Case: 20-1336 Document: 50 Page: 1 Filed: 01/13/2021
NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
VETERAN SHREDDING, LLC,
Plaintiff-Appellant
v.
UNITED STATES,
Defendant-Appellee
______________________
2020-1336
______________________
Appeal from the United States Court of Federal Claims
in No. 1:19-cv-00945-MBH, Senior Judge Marian Blank
Horn.
______________________
Decided: January 13, 2021
______________________
TIMOTHY TURNER, Whitcomb, Selinsky, PC, Denver,
CO, for plaintiff-appellant. Also represented by JOSEPH
ANTHONY WHITCOMB.
IGOR HELMAN, Commercial Litigation Branch, Civil Di-
vision, United States Department of Justice, Washington,
DC, for defendant-appellee. Also represented by JEFFREY
B. CLARK, ROBERT EDWARD KIRSCHMAN, JR., DOUGLAS K.
MICKLE; NATICA CHAPMAN NEELY, Office of General
Case: 20-1336 Document: 50 Page: 2 Filed: 01/13/2021
2 VETERAN SHREDDING, LLC v. UNITED STATES
Counsel, United States Department of Veterans Affairs,
Portland, OR.
______________________
Before PROST, Chief Judge, MAYER and MOORE, Circuit
Judges.
PROST, Chief Judge.
Veteran Shredding, LLC appeals a judgment of the
Court of Federal Claims dismissing its bid protest. Vet-
eran Shredding contends that the Rule of Two, 38 U.S.C.
§ 8127(d), required the solicitation in question to have been
set aside for competition among service-disabled veteran–
owned small businesses (“SDVOSBs”).
The Rule of Two requires that competition be restricted
to SDVOSBs when a contracting officer reasonably expects
that two or more SDVOSBs will bid on the solicitation and
that an award can be made at a fair and reasonable price.
Because the contracting officer lacked such an expectation
here, no set-aside was required. We affirm.
I
Veteran Shredding is a firm whose services and owner-
ship status are apparent. It sought to shred documents for
the Minneapolis Veterans Affairs Healthcare System.
To seek shredding services, the Department of Veter-
ans Affairs (“VA”) had initially posted what is here called
the ’181 solicitation, 1 issuing it as an SDVOSB set-aside
under the Rule of Two. Veteran Shredding bid, but the con-
tracting officer found its bid unreasonably high. When no
reasonable SDVOSB bids came in, that solicitation was
canceled, and the nearly identical ’276 solicitation 2 was is-
sued—this one set aside for competition among all capable
1 No. 36C26318Q0181.
2 No. 36C26319Q0276.
Case: 20-1336 Document: 50 Page: 3 Filed: 01/13/2021
VETERAN SHREDDING, LLC v. UNITED STATES 3
small businesses, veteran-owned or not. See 48 C.F.R.
§§ 819.7005(c), 19.1405(b)–(c).
Veteran Shredding did not bid again. Instead it sued,
arguing that the ’276 solicitation should have been set
aside for SDVOSBs alone. Veteran Shredding and the gov-
ernment cross-moved for judgment on the administrative
record. The Court of Federal Claims granted judgment in
the government’s favor, dismissing Veteran Shredding’s
complaint. Veteran Shredding, LLC v. United States,
146 Fed. Cl. 543, 581 (2019) (“Veteran Shredding II”). Vet-
eran Shredding appