not in accordance with law.”’” (alterations in original)
(quoting Banknote Corp. of Am. v. United States, 365 F.3d at 1350-51 (citing Advanced
Data Concepts, Inc. v. United States, 216 F.3d 1054, 1057-58 (Fed. Cir.), reh’g denied
(Fed. Cir. 2000)), reh’g and reh’g en banc denied (Fed. Cir. 2013). The statute says that
agency procurement actions should be set aside when they are “arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with law,” or “without observance of
procedure required by law.” 5 U.S.C. § 706(2)(A), (D) (2012);13 see also Tinton Falls
13 The language of 5 U.S.C. § 706 provides in full:
To the extent necessary to decision and when presented, the reviewing
court shall decide all relevant questions of law, interpret constitutional and
statutory provisions, and determine the meaning or applicability of the terms
of an agency action. The reviewing court shall—
(1) compel agency action unlawfully withheld or unreasonably delayed;
and
(2) hold unlawful and set aside agency action, findings, and conclusions
found to be—
(A) arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with law;
(B) contrary to constitutional right, power, privilege, or immunity;
(C) in excess of statutory jurisdiction, authority, or limitations, or short
of statutory right;
(D) without observance of procedure required by law;
(E) unsupported by substantial evidence in a case subject to sections
556 and 557 of this title or otherwise reviewed on the record of
an agency hearing provided by statute; or
(F) unwarranted by the facts to the extent that the facts are subject
to trial de novo by the reviewing court.
In making the foregoing determinations, the court shall review the whole
record or those parts of it cited by a party, and due account shall be taken
of the rule of prejudicial error.
5 U.S.C. § 706.
28
Lodging Realty, LLC v. United States, 800 F.3d 1353, 1358 (Fed. Cir. 2015); Orion Tech.,
Inc. v. United States, 704 F.3d 1344, 1347 (Fed. Cir. 2013); COMINT Sys. Corp. v. United
States, 700 F.3d 1377, 1381 (Fed. Cir. 2012) (“We evaluate agency actions according to
the standards set forth in the Administrative Procedure Act; namely, for whether they are
‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.’”
(quoting 5 U.S.C. § 706(2)(A); and Bannum, Inc. v. United States, 404 F.3d at 1351));
Savantage Fin. Servs. Inc., v. United States, 595 F.3d 1282, 1285-86 (Fed. Cir. 2010);
Weeks Marine, Inc. v. United States, 575 F.3d 1352, 1358 (Fed. Cir. 2009); Axiom Res.
Mgmt., Inc. v. United States, 564 F.3d at 1381 (noting arbitrary and capricious standard
set forth in 5 U.S.C. § 706(2)(A), and reaffirming the analysis of Impresa Construzioni
Geom. Domenico Garufi v. United States, 238 F.3d at 1332); Blue & Gold Fleet, L.P. v.
United States, 492 F.3d 1308, 1312 (Fed. Cir. 2007) (“‘[T]he inquiry is whether the
[government]’s procurement decision was “arbitrary, capricious, an abuse of discretion,
or otherwise not in accordance with law.”’” (quoting Bannum, Inc. v. United States, 404
F.3d at 1351 (quoting 5 U.S.C. § 706(2)(A) (2000))); NVT Techs., Inc. v. United States,
370 F.3d at 1159 (“Bid protest actions are subject to the standard of review established
under section 706 of title 5 of the Administrative Procedure Act (‘APA’), 28 U.S.C. §
1491(b)(4) (2000), by which an agency’s decision is to be set aside only if it is ‘arbitrary,
capricious, an abuse of discretion, or otherwise not in accordance with law,’ 5 U.S.C. §
706(2)(A) (2000).” (internal citations omitted)); Info. Tech. & Applications Corp. v. United
States, 316 F.3d at 1319 (“Consequently, our inquiry is whether the Air Force’s
procurement decision was ‘arbitrary, capricious, an abuse of discretion, or otherwise not
in accordance with law.’ 5 U.S.C. § 706(2)(A) (2000).”); Synergy Sols., Inc. v. United
States, 133 Fed. Cl. 716, 734 (2017) (citing Banknote Corp. of Am. v. United States, 365
F.3d at 1350); Eco Tour Adventures, Inc. v. United States, 114 Fed. Cl. at 22; Contracting,
Consulting, Eng’g LLC v. United States, 104 Fed. Cl. 334, 340 (2012). “In a bid protest
case, the agency’s award must be upheld unless it is ‘arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law.’” Turner Constr. Co. v. United States,
645 F.3d 1377, 1383 (Fed. Cir.) (quoting PAI Corp. v. United States, 614 F.3d at 1351),
reh’g en banc denied (Fed. Cir. 2011); see also Tinton Falls Lodging Realty, LLC v. United
States, 800 F.3d at 1358 (“In applying this [arbitrary and capricious] standard to bid
protests, our task is to determine whether the procurement official’s decision lacked a
rational basis or the procurement procedure involved a violation of a regulation or
procedure.” (citing Savantage Fin. Servs., Inc. v. United States, 595 F.3d at 1285–86));
Glenn Def. Marine (ASIA), PTE Ltd. v. United States, 720 F.3d 901, 907 (Fed. Cir.), reh’g
en banc denied (Fed. Cir. 2013); Nat’l Gov’t Servs., Inc. v. United States, 137 Fed. Cl.
715, 735 (2018) (quoting Centech Grp., Inc. v. United States, 554 F.3d 1029, 1037 (Fed.
Cir. 2009)); McVey Co., Inc. v. United States, 111 Fed. Cl. 387, 402 (2013) (“The first step
is to demonstrate error, that is, to show that the agency acted in an arbitrary and
capricious manner, without a rational basis or contrary to law.”); PlanetSpace, Inc. v.
United States, 92 Fed. Cl. 520, 531-32 (“Stated another way, a plaintiff must show that
the agency’s decision either lacked a rational basis or was contrary to law.” (citing Weeks
Marine, Inc. v. United States, 575 F.3d at 1358)), subsequent determination, 96 Fed. Cl.
119 (2010).
The United States Supreme Court has identified sample grounds which can
29
constitute arbitrary or capricious agency action:
[W]e will not vacate an agency’s decision unless it “has relied on factors
which Congress has not intended it to consider, entirely failed to consider
an important aspect of the problem, offered an explanation for its decision
that runs counter to the evidence before the agency, or is so implausible
that it could not be ascribed to a difference in view or the product of agency
expertise.”
Nat’l Ass’n of Home Builders v. Defenders of Wildlife, 551 U.S. 644, 658 (2007) (quoting
Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)); see
also Tinton Falls Lodging Realty, LLC v. United States, 800 F.3d at 1358; F.C.C. v. Fox
Television Stations, Inc., 556 U.S. 502, 552 (2009); Ala. Aircraft Indus., Inc.-Birmingham
v. United States, 586 F.3d 1372, 1375 (Fed. Cir. 2009), reh’g and reh’g en banc denied
(Fed. Cir. 2010); In re Sang Su Lee, 277 F.3d 1338, 1342 (Fed. Cir. 2002) (“[T]he agency
tribunal must present a full and reasoned explanation of its decision. . . . The reviewing
court is thus enabled to perform meaningful review . . . .”); Textron, Inc. v. United States,
74 Fed. Cl. 277, 285-86 (2006), appeal dismissed sub nom. Textron, Inc. v. Ocean
Technical Servs., Inc., 223 F. App’x 974 (Fed. Cir. 2007). The United States Supreme
Court also has cautioned, however, that “courts are not free to impose upon agencies
specific procedural requirements that have no basis in the APA.” Pension Benefit Guar.
Corp. v. LTV Corp., 496 U.S. 633, 654 (1990).
Under an arbitrary or capricious standard, the reviewing court should not substitute
its judgment for that of the agency, but should review the basis for the agency decision to
determine if it was legally permissible, reasonable, and supported by the facts. See Motor
Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. at 43 (“The scope of
review under the ‘arbitrary and capricious’ standard is narrow and a court is not to
substitute its judgment for that of the agency.”); see also Turner Constr. Co., Inc. v. United
States, 645 F.3d at 1383; R & W Flammann GmbH v. United States, 339 F.3d 1320, 1322
(Fed. Cir. 2003) (citing Ray v. Lehman, 55 F.3d 606, 608 (Fed. Cir.), cert. denied, 516
U.S. 916 (1995)); Synergy Sols., Inc. v. United States, 133 Fed. Cl. at 735 (citing Impresa
Construzioni Geom. Domenico Garufi v. United States, 238 F.3d at 1332-33). “‘“If the
court finds a reasonable basis for the agency’s action, the court should stay its hand even
though it might, as an original proposition, have reached a different conclusion as to the
proper administration and application of the procurement regulations.”’” Weeks Marine,
Inc. v. United States, 575 F.3d at 1371 (quoting Honeywell, Inc. v. United States, 870
F.2d 644, 648 (Fed. Cir. 1989) (quoting M. Steinthal & Co. v. Seamans, 455 F.2d 1289,
1301 (D.C. Cir. 1971))); Limco Airepair, Inc. v. United States, 130 Fed. Cl. 544, 550 (2017)
(citation omitted); Jordan Pond Co., LLC v. United States, 115 Fed. Cl. 623, 631 (2014);
Davis Boat Works, Inc. v. United States, 111 Fed. Cl. 342, 349 (2013); Norsat Int’l
[America], Inc. v. United States, 111 Fed. Cl. 483, 493 (2013); HP Enter. Servs., LLC v.
United States, 104 Fed. Cl. 230, 238 (2012); Vanguard Recovery Assistance v. United
States, 101 Fed. Cl. 765, 780 (2011).
Stated otherwise by the United States Supreme Court:
30
Section 706(2)(A) requires a finding that the actual choice made was not
“arbitrary, capricious, an abuse of discretion, or otherwise not in accordance
with law.” To make this finding the court must consider whether the decision
was based on a consideration of the relevant factors and whether there has
been a clear error of judgment. Although this inquiry into the facts is to be
searching and careful, the ultimate standard of review is a narrow one. The
court is not empowered to substitute its judgment for that of the agency.
Citizens to Pres. Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971) (internal citations
omitted), abrogated on other grounds by Califano v. Sanders, 430 U.S. 99 (1977); see
also U.S. Postal Serv. v. Gregory, 534 U.S. 1, 6-7 (2001); Bowman Transp., Inc. v.
Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 285 (1974), reh’g denied, 420 U.S. 956
(1975); Co-Steel Raritan, Inc. v. Int’l Trade Comm’n, 357 F.3d 1294, 1309 (Fed. Cir. 2004)
(In discussing the “arbitrary, capricious, and abuse of discretion, or otherwise not in
accordance with the law” standard, the Federal Circuit stated: “the ultimate standard of
review is a narrow one. The court is not empowered to substitute its judgment for that of
the agency.”); In re Sang Su Lee, 277 F.3d at 1342; Advanced Data Concepts, Inc. v.
United States, 216 F.3d at 1058 (“The arbitrary and capricious standard applicable here
is highly deferential. This standard requires a reviewing court to sustain an agency action
evincing rational reasoning and consideration of relevant factors.” (citing Bowman
Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. at 285)); Lockheed Missiles &
Space Co. v. Bentsen, 4 F.3d 955, 959 (Fed. Cir. 1993); By Light Prof’l IT Servs., Inc. v.
United States, 131 Fed. Cl. 358, 366 (2017); BCPeabody Constr. Servs., Inc. v. United
States, 112 Fed. Cl. 502, 508 (2013) (“The court ‘is not empowered to substitute its
judgment for that of the agency,’ and it must uphold an agency’s decision against a
challenge if the ‘contracting agency provided a coherent and reasonable explanation of
its exercise of discretion.’” (internal citations omitted) (quoting Keeton Corrs., Inc. v.
United States, 59 Fed. Cl. 753, 755, recons. denied, 60 Fed. Cl. 251 (2004); and Axiom
Res. Mgmt., Inc. v. United States, 564 F.3d at 1381)), appeal withdrawn, 559 F. App’x
1033 (Fed. Cir. 2014); Supreme Foodservice GmbH v. United States, 109 Fed. Cl. 369,
382 (2013); Alamo Travel Grp., LP v. United States, 108 Fed. Cl. 224, 231 (2012);
ManTech Telecomms. & Info. Sys. Corp. v. United States, 49 Fed. Cl. 57, 63 (2001), aff’d,
30 F. App’x 995 (Fed. Cir. 2002); Ellsworth Assocs., Inc. v. United States, 45 Fed. Cl.
388, 392 (1999) (“Courts must give great deference to agency procurement decisions
and will not lightly overturn them.” (citing Fla. Power & Light Co. v. Lorion, 470 U.S. 729,
743-44 (1985))), appeal dismissed, 6 F. App’x 867 (Fed. Cir. 2001), and superseded by
regulation as recognized in MVS USA, Inc. v. United States, 111 Fed. Cl. 639 (2013).
According to the United States Court of Appeals for the Federal Circuit:
Effective contracting demands broad discretion. Burroughs Corp. v. United
States, 223 Ct. Cl. 53, 617 F.2d 590, 598 (1980); Sperry Flight Sys. Div. v.
United States, 548 F.2d 915, 921, 212 Ct. Cl. 329 (1977); see NKF Eng’g,
Inc. v. United States, 805 F.2d 372, 377 (Fed. Cir. 1986); Tidewater
Management Servs., Inc. v. United States, 573 F.2d 65, 73, 216 Ct. Cl. 69
31
(1978); RADVA Corp. v. United States, 17 Cl. Ct. 812, 819 (1989), aff’d, 914
F.2d 271 (Fed. Cir. 1990). Accordingly, agencies “are entrusted with a good
deal of discretion in determining which bid is the most advantageous to the
Government.” Tidewater Management Servs., 573 F.2d at 73, 216 Ct. Cl.
69.
Lockheed Missiles & Space Co. v. Bentsen, 4 F.3d at 958-59; see also Res-Care, Inc. v.
United States, 735 F.3d 1384, 1390 (Fed. Cir.) (“DOL [Department of Labor], as a federal
procurement entity, has ‘broad discretion to determine what particular method of
procurement will be in the best interests of the United States in a particular situation.’”
(quoting Tyler Constr. Grp. v. United States, 570 F.3d 1329, 1334 (Fed. Cir. 2009))), reh’g
en banc denied (Fed. Cir. 2014); Grumman Data Sys. Corp. v. Dalton, 88 F.3d 990, 995
(Fed. Cir. 1996); Geo-Med, LLC v. United States, 126 Fed. Cl. 440, 449 (2016); Cybertech
Grp., Inc. v. United States, 48 Fed. Cl. 638, 646 (2001) (“The court recognizes that the
agency possesses wide discretion in the application of procurement regulations.”);
Furthermore, according to the United States Court of Appeals for the Federal Circuit:
Contracting officers “are entitled to exercise discretion upon a broad range
of issues confronting them in the procurement process.” Impresa
Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324,
1332 (Fed. Cir. 2001) (internal quotation marks omitted). Accordingly,
procurement decisions are subject to a “highly deferential rational basis
review.” CHE Consulting, Inc. v. United States, 552 F.3d 1351, 1354 (Fed.
Cir. 2008) (internal quotation marks omitted).
PAI Corp. v. United States, 614 F.3d at 1351; see also AgustaWestland N. Am., Inc. v.
United States, 880 F.3d at 1332 (“Where, as here, a bid protester challenges the
procurement official's decision as lacking a rational basis, we must determine whether
‘the contracting agency provided a coherent and reasonable explanation of its exercise
of discretion,’ recognizing that ‘contracting officers are entitled to exercise discretion upon
a broad range of issues confronting them in the procurement process.’” (quoting Impresa
Construzioni Geom. Domenico Garufi v. United States, 238 F.3d at 1332-33 (internal
quotation marks and citation omitted))); Weeks Marine, Inc. v. United States, 575 F.3d at
1368-69 (“We have stated that procurement decisions ‘invoke [ ] “highly deferential”
rational basis review.’ Under that standard, we sustain an agency action ‘evincing rational
reasoning and consideration of relevant factors.’” (alteration in original) (quoting CHE
Consulting, Inc. v. United States, 552 F.3d at 1354 (quoting Advanced Data Concepts,
Inc. v. United States, 216 F.3d at 1058))).
On a motion for judgment on the administrative record, a disappointed bidder has
the burden of demonstrating the arbitrary and capricious nature of the agency decision
by a preponderance of the evidence. See Tinton Fall Lodging Realty, LLC v. United Sates,
800 F.3d at 1364; see also Grumman Data Sys. Corp. v. Dalton, 88 F.3d at 995-96;
Enhanced Veterans Sols., Inc. v. United States, 131 Fed. Cl. 565, 578 (2017); Davis Boat
Works, Inc. v. United States, 111 Fed. Cl. at 349; Contracting, Consulting, Eng’g LLC v.
United States, 104 Fed. Cl. at 340. The Federal Circuit has indicated that “[t]his court will
32
not overturn a contracting officer’s determination unless it is arbitrary, capricious, or
otherwise contrary to law. To demonstrate that such a determination is arbitrary or
capricious, a protester must identify ‘hard facts’; a mere inference or suspicion . . . is not
enough.” PAI Corp. v. United States, 614 F.3d at 1352 (citing John C. Grimberg Co. v.
United States, 185 F.3d 1297, 1300 (Fed. Cir. 1999)); see also Turner Constr. Co., Inc.
v. United States, 645 F.3d at 1387; Sierra Nevada Corp. v. United States, 107 Fed. Cl.
735, 759 (2012); Filtration Dev. Co., LLC v. United States, 60 Fed. Cl. 371, 380 (2004).
A bid protest proceeds in two steps. First . . . the trial court determines
whether the government acted without rational basis or contrary to law when
evaluating the bids and awarding the contract. Second . . . if the trial court
finds that the government’s conduct fails the APA review under 5 U.S.C.
§ 706(2)(A), then it proceeds to determine, as a factual matter, if the bid
protester was prejudiced by that conduct.
Bannum, Inc. v. United States, 404 F.3d at 1351; T Square Logistics Servs. Corp. v.
United States, Fed. Cl. 550, 555 (2017); FirstLine Transp. Sec., Inc. v. United States, 119
Fed. Cl. 116, 126 (2014), appeal dismissed (Fed. Cir. 2015); Eco Tour Adventures, Inc.
v. United States, 114 Fed. Cl. at 22; Archura LLC v. United States, 112 Fed. Cl. 487, 496
(2013). To prevail in a bid protest case, the protestor not only must show that the
government’s actions were arbitrary, capricious, or otherwise not in accordance with the
law, but the protestor also must show that it was prejudiced by the government’s actions.
See 5 U.S.C. § 706 (“[D]ue account shall be taken of the rule of prejudicial error.”); see
also Glenn Def. Marine (ASIA), PTE Ltd. v. United States, 720 F.3d at 907 (“In a bid
protest case, the inquiry is whether the agency’s action was arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with law and, if so, whether the error
is prejudicial.”); IT Enter. Sols. JV, LLC v. United States, 132 Fed. Cl. 158, 173 (2017)
(citing Bannum v. United States, 404 F.3d at 1357-58); Linc Gov’t Servs., LLC v. United
States, 96 Fed. Cl. 672, 694-96 (2010). In describing the prejudice requirement, the
Federal Circuit also has held that:
To prevail in a bid protest, a protester must show a significant, prejudicial
error in the procurement process. See Statistica, Inc. v. Christopher, 102
F.3d 1577, 1581 (Fed. Cir. 1996); Data Gen. Corp. v. Johnson, 78 F.3d
1556, 1562 (Fed. Cir. 1996). “To establish prejudice, a protester is not
required to show that but for the alleged error, the protester would have
been awarded the contract.” Data General, 78 F.3d at 1562 (citation
omitted). Rather, the protester must show “that there was a substantial
chance it would have received the contract award but for that error.”
Statistica, 102 F.3d at 1582; see CACI, Inc.-Fed. v. United States, 719 F.2d
1567, 1574-75 (Fed. Cir. 1983) (to establish competitive prejudice, protester
must demonstrate that but for the alleged error, “‘there was a substantial
chance that [it] would receive an award--that it was within the zone of active
consideration.’”) (citation omitted).
Alfa Laval Separation, Inc. v. United States, 175 F.3d 1365, 1367 (Fed. Cir.), reh’g denied
33
(Fed. Cir. 1999); see also Glenn Def. Marine (ASIA), PTE Ltd. v. United States, 720 F.3d
at 912; Allied Tech. Grp., Inc. v. United States, 649 F.3d 1320, 1326 (Fed. Cir.), reh’g en
banc denied (Fed. Cir. 2011); Info. Tech. & Applications Corp. v. United States, 316 F.3d
at 1319; Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d at
1332-33; OMV Med., Inc. v. United States, 219 F.3d 1337, 1342 (Fed. Cir. 2000);
Advanced Data Concepts, Inc. v. United States, 216 F.3d at 1057; Stratos Mobile
Networks USA, LLC v. United States, 213 F.3d 1375, 1380 (Fed. Cir. 2000).
In Data General Corp. v. Johnson, the United States Court of Appeals for the
Federal Circuit wrote:
We think that the appropriate standard is that, to establish prejudice, a
protester must show that, had it not been for the alleged error in the
procurement process, there was a reasonable likelihood that the protester
would have been awarded the contract . . . . The standard reflects a
reasonable balance between the importance of (1) averting unwarranted
interruptions of and interferences with the procurement process and (2)
ensuring that protesters who have been adversely affected by allegedly
significant error in the procurement process have a forum available to vent
their grievances. This is a refinement and clarification of the “substantial
chance” language of CACI, Inc.-Fed. [v. United States], 719 F.2d at 1574.
Data Gen. Corp. v. Johnson, 78 F.3d 1556, 1562 (Fed. Cir.), reh’g denied, en banc
suggestion declined (Fed. Cir. 1996); see also Glenn Def. Marine (ASIA), PTE Ltd. v.
United States, 720 F.3d at 912; Bannum, Inc. v. United States, 404 F.3d at 1353, 1358
(“The trial court was required to determine whether these errors in the procurement
process significantly prejudiced Bannum . . . . To establish ‘significant prejudice’ Bannum
must show that there was a ‘substantial chance’ it would have received the contract award
but for the [government’s] errors” in the bid process. (citing Info. Tech. & Applications
Corp. v. United States, 316 F.3d at 1319; Alfa Laval Separation, Inc. v. United States,
175 F.3d at 1367; Statistica, Inc. v. Christopher, 102 F.3d at 1581; and Data Gen. Corp.
v. Johnson, 78 F.3d at 1562); see also Todd Constr., L.P. v. United States, 656 F.3d
1306, 1315 (Fed. Cir. 2011); Advanced Data Concepts, Inc. v. United States, 216 F.3d at
1057 (using a “reasonable likelihood” rule); Stratos Mobile Networks USA, LLC v. United
States, 213 F.3d at 1380 (using a “substantial chance” test); Am. Corr. Healthcare, Inc.
v. United States, 137 Fed. Cl. 395, 410 (2018) (using a “substantial chance” test); Vintage
Autoworks, Inc. v. United States, 132 Fed. Cl. 143, 149 (2017) (using a “substantial
chance” test); Active Network, LLC v. United States, 130 Fed. Cl. 421, 427 (2017) (using
a “substantial chance” test); Archura LLC v. United States, 112 Fed. Cl. at 496 (using a
“substantial chance” test); Info. Scis. Corp. v. United States, 73 Fed. Cl. 70, 96 (2006)
(using a “substantial chance” test), recons. in part, 75 Fed. Cl. 406 (2007).
In the above-captioned bid protest, ARC asserts that CBP failed to perform “any”
acquisition planning or market research prior to deciding to obtain employee relocation
services from the FSS, inappropriately “changing the small business size standard
34
applicable to the Procurement,” and issuing 2018 RFQ as an unrestricted procurement.
ARC asserts in its motion for judgment on the administrative record in this court that:
Under FAR § 7.102 [(2018)], the Agency was required “to perform
acquisition planning and conduct market research for all acquisitions in
order to promote and provide for:”
1. “Full and open competition or, when full and open competition is not
required” by FAR Part 6;
2. “Selection of appropriate contract type”; and
3. “Appropriate consideration of the use of pre-existing contracts,
including interagency and intra-agency contracts, to fulfill the
requirement, before awarding new contracts.”
FAR Part 7 does not exempt any agency or any procurement from the
requirement to undertake acquisition planning.
ARC contends that FAR § 7.105(b)(i)(3) (2018) requires that a “properly prepared”
acquisition plan must include consideration of whether small business concerns may be
utilized, and that FAR § 7.103(u) (2018) requires that federal agencies implement
procedures to ensure that acquisition planners structure contract requirements to facilitate
competition among small business concerns to the maximum extent possible. According
to ARC’s motion for judgment on the administrative record in this court:
The Secretary of DHS has implemented FAR Part 7 through the
promulgation of the DHS supplements to the FAR (“HSAR”), as well as the
DHS Acquisition Manual (“HSAM”).
HSAM § 3007.102(b)(2) states that “[n]o solicitations may be issued,
or funds transferred within or outside the Department until an
acquisition plan (AP) has been completed and approved.”[14]
HSAM § 3007.104 states that “acquisition planning should begin as
soon as the agency need is identified.”
14 When the CBP issued the 2018 RFQ on January 19, 2018, the version of the HSAM
that was in effect had been issued on December 29, 2017. In the December 29, 2017
version of the HSAM, HSAM § 3007.102(b) is reserved, and the section the protestor
quotes in its motion for judgment on the administrative record does not appear to be
included in the HSAM. The DHS subsequently issued revised versions of the HSAM on
March 30, 2018, April 30, 2018, and June 29, 2018. In all three of the revised versions of
the HSAM, HSAM § 3007.102(b) is reserved, and the section protestor quotes does not
appear to be included in the revised versions of the HSAM.
35
HSAM § 3019.501(c) requires that each DHS proposed acquisition
exceeding the simplified acquisition threshold be reviewed by the
CBP small business specialist prior to synopsizing the requirement
and the results documented in the file.
(first alteration in original). ARC also argues that FAR Part 10 requires agencies to
conduct market research, “particularly with respect to whether a particular acquisition can
be performed by small businesses,” prior to soliciting offers for acquisitions with an
estimated value in excess of the simplified acquisition threshold.
ARC, citing to 13 C.F.R. § 125.2(c), further asserts that the SBA’s regulations
require that each agency must conduct market research to determine the type and extent
of small business participation in an acquisition and, when an acquisition involves goods
or services currently being performed by a small business, an agency must provide a
written statement to the SBA thirty days prior to the issuance of a solicitation indicating
why the proposed procurement would render small business participation unlikely.
Additionally, ARC asserts that FAR § 19.502-2(b) requires that a federal agency set aside
an acquisition when the agency has a reasonable expectation that at least two
responsible small business concerns will submit offerors and an award can be made at a
fair market price. ARC alleges that the CBP selected the FSS in an effort to “avoid the
requirements of FAR Part 19, which states that ‘[s]mall business set-asides have priority
over acquisitions using full and open competition.’” (quoting FAR § 19.203(e) (2018)).
ARC states that FAR § 8.405-5 (2018) “exempts FSS orders from the preference
programs of FAR Part 19,” but ARC contends that FAR § 8.405-5
does not exempt FSS orders from the advance acquisition planning
requirements of FAR Part 7 or the advance market research requirements
of FAR Part 10, including such requirements as implemented by FAR Part
19. Such research must precede decisions whether to utilize the GSA
Federal Supply Schedules (“FSS”), which NAICS code (and thus what size
standard) is applicable to the procurement, or whether or not to set-aside
an acquisition for small businesses. See e.g., FAR 8.404(c) (“Orders placed
under a Federal Supply Schedule contract are not exempt from the
development of acquisition plans (see subpart 7.1)”). Nor does FAR Part 8
exempt FSS orders from the advance acquisition planning requirements or
market research requirements of the SBA regulations.
ARC also argues that the CBP’s actions lacked a rational basis and violated “the
applicable regulations and procedures provided above” because the CBP,
Did not undertake any acquisition planning or market research prior
to: (1) selecting FSS 48 as the contract type for the Procurement; (2)
changing the small business size standard applicable to the
Procurement; or (3) releasing the RFQ as an unrestricted
procurement.
36
Did not consult with OSBDU [sic] or the Agency’s small business
specialist prior to: (1) selecting FSS 48 as the contract type for the
Procurement; (2) changing the small business size standard
applicable to the Procurement; or (3) releasing the RFQ as an
unrestricted procurement.
ARC argues that the undated First Market Research Report, the Second Market
Research Report dated December 18, 2017, the undated 2018 Independent Government
Cost Estimate, the December 5, 2017 and December 13, 2017 spreadsheets that Ms.
Spangler sent to CBP contracting personnel, and the February 7, 2018 DHS Small
Business Review Form “were prepared after the RFQ was issued and likely after ARC
registered its complaint with the Agency regarding the RFQ being unrestricted.” ARC
asserts that “many of the facts and opinions expressed in both” the undated First Market
Research Report and the Second Market Research Report dated December 18, 2017
“directly reflect responses to issues raised by ARC in its communications with the Agency
on or about February 1, 2018 or during the GAO protest, both of which were after the
[2018] RFQ was issued.” (emphasis in original). ARC also contends that “Mr. Ohene’s
declaration is an admission that Tab 13 [the undated First Market Research Report] was
flawed and that Tab 42 [the Second Market Research Report dated December 18, 2017]
was not relied upon.”
According to ARC, the December 5, 2017 spreadsheet and December 13, 2017
spreadsheet “are misleading documents and are not trustworthy” because “these
spreadsheets do not include an overview of every available NAICS Code under each
SIN.” ARC contends in its motion for judgment on the administrative record that:
The NAICS Codes under each of the SINs for the RFQ are as follows:
a. SIN 653-1: 484210 (Used Household and Office Goods Moving);
531210 (Offices of Real Estate Agents and Brokers); 531390 (Other
Activities Related to Real Estate); and 541511 (Custom Computer
Programming Services);
b. SIN 653-4: 484210 (Used Household and Office Goods Moving);
531210 (Offices of Real Estate Agents and Brokers); 531390 (Other
Activities Related to Real Estate); and 541511 (Custom Computer
Programming Services);
c. SIN 653-5: 484210 (Used Household and Office Goods Moving);
531210 (Offices of Real Estate Agents and Brokers); 531390 (Other
Activities Related to Real Estate); and 541511 (Custom Computer
Programming Services); and
d. SIN 653-7: 484210 (Used Household and Office Goods Moving).
37
ARC also notes that the December 5, 2017 spreadsheet sent from the GSA to the CBP
“lists only one NAICS Code for each SIN” and that the December 13, 2017 spreadsheet
sent from the GSA to the CBP lists only the following NAICS Codes for each SIN:
a. SIN 653-1: NAICS Codes 531210 and 531190, with two businesses
listed as small business certified.
b. SIN 653-4: NAICS Codes 531390, 531210 and 541511, with two
businesses listed as small business certified.
c. SIN 653-5: NAICS Codes 531210 and 531190, with two businesses
listed as small business certified.
d. SIN 653-7: NAICS Code 484210, with nine business [sic] listed as
small business certified.
ARC argues that “reliance on these documents [the December 5, 2017 spreadsheet and
December 13, 2017 spreadsheet] cannot be considered reasonable as they failed to
reveal all relevant information regarding Schedule 48 and the relevant SINS.”
Regarding the 2018 Independent Government Cost Estimate, ARC asserts that
the document is “totally unverifiable” and does not constitute market research because
the 2018 Independent Government Cost Estimate is undated and unsigned and Mr.
Ohene only received the 2018 Independent Government Cost Estimate a few hours
before issuing the solicitation.15 Regarding the February 7, 2018 DHS Small Business
Review Form, ARC argues that the CBP could not have relied on the February 7, 2018
DHS Small Business Review Form as “the basis for the Agency’s decision not to set aside
the Procurement for small businesses because the document was not created until after
the issuance of the RFQ” on January 19, 2018.
15 The court is not persuaded by ARC’s argument that the 2018 Independent Government
Cost Estimate was prepared after the 2018 RFQ was issued. In an email message dated
December 8, 2017, Mr. Ohene informed Ms. Reeves that Ms. Reeves would need to
update the 2017 Independent Government Cost Estimate that was prepared in
connection with the 2017 RFQ to incorporate the updated pricing the CBP was planning
on using in connection with the 2018 RFQ. According to the July 17, 2018 declaration
signed by Mr. Ohene, “[a]fter having several discussions with Ms. Reeves on the values
for the Independent Government Cost Estimate (IGCE), the IGCE was sent to me on
January 19, 2018.” The administrative record includes a January 19, 2018 email message
from Ms. Reeves to Mr. Ohene, attached to which was the 2018 Independent Government
Cost Estimate. The administrative record, therefore, indicates that CBP had been working
on the 2018 Independent Government Cost Estimate as early as December 8, 2017, and
that the 2018 Independent Government Cost Estimate was finalized prior to the issuance
of the 2018 RFQ.
38
Defendant, however, argues that CBP has broad discretion when deciding whether
to use the FSS to acquire employee relocation services. According to defendant, the
CBP’s June 19, 2017 Acquisition Plan identified benefits associated with using the FSS
and “explained that the agency was not changing its acquisition strategy from the current
relocation services contract because ‘CBP received satisfactory services under both
[prior] contracts [awarded in 2008 and 2014 respectively for relocation services].’”
(alterations in original). Defendant contends that CBP was not required to draft an
additional acquisition plan because “the acquisition vehicle did not change.” Defendant
also asserts that:
In light of the preference for obtaining goods and services from FSS
contractors, and the fact that CBP had successfully employed this approach
on the current and previous contracts for procuring the same services, the
agency’s decision to continue this acquisition strategy was reasonable and
in the best interests of the United States.
Defendant also argues that CBP was not required to “undertake market research
to determine whether a small business set-aside was appropriate before purchasing
goods or services through the FSS,” and that CBP’s decision to set aside prior
procurements of employee relocation services does “not expand CBP’s obligations under
the current FSS solicitation.” Defendant asserts that, “[e]ven if CBP chose to evaluate the
procurement as a small business set-aside – as it had done in the past – no such set-
aside could be made here because there was not at least two small businesses that could
have submitted offers when CBP issued its RFQ in January 2018.” According to
defendant, the December 13, 2017 spreadsheet
reflected the NAICS code for SIN 653-7 (NAICS 484210) that was used in
the cancelled 2017 RFQ (and was in use during under the current contract),
but for which the statement of work and pricing had changed significantly.
The NAICS code for the 2018 RFQ was subsequently changed to 531210
to reflect “the higher estimated value of work to be performed under the
NAICS relative to the other NAICS being utilized for this acquisition as
supported by the Independent Government Cost Estimate.” The GSA
spreadsheet identified only Choice Relocation Management, LLC and Sibcy
Cline Relocation Services, Inc. as “small” under NAICS code 531210. And
in her December 5 email, Ms. Spangler informed Mr. Ohene that “Sibcy
provided notification that it will not renew its option and will expire 3/17/18”
and that “ReloDirect [aka ‘Reliance Relocation Services’] has also provided
notification that it is recertifying as large business.” A review of the System
for Award Management records showed that Reliance Relocation Services,
Inc., dba Relo Direct and ARC were both identified as “other than small”
under NAICS code 531210 at the time. The only small business that
qualified under NAICS code 531210 was Choice Relocation.
(alteration in original; internal references omitted).
39
Regarding the SBA regulation cited by ARC, 13 C.F.R. § 125.2, defendant
contends that the SBA regulation does not apply to the CBP’s acquisition of employee
relocation services under the FSS. Defendant relies on K-Lak Corp. v. United States, 98
Fed. Cl. 1, 6 (2011), as support for its position that the CBP did not have any obligation
to comply with the requirements of 13 C.F.R. § 125.2 once the CBP decided to utilize the
FSS to acquire employee relocation services.
The FAR defines acquisition planning as “the process by which the efforts of all
personnel responsible for an acquisition are coordinated and integrated through a
comprehensive plan for fulfilling the agency need in a timely manner and at a reasonable
cost. It includes developing the overall strategy for managing the acquisition.” FAR §
2.101 (2018). FAR Part 7 sets forth the policies and procedures a federal agency must
follow when developing an acquisition plan. See FAR § 7.000(a) (2018). Acquisition
planning should begin as soon as an agency identifies a need. FAR 7.104(a) (2018); see
also HSAM § 3007.104(a) (2018) (“In accordance with FAR 7.104(a), acquisition planning
should begin as soon as the agency need is identified.”). FAR § 7.102 (2018) requires
that an agency perform acquisition planning and conduct market research pursuant to
FAR Part 10, as discussed below, for all acquisitions in order “to ensure that the
Government meets its needs in the most effective, economical, and timely manner.” FAR
§ 7.102; see also Magnum Opus Techs., Inc. v. United States, 94 Fed. Cl. 512, 545 (2010)
(“FAR part 7 requires agencies to develop acquisition plans to ensure that the
Government meets its needs in the most effective, economical, and timely manner.”
(citing FAR §§ 7.102-.103)). Provided there is no statutory or regulatory requirement to
the contrary, an agency generally has broad discretion when determining whether a
procurement strategy will meet the agency’s needs in an effective, economical, and timely
manner. See Tyler Constr. Grp. v. United States, 570 F.3d 1329, 1334 (Fed. Cir. 2009)
(“The Corps, like other federal procurement entities, has broad discretion to determine
what particular method of procurement will be in the best interests of the United States in
a particular situation.” (citing E.W. Bliss Co. v. United States, 77 F.3d 445, 449 (Fed. Cir.
1996); and Lockheed Missiles & Space Co. v. Bentsen, 4 F.3d at 958)).
The FAR defines market research as “collecting and analyzing information about
capabilities within the market to satisfy agency needs.” FAR § 2.101. FAR Part 10
“prescribes the policies and procedures for conducting market research to arrive at the
most suitable approach to acquiring, distributing, and supporting supplies and services.”
FAR § 10.000 (2018). A federal agency must “[c]onduct market research appropriate to
the circumstances” prior to soliciting offers for an acquisition with an estimated value
exceeding the simplified acquisition threshold and must use the results of the agency’s
market research to determine “if sources capable of satisfying the agency’s requirements
exist.” FAR § 10.001(a) (2018); see also Magnum Opus Techs., Inc. v. United States, 94
Fed. Cl. at 545 (“FAR part 10 requires agencies to conduct market research to determine
the most suitable approach for acquiring goods and services.” (citing FAR §§ 10.001-
.002)). “The extent of market research will vary, depending on such factors as urgency,
estimated dollar value, complexity, and past experience,” but market research “should
include” consideration of the “[s]ize and status of potential sources (see [FAR] Part 19
[(2018)]).” FAR § 10.002(b) (2018).
40
FAR Part 19, titled “Small Business Programs,” at FAR § 19.201(a) (2018)
indicates that it is the policy of the federal government to “provide maximum practicable
opportunities in its acquisitions” to small businesses. See FAR § 19.201(a). FAR
§ 19.501(c) requires that a contracting officer conduct market research, and, if the
contracting officer decides not to set aside the acquisition for small businesses, the
contracting officer must document why a small business set-aside is inappropriate. FAR
§ 19.501(c); see also Proxtronics Dosimetry, LLC v. United States, 128 Fed. Cl. 656, 680
(2016) (discussing the requirements of FAR Part 19 and stating that “[c]ontracting officers
are required to ‘review acquisitions to determine if they can be set aside for small
business,’ and must ‘perform market research’ before concluding that an acquisition
should not be set aside for a small business” (quoting FAR § 19.501(c))), appeal
dismissed (Fed. Cir. 2017). A contracting officer generally must set aside an acquisition
for small businesses when there is a reasonable expectation that “[o]ffers will be obtained
from at least two responsible small business concerns offering the products of different
small business concerns” and “[a]ward will be made at fair market prices.” See FAR §
19.502-2(b); see also Adams & Assocs., Inc. v. United States, 741 F.3d 102, 106 (Fed.
Cir.) (stating that, under FAR Part 19, “[t]he Rule of Two requires the ‘contracting officer
shall set aside any acquisition over $150,000 for small business participation when there
is a reasonable expectation that: (1) Offers will be obtained from at least two responsible
small business concerns . . . ; and (2) Award will be made at fair market prices.’” (omission
in original) (quoting FAR § 19.502-2(b))), reh’g en banc denied (Fed. Cir. 2014).
FAR § 8.404(a) (2018), however, states that FAR “Parts 13 (except 13.303-
2(c)(3)), 14, 15, and 19 (except for the requirement at 19.202-1(e)(1)(iii)[16]) do not apply
to BPAs or orders placed against Federal Supply Schedules contracts.” FAR § 8.404(a);
see also FAR § 38.101(e) (2018) (stating that FAR Part 19 does not apply to orders or
blanket purchase agreements awarded under the FSS). Moreover, if an agency is unable
to satisfy its requirements for a procurement from the list of mandatory sources in FAR
§ 8.002 (2018) and FAR § 8.003 (2018), “agencies are encouraged to consider satisfying
requirements from or through the non-mandatory sources listed in paragraph (a) of this
section,” which includes blanket purchase agreements under the FSS, before considering
“[c]ommercial sources (including educational and non-profit institutions) in the open
market.” FAR § 8.004 (2018). Although FAR Part 19 does not apply to acquisitions
utilizing the FSS in accordance with FAR Part 8, acquisitions utilizing the FSS are “not
exempt from the development of acquisition plans” under FAR Part 7. See FAR
§ 8.404(c)(1). Contracting Officers also “may, at their discretion,” set aside a blanket
purchase agreement placed under the FSS for small businesses. See FAR § 8.405-5.
In the above-captioned bid protest, the administrative record indicates that CBP
identified its need for employee relocation services as early as March 2017. In an email
message dated March 29, 2017, which was sent by Mr. Ischkum, a GSA Branch Chief,
16FAR § 19.202-1(e)(1)(iii) (2018) states that a contracting officer shall provide a copy of
a proposed acquisition package to an SBA procurement center representative when the
proposed acquisition is a consolidated or bundled requirement.
41
to Mr. Ohene and displayed a subject line of “F2017036219 Relocation Services,” Mr.
Ischkum states, “I saw her [Ms. Reeves’] APFS [Acquisition Planning Forecast System
Number] # F2017036219 for relocation services. This is something you may easily be
able to accomplish on the GSA Schedules program.” In a March 30, 2017 email message
from Mr. Ohene to Mr. Ischkum, Mr. Ohene stated that “[w]e plan to use GSA Schedule
48 Transportation, Delivery, and Relocation Solutions for the recompete. It was used
successfully for the last acquisition.” In response to questions received by CBP regarding
the CBP’s May 8, 2018 Request for Information, CBP indicated that NAICS Code 484210,
titled “Used Household and Office Goods Moving,” which has a small business size
standard of $27,500,000.00, was to be the applicable NAICS Code for the acquisition of
employee relocation services.
According to the CBP’s Acquisition Plan dated June 19, 2017, the acquisition of
employee relocation services “will be competed via GSA Relocation Services schedule
holders.” The CBP’s Acquisition Plan stated that “[m]arket research conducted for this
requirement showed that relocation services can be procured via GSA Schedule 48-
Transportation, Delivery, and Relocation Solutions, which was created to assist federal
agencies offering relocation benefits for employees and their families,” and that SINs 653-
1, 653-4, 653-5, and 653-7, which are listed on Schedule 48 of the FSS, satisfied the
CBP’s requirements. The CBP’s June 19, 2017 Acquisition Plan also provided that:
CBP can leverage the purchase of relocation services via the GSA
schedule. The use of FAR Subpart 8.4 (Federal Supply Schedule)
procedures significantly reduces acquisition lead time allowing CBP to more
efficiently complete the procurement process for the relocation acquisition.
In addition, small business set-asides are allowable under the schedule.
While the award will not be an IDIQ award as it is not permitted for GSA
Multiple Award Schedule (MAS) vehicles, a Blanket Purchase Agreement
will be awarded that will significantly reduce time by allowing orders to be
placed under it as needs arise.
Additionally, the CBP noted that it had received satisfactory results under the previous
employee relocation contract and the current ARC contract, which was issued under
Schedule 48 of the FSS.17
17 As noted above, APA review is to be applied to an agency’s decision based on the
record the agency presents to the court, although the court may supplement the
administrative record when omission of the supplemental material precludes effective
judicial review. See AugustaWestland N. Am., Inc. v. United States, 880 F.3d at 1331-32;
see also Axiom Res. Mgmt., Inc. v. United States, 564 F.3d at 1380. ARC attached to its
motion for judgment on the administrative record a July 25, 2018 declaration signed by
Mr. William Mulholland, who states that he is the “Managing Member” of ARC. In the July
25, 2018 declaration, Mr. Mulholland focuses on an invoicing dispute experienced
between ARC and CBP. ARC asserts that the declaration signed by Mr. Mulholland
“directly challenges the facts asserted in these so-called Market Research Reports,
demonstrating that such reports were flawed and likely created after ARC contacted the
42
On August 21, 2017, the CBP issued the 2017 RFQ, which was set-aside for small
businesses and sought employee relocation services under GSA’s “Relocation Services
Schedule 48 SSIN 653.” On August 22, 2017, CBP issued an amendment to the 2017
RFQ, which added SINs 653-1, 653-4, 653-5, and 653-7 to the 2017 RFQ. On August 23,
2017, Terri Shaffer, a GSA Program Analyst, sent an email message to CBP contracting
personnel stating that the 2017 RFQ “included commercial pricing as an option for move
management services” under SIN 653-7, and that the “recent change to the Schedule
which is reflected in the attached process maps offers move management services
through the Schedule in combination with the household goods moving services being
managed under the terms, conditions, and pricing of the Centralized Household Goods
Traffic Management Program (CHAMP).” On September 5, 2017, CBP issued a
modification cancelling the 2017 RFQ.
Subsequently, according to a November 9, 2018 email from Ms. Shaffer of the
GSA, Ms. Schaffer began “working closely with Iris [Reeves of CBP] on the requirements
for your [the CBP’s] BPA,” and, as of November 9, 2017, Ms. Shaffer and Ms. Reeves
were “nearing the final stretch” of completing a statement of work for the 2018 RFQ, which
was ultimately issued on January 19, 2018. As with the 2017 RFQ, the 2018 RFQ seeks
to use Schedule 48 of the FSS to acquire employee relocation services and identifies
SINs 653-1, 653-4, 653-5, and 653-7 as the applicable SINs. Prior to the issuance of the
2018 RFQ, on December 5, 2017, Ms. Spangler, a GSA Contracting Officer, sent an email
message to Mr. Ohene and Ms. Reeves that stated:
To support your research please find attached a pricing sheet for the
Schedule 48 employee relocation contracts. This sheet includes the NAICS
for each SIN and contractor business size classification by SIN as of today.
As you can see, Schedule 48 employee relocation contracts may include
multiple NAICS with different business classifications. The Schedule COs
made NAICS determinations for these contracts based on the
preponderance of work to be performed under the contract at time of award.
FAR 8.405-5(b) states that “Ordering activities should rely on the small
business representations made by schedule contractors at the contract
Government after release of the 2018 RFQ.” Defendant argues that the court “should
strike the declaration of William Mulholland” because “the declaration contains no
information that is relevant to any of the issues being protested.” The defendant is correct
that, upon review, there appears to be no information necessary for the court’s judicial
review in the above-captioned bid protest included in Mr. Mulholland’s declaration. The
court, therefore, declines to supplement the administrative record with the declaration
signed by Mr. Mulholland. Mr. Mulholland’s offered additional information regarding an
invoicing dispute between ARC and CBP does not alter the court’s conclusion that CBP
adequately engaged in acquisition planning and conducted market research prior to
issuing the 2018 RFQ.
43
level.” However, in situations where a MAS contract includes multiple
NAICS, the ordering CO’s are responsible for assigning the order level
NAICS which best corresponds to the work being performed. The order
level CO should be re-certifying businesses at the order level per SBA at 71
Federal Register 220 (November 15, 2006), Page 66439. Due to the fact
that a contractor’s business size may be different at the MAS level from the
Ordering Level, with regards to schedule SB set-asides competitors have
an avenue for business size protest through the ordering CO.
I’m hoping the attachment will provide the documentation needed for your
market research and resulting decision for acquisition strategy.
Ms. Spangler also informed Ms. Reeves and Mr. Ohene that Sibcy Cline Relocation
Services informed GSA that Sibcy Cline Relocation Services “will not renew its option and
will expire 3/17/18,” which was reflected in the December 5, 2017 spreadsheet. On
December 13, 2017, Ms. Spangler sent to Ms. Reeves and Mr. Ohene an updated
spreadsheet that “was updated to correct NAICS codes & add comments on expiration
dates.” As the parties have stipulated, Ms. Spangler’s December 13, 2017 spreadsheet
listed the following NAICS Codes for each SIN:
SIN 653-1: NAICS Codes 531210 and 531190, with two businesses listed
as small business certified: Choice Relocation Management and Sibcy
Cline Relocation Services
SIN 653-4: NAICS Codes 531390, 531210 and 541511, with two
businesses listed as small business certified: Choice Relocation
Management and Sibcy Cline Relocation Services
SIN 653-5: NAICS Codes 531210 and 531190, with two businesses listed
as small business certified: Choice Relocation Management and Sibcy
Cline Relocation Services
SIN 653-7: NAICS Code 484210, with nine business listed as small
business certified: American Relocation Connections, Choice Relocation
Management, Reliance Relocation Services, Sibcy Cline Relocation
Services, TRF Global Mobility, Life International Companies, Move
Management Center, Relocation Management Worldwide, and Weleski
Transfer.
Based on the December 13, 2017 spreadsheet and Sibcy Cline Relocation Services’
statement that it “will not renew its option and will expire 3/17/18,” the only certified small
business under NAICS Codes 531210, 531190, and 541511 was Choice Relocation
Management, although, according to the December 13, 2017 spreadsheet, there were
44
seven certified small businesses under NAICS Code 484210.18 The December 5, 2017
spreadsheet and December 13, 2017 spreadsheet also provided a “Rate Comparison”
among all of the vendors listed under each SIN.
According to the undated First Market Research Report, CBP then determined that
the applicable NAICS Code for the 2018 RFQ was NAICS Code 531210, titled “Offices of
Real Estate Agents and Brokers,” rather than NAICS Code 484210, titled “Used
Household and Office Goods Moving,” which the CBP utilized for the 2017 RFQ. The
undated First Market Research Report stated:
GSA schedule 48-Transportation, Delivery, and Relocation Solutions
vehicle is able to meet this requirement based on market research.
Schedule 48 was created to assist federal agencies with respect to
relocation services. The schedule contains the following applicable
SINs/NAICS for the CBP Relocation Services acquisition:
SIN 653-1, Relocation Services Package (Homesale Assistance) NAICS
531210 & 531390
SIN 653-4, Additional Services NAICS 531210 & 531390
SIN 653-5, Agency Customization Service NAICS 531210 & 531390
SIN 653-7, Move Management Services NAICS 484210
The CBP Relocation acquisition encompasses the above SINs/NAICS.
Given the multiple NAICS associated with the above reference [sic] SINs,
the applicable NAICS at the order level for the preponderance of work ($
value) to be performed under the resultant contract is NAICS 531210 (Office
of Real Estates and Brokers). NAICS 531210 is being utilized given the
higher estimated value of work to be performed under the NAICS relative to
the other NAICS being utilized for this acquisition as supported by
Independent Government Cost Estimate.
Thereafter, on January 19, 2018, CBP issued the 2018 RFQ as an unrestricted
procurement, and, on February 5, 2018, CBP issued an amendment to the 2018 RFQ,
which indicates that NAICS Code 531210 is the applicable NAICS Code for the 2018
RFQ.
Contrary to ARC’s position, the administrative record indicates that CBP did
undertake acquisition planning and market research prior to selecting the FSS as the
method for obtaining employee relocation services for the 2017 RFQ, as well as additional
acquisition planning and market research prior to issuing the 2018 RFQ. As discussed
above, the email messages exchanged between Mr. Ohene and Mr. Ischkum indicate
18Reliance Relocation Services, which is listed as a small business under NAICS Code
484210 in the December 5, 2017 and December 13, 2017 spreadsheets, had informed
the GSA, which had informed CBP, that Reliance Relocation Services was going to be
recertifying as a “large business.”
45
that the CBP identified its upcoming need for employee relocation services as early as
March 2017. The CBP’s June 19, 2017 Acquisition Plan indicates that CBP had
previously, successfully used the FSS to acquire employee relocation services, noted that
Schedule 48, which is titled “Transportation, Delivery and Relocation Solutions,” was
“created to assist federal agencies offering relocation benefits for employees and their
families,” stated that the SINs listed on Schedule 48 of the FSS covered the CBP’s
requirements, stated that “[m]arket research conducted for this acquisition can be
procured via GSA Schedule 48,” and reasoned that using the FSS permitted the CBP to
complete its procurement process in an efficient manner, all of which suggested to the
agency that the FSS was an effective method for acquiring employee relocation services.
Although the CBP’s June 19, 2017 Acquisition Plan was created in connection with the
2017 RFQ, which requested employee relocation services under SINs 653-1, 653-4, 653-
5, and 653-7, the reasoning in the June 19, 2017 Acquisition Plan directly supports the
use of Schedule 48 of the FSS for the 2018 RFQ, which also requested employee
relocation services under SINs 653-1, 653-4, 653-5, and 653-7, albeit with revised pricing
and a revised statement of work for SIN 653-7. See FAR § 10.002(b)(1) (“The contracting
officer may use market research conducted within 18 months before the award of any
task or delivery order if the information is still current, accurate, and relevant.”). As
indicated in Ms. Reeves’ December 8, 2017 email message to Mr. Ohene, the CBP
anticipated that its “estimates on our volumes [for employee relocation services] for the
next 4 years should still be the same” for the 2018 RFQ and that CBP’s 2018 RFQ is
requesting “the same services that we previously had,” although, as noted in Mr. Ohene’s
December 8, 2017 response, vendors would not be submitting pricing for the shipment of
Household Goods because “CHAMP will be handling this.” ARC also states that “there is
no fundamental change to the services being acquired” under the 2018 RFQ, but that the
CBP “simply changed the pricing the contractor could charge for move management
services, i.e., such charges were limited to the CHAMP tariffs.”
The June 19, 2017 Acquisition Plan was developed less than seven months before
CBP issued the 2018 RFQ on January 19, 2018, and ARC has not identified any
information in the administrative record indicating that Schedule 48 of the FSS, which is
titled “Transportation, Delivery and Relocation Solutions,” had become an ineffective
vehicle for the CBP’s procurement of employee relocation services during that time
period. Under the existing regulations, the CBP had broad discretion when selecting
which method of contracting to utilize for the acquisition, and the administrative record
indicates that the CBP engaged in acquisition planning prior to selecting Schedule 48 of
the FSS to acquire employee relocation services, as the CBP had done in the past when
acquiring employee relocation services, and that CBP had a rational basis for selecting
the FSS vehicle. See Tyler Constr. Grp. v. United States, 570 F.3d at 1334 (stating that
an agency “has broad discretion to determine what particular method of procurement will
be in the best interests of the United States in a particular situation” (citing E.W. Bliss Co.
v. United States, 77 F.3d at 449; and Lockheed Missiles & Space Co. v. Bentsen, 4 F.3d
at 958)); see also Che Consulting, Inc. v. United States, 125 Fed. Cl. 234, 245 (2016)
(indicating that an agency had broad discretion in selecting the method of contracting to
use and stating that the agency “had the right to award the contract under the FSS
program”); K-Lak Corp. v. United States, 98 Fed. Cl. at 6 (“[A] procuring agency is free to
46
decide whether to use the FSS without regard to whether the requirement has been or
could be met through a set-aside or preference program.”). Indeed, the protestor, ARC,
indicated at the September 5, 2018 oral argument that ARC was not asserting that it was
improper for the CBP to utilize the FSS to procure employee relocation services, but only
that the CBP’s decision to utilize the FSS lacked a rational basis because ARC failed to
perform acquisition planning and market research prior to selecting the FSS as the
method for obtaining employee relocation services, which is not supported by the
administrative record.
Regarding ARC’s allegation that the CBP did not perform any market research
prior to “changing the small business size standard applicable to the Procurement” or
“releasing the RFQ as an unrestricted procurement,” the administrative record indicates
that Ms. Spangler of the GSA sent CBP contracting personnel a detailed spreadsheet on
December 5, 2017 and an updated, detailed spreadsheet on December 13, 2017
identifying vendors under SINs 651-1, 653-4, 653-5, and 653-7 and indicating whether
each vendor identified in the spreadsheets was certified as a small business or an other
than small business for certain NAICS Codes applicable to the four SINs.
The FAR requires that CBP “[c]onduct market research appropriate to the
circumstances” to determine “if sources capable of satisfying the agency’s requirements
exist,” and, the agency, including Mr. Ohene and Ms. Reeves of the CBP, had discretion
when determining the extent and the nature of the market research to conduct prior to
issuing the 2018 RFQ. See Sigmatech, Inc. v. United States, 136 Fed. Cl. 346, 352 (2018)
(“FAR Part 10 provides that an agency has substantial discretion in determining how
much and what type of market research is ‘appropriate to the circumstances’ for the
purpose of ‘[d]etermining if sources capable of satisfying the agency’s requirements
exist.’” (alteration in original) (quoting FAR § 10.001(a)) (citation omitted)); see also
Advanced Am. Constr., Inc. v. United States, 111 Fed. Cl. 205, 226 (2013) (“[T]he agency
enjoys substantial discretion in determining how much and what type of market research
is ‘appropriate to the circumstances’ for the purpose of ‘[d]etermin[ing] if sources capable
of satisfying the agency’s requirements exist.’” (second and third alterations in original)
(quoting FAR § 10.001(a))); Assessment & Training Sols. Consulting Corp. v. United
States, 92 Fed. Cl. 722, 731 (2010) (“The court agrees with defendant that the Contracting
Officer had discretion under the relevant regulations to conduct market research
‘appropriate to the circumstances.’” (quoting FAR § 10.001(a))). The work and review
evidenced by the December 5, 2017 spreadsheet and December 13, 2017 spreadsheet
acquired from Ms. Spangler of the GSA satisfied CBP’s obligation to undertake market
research appropriate to the circumstances in order to determine whether there were
sources capable of satisfying the CBP’s requirements under Schedule 48 of the FSS and
the agency’s actions in this regard were not arbitrary and capricious. Both spreadsheets
indicate that there were multiple vendors potentially available under Schedule 48 capable
of providing to the CBP the services listed under SINs 651-1, 653-4, 653-5, and 653-7.
According to FAR § 10.002(b)(2), market research may include “[c]ontacting
knowledgeable individuals in Government and industry regarding market capabilities to
meet requirements,” which, is what CBP did when it obtained the December 5, 2017
spreadsheet and December 13, 2017 from Ms. Spangler, GSA’s “CO who oversees the
47
relocation contracts” and “manages these [relocation] contracts.” See FAR
§ 10.002(b)(2)(i). The undated First Market Research Report indicates that CBP also
conducted market research by reviewing “IBIS World, a renowned magazine that
publishes the largest collection of reports, analysis, statistics and future trends in various
industries,” which the undated First Market Research Report indicates “provides a
positive assessment of the relocation services commercial market place.” See FAR
§ 10.002(b)(2)(vii) (stating that market research may include “[r]eviewing catalogs and
other generally available product literature published by manufacturers, distributors, and
dealers or available on-line”). FAR Part 10 states that market research “should include”
consideration of the “[s]ize and status of potential sources (see part 19),” while also noting
that the “extent of market research will vary depending on such factors as urgency,
estimated dollar value, complexity, and past experience.” See FAR § 10.002(b)(1)(vii).
Although FAR § 19.501(c) states that the “contracting officer shall perform market
research and document why a small business set-aside is inappropriate when an
acquisition is not set aside for small business,” FAR Part 19 does not apply to blanket
purchase agreements placed under the FSS. See FAR § 8.404(a) (stating that FAR Part
19 does not apply to blanket purchase agreements placed under the FSS); see also K-
Lak Corp. v. United States, 98 Fed. Cl. at 2 n.3; Navarro Research & Eng’g, Inc. v. United
States, 94 Fed. Cl. 224, 233 (2010) (“FAR Part 8.4 expressly exempts FSS contracts from
the requirements of Parts 13, 14, 15, and 19.” (citing FAR § 8.404(a))).
The court is not persuaded by ARC’s argument that “[c]learly Mr. Ohene, or others
at the Agency, had made a decision to remove the acquisition from the small business
program before they had made contact with [Ms.] Spangler. In fact, it appears a decision
may have been made in November of 2017.” In an attempt to support its position, ARC
cites to a November 28, 2017 email message in a series of email messages between Mr.
Ohene and Ms. Reeves and to a December 6, 2017 email message from Mr. Ohene to
Ms. Spangler. In the November 2017 email messages between Ms. Reeves and Mr.
Ohene, on November 16, 2017, Mr. Ohene asked Ms. Reeves to send him “some names
of Relocation Vendors that showed good capability and can be used as part our Market
Research.” Ms. Reeves responded on November 22, 2017 by sending Mr. Ohene the list
of five “vendors that we identified when preparing for the DHS Relocation Service
Contract.” Subsequently, on November 28, 2017, Ms. Reeves sent another email
message to Mr. Ohene, which stated “[s]till on track to getting you the SOW by COB
Thursday [November 30, 2017]. Is there anything else that I should be working on? If so,
could you provide me with a list of expected deliverables so I can plan accordingly.” That
same day, on November 28, 2017, Mr. Ohene sent an email message to Ms. Reeves
stating:
Thanks for the information. I look forward to the SOW. We will have to tweak
some of the initial documents used in FY17 due to the change in the
acquisition strategy.
Market Research
Acquisition Plan
48
I will work on the above two and send them to you. In addition, we will have
to work on the Evaluation Factors that will be used to make the award. Terri
provided a Sample Evaluation Factors that we can tweak for our acquisition.
We may also need to tweak the attached Independent Government Cost
Estimate. According to Terri, we will be paying fees to the Contractor who
will be coordinating the HHG shipping with a CHAMP carrier so our IGCE
needs to reflect the estimated fee and not the actual HHG amount as it is
currently listed in the attached. We can use an average of fees off the GSA
Relocation Schedule for our IGCE.
Mr. Ohene’s November 28, 2017 email message, including Mr. Ohene’s vague reference
to a “change in the acquisition strategy,” does not specifically indicate that, as of
November 28, 2017, CBP “had made a decision to remove the acquisition from the small
business program,” as ARC asserts, but only that Mr. Ohene anticipated that CBP would
have to perform additional research related to CBP’s upcoming acquisition of employee
relocation services because of the change in pricing.
In the December 6, 2017 email message, cited by protestor in an attempt by ARC
to demonstrate that CBP had made a decision to release the procurement as an
unrestricted procurement prior conducting market research, Mr. Ohene is responding to
Ms. Spangler’s December 5, 2017 email messages, in which Ms. Spangler sent to CBP
contracting personnel the December 5, 2017 spreadsheet and provided additional
information about the notifications received from Sibcy Cline Relocation Services and
Reliance Relocation Services. In the December 6, 2017 email message, Mr. Ohene
states:
Thanks for the pricing sheet and the additional information regarding Sibcy
and Relo Direct. We plan on opening up the acquisition to both large and
small business probably - [redacted] vendors based on market research
information. As we move further in the acquisition, I will let you know if
anything else is needed.
As of December 6, 2017, CBP had conducted market research that indicated that
Schedule 48 of the FSS was an efficient tool for CBP’s upcoming acquisition of employee
relocation services, which was documented in the June 19, 2017 Acquisition Plan, and
CBP was in possession of the December 5, 2017 spreadsheet indicating whether vendors
were certified as a small business or as an other than small business under NAICS Codes
associated with SINs 653-1, 653-4, 653-5, and 653-7. Mr. Ohene only states in his
December 6, 2017 email message to Ms. Spangler that CBP “probably” will issue the
2018 RFQ to “both large and small business,” which Mr. Ohene states is based on “market
research information.” The CBP then received the December 13, 2017 spreadsheet from
Ms. Spangler, and the undated First Market Research Report, which Mr. Ohene indicates
in his July 17, 2018 declaration was created on or about December 18, 2017, states that,
“based on information obtained through the GSA Contracting Officer in charge of
Relocation Program, there was a not reasonable expectation that CBP would receive
three small business proposals needed for maximum competition,” as the only business
49
identified in the December 5, 2017 and the December 13, 2017 spreadsheet as being a
certified small business under NAICS Code 531210 was Choice Relocation Management.
ARC also argues that the CBP violated the SBA regulation at 13 C.F.R.
§ 125.2(c)(2), which states that “[e]ach agency, as part of its acquisition planning, must
conduct market research to determine the type and extent of foreseeable small business
participation in the acquisition,” and also that, during the market research phase, a
procuring agency “must consult with the applicable PCR [SBA Procurement Center
Representative] (or if a PCR is not assigned to the procuring activity, the SBA Office of
Government Contracting Area Office serving the area in which the buying activity is
located) and the activity’s Small Business Specialist.” ARC further asserts that the CBP
violated 13 C.F.R. § 125.2(c)(3)(iv), which states that, when a requirement includes goods
or services currently being performed by a small business, an agency must provide to the
SBA a written statement at least thirty days prior to issuing a solicitation when a proposed
acquisition strategy “[i]ncludes in its description goods or services the magnitude of the
quantity or estimated dollar value of which would render small business prime contract
participation unlikely.” Defendant, however, asserts that CBP did not have to comply with
13 C.F.R. § 125.2(c) because CBP had selected the FSS as the acquisition vehicle for its
procurement. Defendant argues that “[w]e do not dispute that orders issued against a
multiple award schedule – including the solicitation at issue here – are contemplated
within certain provisions set forth at 13 C.F.R. § 125.2. But none of those provisions affect
this procurement.” According to defendant, “the only provision of the regulation that
speaks directly to this procurement is found at [13 C.F.R.] § 125.2(e)(6)(i), which gives
the contracting officer ‘the authority to set-aside orders against Multiple Award Contracts
that were competed on a full and open basis.’” (footnote omitted) (quoting 13 C.F.R.
§ 125.2(e)(6)). Defendant cites to K-Lak Corp. v. United States, 98 Fed. Cl. at 6, and
asserts in a parenthetical that, “because the agency chose to use the FSS after the
incumbent’s contract expired, it was not required to comply with Rule of Two or any of the
other regulations applicable to small businesses.” According to defendant, 13 C.F.R. §
125.2(c) is “inapplicable” to the CBP’s procurement and “irrelevant” to ARC’s protest, as
13 C.F.R. § 125.2(c) “only applies to acquisitions at the Multiple Award Contract level”
and not “to Part 8.4 task orders.”
In K-Lak Corp. v. United States, the United States Court of Federal Claims
reviewed a protestor’s challenge to an agency’s decision to “procure credit reports using
the Federal Supply Schedule (‘FSS’) rather than continue its procurement pursuant to the
requirement it had set aside for small businesses in 2007.” See K-Lak Corp. v. United
States, 98 Fed. Cl. at 1. The court in K-Lak Corp. stated that the protestor had “not cited
and the court has not found any statutory or regulatory support for the plaintiff’s underlying
contention that, where the required goods or services are available from the FSS, the
FAR or SBA rules mandate that an agency continue to procure the goods or services as
a small business set-aide.” Id. at 6. The court in K-Lak Corp. explained that the “language
in FAR 8.404(a), FAR 38.101(e), and FAR 19.502-1(b), quoted above, makes it plain that
the small business set aside rules relied upon by the plaintiff do not apply to purchases
under the FSS.” Id. According to the court in K-Lak Corp. v. United States, “because the
Air Force decided to use the FSS after K-LAK’s [the protestor’s] contract expired, the Air
50
Force was not required to comply with the Rule of Two or any of the other regulations
applicable to small businesses that the plaintiff relies upon in its complaint and
subsequent briefing.” Id. The court in K-Lak Corp. v. United States, however, did not
specifically address or cite the SBA regulation cited by ARC, 13 C.F.R. § 125.2, but
indicated that the “Rule of Two” is inapplicable to procurements under the FSS, which is
consistent with this court’s conclusion that, when issuing an order under the FSS, an
agency is not required to set aside a procurement for small businesses even when there
is a reasonable expectation that at least two small businesses will submit offers and that
award will be made at a fair market price, as discussed above. Furthermore, the SBA
regulation cited by ARC, 13 C.F.R. § 125.2, has been updated multiple times since the
court in K-Lak Corp v. United States issued its opinion on March 3, 2011, and the
requirements cited by ARC were not in the version of 13 C.F.R. § 125.2 in effect on March
3, 2011.19
The regulations cited by ARC stem from the Small Business Jobs Act of 2010,
Pub. L. No. 111-240, 124 Stat. 2504 (the Jobs Act), which was signed into law on
September 27, 2010. Section 1331 of the Jobs Act, titled “RESERVATION OF PRIME
CONTRACT AWARDS FOR SMALL BUSINESSES,” amended the statute at 15 U.S.C.
§ 644 “by adding at the end” the following language:
(r) MULTIPLE AWARD CONTRACTS.--Not later than 1 year after the date
of enactment of this subsection, the Administrator for Federal Procurement
Policy and the Administrator [of the SBA], in consultation with the
Administrator of General Services, shall, by regulation, establish guidance
under which Federal agencies may, at their discretion--
(1) set aside part or parts of a multiple award contract for small business
concerns, including the subcategories of small business concerns
identified in subsection (g)(2);
(2) notwithstanding the fair opportunity requirements under section
2304c(b) of title 10, United States Code, and section 303J(b) of the
Federal Property and Administrative Services Act of 1949 (41 U.S.C.
253j(b)), set aside orders placed against multiple award contracts for
small business concerns, including the subcategories of small business
concerns identified in subsection (g)(2); and
(3) reserve 1 or more contract awards for small business concerns under
full and open multiple award procurements, including the subcategories
of small business concerns identified in subsection (g)(2).
19 As discussed below, the requirements cited by ARC were implemented and
incorporated into 13 C.F.R. § 125.2 on October 2, 2013, with an effective date of
December 31, 2013. See Acquisition Process: Task and Delivery Order Contracts,
Bundling, Consolidation, 78 Fed. Reg. 61,114 (Oct. 2, 2013).
51
(capitalization in original).
On November 2, 2011, the Department of Defense (DoD), the GSA, and the
National Aeronautics and Space Administration (NASA) issued an interim rule amending
the FAR to implement Section 1331 of the Jobs Act. See Federal Acquisition Regulation;
Set-Asides for Small Business, 76 Fed. Reg. 68,032, 68,032 (Nov. 2, 2011). The interim
rule noted that the SBA and the Office of Federal Procurement Policy have requested
“that DoD, GSA, and NASA publish this interim rule in order to provide agencies with
guidance that they can use in taking advantage of this important tool, while SBA
completes the drafting and coordination of a proposed rule that will set forth more specific
guidance.” Id. at 68,033. The interim rule stated that it amended:
• FAR subpart 8.4 to make clear that order set-asides may be used in
connection with the placement of orders and blanket purchase
agreements under Federal Supply Schedules;
• FAR subpart 12.2 to acknowledge that discretionary set-asides may be
used if placing an order under a multiple-award contract;
• FAR subpart 16.5 to acknowledge that set-asides may be used in
connection with the placement of orders under multiple-award contracts,
notwithstanding the requirement to provide each contract holder a fair
opportunity to be considered;
• FAR part 19 to add a new section authorizing agencies to (1) use set-
asides under multiple-award contracts— including set-asides for small
businesses participating in the small business programs identified in FAR
19.000(a)(3); and (2) reserve one or more contract awards under multiple-
award contracts for small businesses, including any of the socio-economic
groups; and
• FAR subpart 38.1 to add a reference to FAR 8.405–5 to make clear that
order set-asides may be used in connection with the placement of orders
and blanket purchase agreements under Federal Supply Schedules.
Id.
On May 16, 2012, the SBA published a proposed rule to amend the SBA’s
regulations in order to implement Section 1331 of the Jobs Act. See Acquisition Process:
Task Order and Delivery Order Contracts, Bundling, Consolidation, 77 Fed. Reg. 29,130,
29,130 (proposed May 16, 2012). In the SBA’s proposed rule, the SBA stated:
[T]he SBA has proposed to define the term multiple award contract to mean:
(1) A multiple award schedule contract issued by the GSA (e.g., GSA
Federal Supply Schedule contract) or agencies granted Multiple Award
Schedule contract authority by GSA (e.g., Department of Veterans Affairs)
52
as described in FAR part 38 and subpart 8.4; (2) a multiple award task-order
or delivery-order contract issued in accordance with FAR subpart 16.5,
including Governmentwide acquisition contracts; and (3) any other IDIQ
contract entered into with two or more sources pursuant to the same
solicitation. SBA notes that although it is proposing to include a specific
reference to GSA Schedules as part of the definition of multiple award
contract, the proposed rule is not meant to infringe upon GSA’s authority for
the MAS Program pursuant to 41 U.S.C. 152(3).
See id. at 21,139. Under a heading labeled “Order set-asides,” the SBA stated, in full:
The proposed rule also lays out processes, at [13 C.F.R.] § 125.2(e)(6), that
permit agencies, when awarding multiple award contracts pursuant to full
and open competition without either partial set-asides or reserves, to make
commitments to set aside orders, or preserve the right to consider set-
asides, when the rule of two is met. The contracting officer would state in
the solicitation and resulting contract what process would be used—e.g.,
automatic application of set-asides or preservation of right to consider set-
asides. These alternatives maximize agencies’ flexibility in exercising their
discretion to determine when and how best to use set-asides under multiple
award contracts.
Finally, the proposed rule states at [13 C.F.R.] § 125.1(k) that the term
‘‘multiple award contract’’ includes MAS contracts issued by GSA—or
agencies to which GSA has delegated authority. This clarification is
consistent with the interim FAR rule which, as explained above, states (at
FAR 8.405–5(a)) that order set-asides may be used in connection with the
placement of orders and BPAs under MAS contracts. The MAS Program
provides an important contracting gateway to help agencies reach small
businesses. It is the largest acquisition program in the Federal Government
built on MACs; nearly $40 billion in sales went through the MAS contracts
managed by GSA in FY 2011. As a general matter, SBA anticipates that
Schedule orders would be conducted using a modified version of the
process set forth at [13 C.F.R. §] 125.2(e)(6). A contracting officer, at his or
her discretion, may set aside a Schedule order by including language in its
request for quote that the order is a set aside for small business and only
quotes submitted by a small business concern (or a specific category of
small businesses) will be accepted. GSA’s Federal Acquisition Service is
modifying its schedules to include all appropriate set-aside clauses and has
developed both written and webinar training for agency customers. For
additional information on using setasides [sic] on orders, agencies should
go to www.gsa.gov.
Id. at 29,131 (emphasis in original). Under a heading labeled “Documentation of
consideration given to section 1331 authorities,” the SBA stated:
53
Although these documentation requirements are spelled out in the
proposed rule, SBA does not view them as creating new burdens for agency
contracting officers. To the contrary, SBA believes these requirements
reinforce responsibilities which serve the purpose of increasing
opportunities for small businesses that already are in the FAR, such as FAR
19.501(c), which states, as a general matter, that ‘‘the contracting officer
shall perform market research and document why a small business set-
aside is inappropriate when an acquisition is not set aside for small
business.’’
Id. When discussing the proposed regulations at 13 C.F.R. § 125.2(b)-(c), regarding the
SBA’s responsibilities and the procuring agency’s responsibilities in acquisition planning,
the SBA does not appear to mention orders placed against the FSS, but, rather, discusses
a procuring agency’s responsibilities when issuing the solicitation underlying a multiple
award contract. See id. at 29,141-42. When discussing the proposed rule at 13 C.F.R.
§ 125.2(e), the SBA discusses requirements applicable to a “multiple award contract,” as
well as to “set-aside orders issued against a multiple award contract.” See id. at 29,142.
Regarding the SBA’s Procurement Center Representatives, the SBA stated that the
“SBA’s procurement center representatives (PCRs) may review acquisitions involving the
award of multiple award contracts or orders issued against such contracts that are not
set-aside for small businesses or where no awards have been reserved for small
businesses.” Id. at 29,132.
On October 2, 2013, the SBA issued its final rule amending the “SBA’s regulations
to establish policies and procedures for setting aside, partially setting aside and reserving
Multiple Award Contracts for small business concerns” and for “establishing policies and
procedures for setting aside task and delivery orders for small business concerns under
Multiple Award Contracts.” See 78 Fed. Reg. at 61,114. In issuing the final rule, the SBA
stated:
Of particular note, the final rule, like the proposed rule, preserves the
discretion that section 1331 vests in agencies to decide whether or not to
use any of the enumerated set-aside and reserve tools. There is nothing in
the rule that compels an agency to award a multiple award contract with a
partial set-aside, contract reserve, or contract clause that commits (or
preserves the right) to set aside orders when the “rule of two” is met. The
rule only requires that agencies consider these tools before awarding the
multiple award contract and, if they choose not to use any of them,
document the rationale. Agencies have the discretion to forego using the
section 1331 tools even if the requirements could be met; they simply need
to explain how their planned action is consistent with the best interests of
the agency and the agency’s overarching responsibility to provide maximum
practicable opportunities for small businesses . . . .
54
In sum, this final rule will provide adequate tools and assurances that
agencies will maximize small business participation on multiple award
contracts without compromising the greater flexibility and leverage agencies
have in conducting procurements through multiple award contracts.
Id. at 61,116. In a section titled “GSA Multiple Award Schedule Program,” the SBA stated
that the “SBA believes that contracting officers must give appropriate consideration to the
utilization of small businesses during acquisition planning” and that “[a]gencies realize
they are able to use the GSA MAS program for strategic sourcing purposes while at the
same time setting aside orders for small business to maximize participation of small
businesses in Federal contracting.” See id. at 61,125. The SBA also stated that the “SBA
has clarified in the final rule that PCRs will only review multiple award contracts where
the agency has not set-aside all or part of the acquisition or reserved the acquisition for
small businesses.” Id. The SBA, again, discussed the pre-existing requirement to conduct
market research concerning potential small business participation at FAR § 19.501(c) and
stated:
The majority of respondents believe, and SBA agrees, that the contracting
officer should be required to document the decision to not use one of the
authorities and that this is not a burden on contracting officers since they
are always required to consider the use of small businesses during
acquisition planning. In addition, we believe that the rule needs to
specifically address this fact in order to avoid any confusion on this issue.
Id. at 61,124-25.
The SBA regulation at 13 C.F.R. § 125.2 states that “these regulations apply to all
types of Federal Government contracts, including Multiple Award Contracts, and
contracts for architectural and engineering services, research, development, test and
evaluation.” 13 C.F.R. § 125.2(a); see also Edmond Sci. Co., B-410179 et al., 2014 WL
6199127, at *5 (Comp. Gen. Nov. 12, 2014) (“Subsection 125.2(a) states that the
regulations apply to multiple award contracts.”). The regulation at 13 C.F.R. § 125.1 states
that the term “Multiple Award Contract” includes a “Multiple Award Schedule contract
issued by GSA (e.g., GSA Schedule Contract) or agencies granted Multiple Award
Schedule contract authority by GSA (e.g., Department of Veterans Affairs) as described
in FAR part 38 and subpart 8.4.” The definition of “Multiple Award Contract” provided in
13 C.F.R. § 125.1 does not identify an order issued against an existing “Multiple Award
Contract,” such as the FSS. See 13 C.F.R. § 125.1 (2018). The SBA regulation at 13
C.F.R. § 125.1 defines contract as follows:
Contract, unless otherwise noted, has the same definition as set forth in
FAR 2.101 (48 U.S.C. 2.101) and includes orders issued against Multiple
Award Contracts and orders competed under agreements where the
execution of the order is the contract (e.g., a Blanket Purchase Agreement
(BPA), a Basic Agreement (BA), or a Basic Ordering Agreement (BOA)).
55
The SBA definition immediately above appears inconsistent with the history of 13
C.F.R. § 125.2, which does not indicate that the SBA intended for the regulation at 13
C.F.R. § 125.2(c) to apply to orders placed against the FSS. The SBA stated when issuing
its final rule that the final rule “only requires that agencies consider these tools [in Section
1331 of the Jobs Act] before awarding the multiple award contract and, if they choose not
to use any of them, document the rationale,” which indicates that the SBA intended to
promulgate requirements applicable to solicitations at the multiple award contract level,
but not at the order level. See 78 Fed. Reg. at 61,116. In issuing the proposed rule, the
SBA stated that the “Schedule orders would be conducted using a modified version of the
process set forth at [13 C.F.R. §] 125.2(e)(6),” which, in the current version of 13 C.F.R.
§ 125.2(e)(6), is titled “Set-aside of orders against Full and Open Multiple Award
Contracts.” See 13 C.F.R. § 125.2(e)(6). Under 13 C.F.R. § 125.2(e), titled “Multiple
Award Contract,” “[t]he procuring agency contracting officer must document the contract
file and explain why the procuring agency did not partially set-aside or reserve a Multiple
Award Contract, or set-aside orders issued against a Multiple Award Contract, when
these authorities could have been used,” which is consistent with the SBA’s statement
that its final rule “only requires that agencies consider these tools [in Section 1331 of the
Jobs Act] before awarding the multiple award contract and, if they choose not to use any
of them, document the rationale.” See 13 C.F.R. § 125.2(e)(1)(iii). Under 13 C.F.R. §
125.2(e)(2), titled “Total Set-aside of Multiple Award Contracts,” the contracting officer
also “must conduct market research to determine whether the ‘rule of two’ can be met. If
the ‘rule of two’ can be met, the contracting officer must follow the procedures for a set-
aside set forth in paragraph (f) of this section.” See 13 C.F.R. § 125.2(e)(2)(i). Under 13
C.F.R. § 125.2(e)(6), titled “Set-aside of orders against Full and Open Multiple Award
Contracts,” the subsection which the SBA indicated to be the section relevant to setting
aside schedule orders, there is no requirement that an agency conduct market research
regarding the extent of potential small business participation prior to setting aside a
schedule order. Rather, 13 C.F.R. § 125.2(e)(6)(i) states that “the contracting officer has
the authority to set-aside orders against Multiple Award Contracts that were competed on
a full and open basis.” See 13 C.F.R. § 125.2(e)(6)(i).
Moreover, interpreting the requirements in 13 C.F.R. § 125.2(c) to apply to orders
placed under the FSS would be inconsistent with the FAR. In both the proposed rule and
final rule, the SBA stated that the requirement to conduct market research concerning
potential small business participation, which is reflected in the current version of 13 C.F.R.
§ 125.2(c)(2), was not a new requirement because FAR § 19.501(c) already required
contracting officers to conduct market research concerning small businesses. The
requirement cited by ARC at 13 C.F.R. § 125.2(c)(3)(iv) is substantially similar to the
regulation at FAR § 19.202-1(e)(1) (2018), as both regulations require that a written
statement be sent to an SBA Procurement Center Representative when a small business
is currently performing a requirement for goods or services and the magnitude of the
quantity or estimated dollar value of a proposed acquisition strategy involving those goods
or services renders small business participation unlikely. As discussed above, however,
FAR § 8.404(a) explicitly states that the requirements in FAR Part 19 do not apply to
orders placed under the FSS. See FAR § 8.404(a). According to FAR § 38.101:
56
When establishing Federal Supply Schedules, GSA, or an agency
delegated that authority, is responsible for complying with all applicable
statutory and regulatory requirements (e.g., Parts 5, 6, and 19). The
requirements of parts 5, 6, and 19 apply at the acquisition planning stage
prior to issuing the schedule solicitation and, generally, do not apply to
orders and BPAs placed under resulting schedule contracts except see
8.404 and 8.405-5.
See FAR § 38.101(e). Moreover, as discussed above, FAR Part 10 only states that market
research “should include” consideration of the “[s]ize and status of potential sources.” See
FAR § 10.002(b). Notwithstanding the apparent inconsistency between the language in
13 C.F.R. §§ 125.1 and 125.2 and the history of 13 C.F.R. § 125.2, as discussed below,
ARC’s protest still fails.
Regarding the requirement at 13 C.F.R. § 125.2(c)(2) that an agency must conduct
market research to determine the type and extent of foreseeable small business
participation in an acquisition, in the above-captioned bid protest, the parties have
stipulated that the December 5, 2017 spreadsheet and December 13, 2017 spreadsheet
indicated whether a vendor was certified as a small business under certain NAICS Codes
applicable to the SINs included in the 2018 RFQ. As the parties have stipulated, the
December 13, 2017 spreadsheet identified:
SIN 653-1: NAICS Codes 531210 and 531190, with two businesses listed
as small business certified: Choice Relocation Management and Sibcy
Cline Relocation Services
SIN 653-4: NAICS Codes 531390, 531210 and 541511, with two
businesses listed as small business certified: Choice Relocation
Management and Sibcy Cline Relocation Services
SIN 653-5: NAICS Codes 531210 and 531190, with two businesses listed
as small business certified: Choice Relocation Management and Sibcy
Cline Relocation Services
SIN 653-7: NAICS Code 484210, with nine business listed as small
business certified: American Relocation Connections, Choice Relocation
Management, Reliance Relocation Services, Sibcy Cline Relocation
Services, TRF Global Mobility, Life International Companies, Move
Management Center, Relocation Management Worldwide, and Weleski
Transfer.
The CBP had discretion to determine the extent of market research that must be
conducted regarding a procurement under FAR Part 8. The information in the record
before the court indicates that the CBP conducted sufficient market research to determine
the type and extent of any potential small business participation under the SINs relevant
57
to the 2018 RFQ by obtaining research regarding the small business certifications of
vendors under NAICS Codes associated with SINS 653-1, 653-4, 653-5, and 653-7 on
Schedule 48 of the FSS from Ms. Spangler, GSA’s “CO who oversees the relocation
contracts” and “manages these contracts.” See FAR § 10.002(b)(2)(i) (stating that market
research may include “[c]ontacting knowledgeable individuals in Government and
industry regarding market capabilities to meet requirements”). As indicated in Ms.
Shaffer’s December 5, 2017 email to CBP contracting personnel, Ms. Spangler “put
together information that includes small business as it relates to these contracts and can
provide this to you directly,” which was provided to CBP in the December 5, 2017
spreadsheet and December 13, 2017 spreadsheet. The CBP’s rationale for issuing the
2018 RFQ as an unrestricted procurement also is documented in the undated First Market
Research Report, which states:
Further, based on information obtained through the GSA Contracting Officer
in charge of Relocation Program, there was a not reasonable expectation
that CBP would receive three small business proposals needed for
maximum competition. Specifically, a number of small business [sic] were
exiting the GSA Relocation program. The requirement is such the contractor
would have to provide services across 4 SINs relevant to the acquisition,
and the market research done did not show sufficient small businesses
required to obtain at [sic] 2 to 3 proposals[.]
As noted by ARC, however, the December 5, 2017 spreadsheet and December
13, 2017 spreadsheet did not list all of the applicable NAICS Codes under SINs 653-1,
653-4, 653-5, and 653-7. According to ARC, “reliance on these documents cannot be
considered reasonable as they failed to reveal all relevant information regarding Schedule
48 and the relevant SINS.” The December 13, 2017 spreadsheet, which was updated by
GSA with additional NAICS Codes not included in the December 5, 2017 spreadsheet,
omitted NAICS Code 484210 as an applicable NAICS Code under SIN 653-1, 653-4, and
653-5, as well as NAICS Code 541511 as an applicable NAICS Code under SINs 653-1
and 653-5. The December 13, 2017 spreadsheet, however, listed NAICS Code 484210
as a NAICS Code under SIN 653-7 and NAICS Code 541511 as a NAICS Code under
SIN 653-4. All of the potential NAICS Codes that could have been used for the 2018 RFQ,
which were the NAICS Codes 484210, 531190, 531210, 531210, and 541511, therefore,
were included in the December 13, 2017 spreadsheet and were before the CBP when it
determined that the applicable NAICS Code for the 2018 RFQ was NAICS Code 531210.
According to the SBA’s regulations:
The contracting officer must assign a single NAICS code for each order
issued against a Multiple Award Contract. When placing an order under a
Multiple Award Contract with multiple NAICS codes, the contracting officer
must assign the NAICS code and corresponding size standard that best
describes the principle purpose of each order. In cases like the GSA
Schedule, where an agency can issue an order against multiple SINs with
different NAICS codes, the contracting officer must select the single NAICS
code that best represents the acquisition.
58
13 C.F.R. § 121.402(c) (2018). Based on the NAICS Codes included in the December 5,
2017 and December 13, 2017 spreadsheets, CBP was aware that it could select from
NAICS Codes 484210, 531190, 531210, 531210, or 541511 as the applicable NAICS
Code for the 2018 RFQ. The undated first Market Research Report indicates that CBP
determined that the NAICS Code applicable to the 2018 RFQ was NAICS Code 531210
because of “the higher estimated value of work to be performed under the NAICS relative
to the other NAICS being utilized for this acquisition.”
ARC also asks:
[I]f the Acquisition Plan for the 2017 RFQ was the acquisition plan for the
2018 RFQ as the Cross Motion suggests, how does the Government
rationalize the Acquisition Plan’s findings that “small business vendors from
GSA Multiple Award Schedule (MAS) holders will be utilized for this
acquisition” and that the proper NAICS Code was 484210 – Household
Goods Moving, with its decisions to release the 2018 RFQ as unrestricted
and to change the NAICS Code?
The administrative record indicates that the CBP performed sufficient acquisition planning
and market research and considered the information obtained prior to selecting NAICS
Code 531210 as the proper NAICS Code applicable to the 2018 RFQ and releasing the
2018 RFQ as an unrestricted procurement.
Moreover, to the extent ARC is challenging the merits of the CBP’s decision to
select NAICS Code 531210, rather than NAICS Code 484210, as the NAICS Code
applicable to the 2018 RFQ, the regulation at 13 C.F.R. § 121.1103(b)(1) (2018) requires
that an “appeal from a contracting officer’s NAICS code or size standard designation must
be served and filed within 10 calendar days after the issuance of the solicitation or
amendment affecting the NAICS code or size standard” to the SBA’s Office of Hearings
and Appeals, which ARC did not do prior to filing its complaint in this court. See 13 C.F.R.
§ 121.1103(b)(1); see also 13 C.F.R. § 121.402(d) (2018) (“The NAICS code assigned to
a procurement and its corresponding size standard is final unless timely appealed to
SBA’s Office of Hearings and Appeals . . . .”). An appeal to the SBA’s Office of Hearings
and Appeals “is an administrative remedy that must be exhausted before judicial review
of a NAICS code designation may be sought in a court.” 13 C.F.R. § 121.1102 (2018).
Therefore, ARC’s failure to appeal the CBP’s determination that NAICS Code 531210
applied to the 2018 RFQ prevents this court from reviewing the merits of the CBP’s
assignment of NAICS Code 531210 to the 2018 RFQ.20 See Palladian Partners, Inc. v.
20 ARC argues that the undated First Market Research Report, which was initially
produced as part of the agency record in ARC’s bid protest at the GAO, does “not
constitute market research” because it “appears” that the undated First Market Research
59
United States, 783 F.3d 1243, 1255 (Fed. Cir. 2015) (“[I]f no party had appealed the
contracting officer’s NAICS code selection to OHA [Office of Hearings and Appeals], it
would not have been reviewable in court.”); see also Lawrence Battelle, Inc. v. United
States, 117 Fed. Cl. 579, 588 (2014) (“Because LBI failed to appeal the NAICS code or
size standard to SBA within the time allotted, it may not seek review of the NAICS code
or size determination in this proceeding.”).
Regarding ARC’s challenge to the CBP’s release of the 2018 RFQ as an
unrestricted procurement, as discussed above, under the NAICS Code applicable to the
2018 RFQ, NAICS Code 531210, the December 13, 2017 spreadsheet and that Sibcy
Cline Relocation Services informed the GSA that Sibcy Cline Relocation would not be
renewing its contract that was set to expire in March 2018 indicate that the only business
certified as a small business under NAICS Code 531210 appeared to be Choice
Relocation Services.21 The CBP, therefore, rationally exercised its discretion when
deciding to not set aside the 2018 RFQ for small businesses and to issue the 2018 RFQ
Report was “created to provide some support to the Agency’s otherwise wholly
unsupported defenses to the subject Protest” and does not provide “reliable evidence to
prove that the Agency performed the requisite market research prior to issuing the RFQ”
on January 19, 2018. (emphasis in original). In the July 17, 2018 declaration signed by
Mr. Ohene, Mr. Ohene indicates that the undated First Market Research Report was
created in December 2017, but contained several errors, as discussed above. The
portions of the undated First Market Research Report quoted by the court earlier in the
opinion regarding the applicable NAICS Code for the 2018 RFQ were not impacted by
the errors identified by Mr. Ohene. Additionally, in his November 28, 2017 email message
to Ms. Reeves, Mr. Ohene states that “I will work on” a “Market Research” document,
which indicates that Mr. Ohene intended to work on a document relating to market
research in connection with CBP’s upcoming procurement of employee relocation
services. Although the First Market Research Report is undated, the court is not
persuaded by plaintiff’s speculative and unsupported argument that the First Market
Research Report was created after the 2018 RFQ was issued on January 19, 2018.
Moreover, the pertinent portions of the First Market Research Report summarizes the
market research information from the December 5, 2017 spreadsheet and December 13,
2017 spreadsheet, which were obtained from the GSA prior to the issuance of the 2018
RFQ on January 19, 2018. The First Market Research Report does contain information
pertaining to the CBP’s rationale for selecting NAICS Code 531210 as the applicable
NAICS Code for the 2018 RFQ, which is not contained in the December 5, 2017
spreadsheet and December 13, 2017 spreadsheet. Regardless, the merits of whether
CBP chose the proper NAICS Code for the 2018 RFQ is beyond the scope of this court’s
review because ARC failed to appeal the CBP’s determination to the SBA.
21 The court notes that, after the 2018 RFQ was issued on January 19, 2018 and after
ARC filed its bid protest regarding the 2018 RFQ at the GAO on February 12, 2018, ARC
did update its small business certification to indicate that ARC, in fact, was a small
business under NAICS Code 531210.
60
as an unrestricted procurement. See FAR § 8.405-5 (stating that an agency may, at their
discretion, set aside a blanket purchase agreement issued under the FSS).
As to ARC’s assertion that the CBP violated 13 C.F.R. § 125.2(c)(3), which
requires that an agency provide to the SBA a written statement “if the description of the
requirement includes goods or services currently being performed by a small business
and the magnitude of the quantity or estimated dollar value of the proposed procurement
would render small business prime contract participation unlikely,” the administrative
record does not indicate that the CBP issued the 2018 RFQ as an unrestricted
procurement because “the magnitude of the quantity or estimated dollar value” rendered
small business participation unlikely. Rather, the administrative record indicates that the
2018 RFQ was issued as an unrestricted procurement because CBP determined NAICS
Code 531210 to be the applicable NAICS Code for the 2018 RFQ, under which there was
only one certified small business at the time the 2018 RFQ was issued. Thus, CBP
arguably did not violate the SBA regulation at 13 C.F.R. § 125.2(c)(3) by failing to provide
to the SBA a written statement.22
Finally, ARC argues that the CBP violated 13 C.F.R. § 125.2(c)(2), which states
that an agency must consult with an SBA Procurement Center Representative and the
agency’s Small Business Specialist during the market research phase, and HSAM
§ 3019.501(c), which requires that proposed acquisitions exceeding the simplified
acquisition threshold be reviewed by a Small Business Specialist. The parties have
stipulated that CBP did not consult with the DHS Office of Small & Disadvantaged
Business Utilization prior to issuing the 2018 RFQ. Mr. Bell’s February 2, 2018 email
message to CBP contracting personnel, in which Mr. Bell asks “what factor(s) determined
an unrestricted acquisition strategy” for the 2018 RFQ, also indicates that CBP did not
consult with the DHS Office of Small & Disadvantaged Business Utilization when
conducting market research. The administrative record also does not indicate that CBP
completed a DHS Small Business Utilization Form earlier than February 7, 2018,
approximately two-and-a-half weeks after the 2018 RFQ was issued as an unrestricted
procurement.
In the February 7, 2018 DHS Small Business Review Form, CBP, however,
indicated that NAICS Code 531210 was the applicable NAICS Code for the 2018 RFQ
“given the higher estimated value of work to be performed under the NAICS,” and that,
based on market research, the procurement was being issued as an unrestricted
procurement because there was not a reasonable expectation that CBP “would receive
two to three small business proposals needed for maximum competition.” On February 9,
2018, a DHS Small Business Specialist concurred with CBP’s decision, and, on February
22Even if CBP should have provided a written statement to the SBA under 13 C.F.R.
§ 125.2(c)(3), CBP’s failure to do so would not have impacted CBP’s procurement
because there was only one small business under the NAICS Code applicable to the 2018
RFQ, NAICS Code 531210, and, given the dearth of certified small businesses under
NAICS Code 531210, it would not have been appropriate for CBP to set aside the 2018
RFQ for small business offerors.
61
12, 2018, a SBA Procurement Center Representative concurred with CBP’s decision to
issue the 2018 RFQ as an unrestricted procurement under the FSS. Although CBP did
not consult with the SBA representative or a Small Business Specialist prior to issuing the
2018 RFQ, ARC has not demonstrated that it was prejudiced by CBP’s failure to do so
because, regardless of whether CBP consulted with the SBA or a Small Business
Specialist during the market research phase, there appears to have been only one
certified small business under NAICS Code 531210 at the time the 2018 RFQ was issued,
and, consequently, there would not have been an expectation of receiving at least three
offers from small businesses. See FAR § 8.405-2(c)(3)(iii) (requiring that, when the value
of a proposed order under the FSS exceeds the simplified acquisition threshold and
requires a statement of work, the agency must provide the RFQ to as many contractors
as practicable “to reasonably ensure that quotes will be received from at least three
contractors that can fulfill the requirements”). Moreover, CBP had discretion to set aside
the 2018 RFQ for small business under FAR § 8.405-5(a), and the administrative record
indicates that CBP rationally exercised its discretion when issuing the 2018 RFQ as an
unrestricted procurement, which CBP issued to Schedule 48 vendors, including ARC.
CONCLUSION
ARC’s motion for judgment on the administrative record is DENIED. Defendant’s
cross-motion for judgment on administrative record is GRANTED. ARC’s request for a
preliminary and permanent injunction is DENIED.23 ARC’s complaint in the above-
captioned bid protest is DISMISSED. The Clerk of the Court shall enter JUDGMENT in
accordance with this opinion.
IT IS SO ORDERED.
s/Marian Blank Horn
MARIAN BLANK HORN
Judge
23As noted above, during the July 9, 2018 conference, ARC stated that it was no longer
seeking a temporary restraining order.
62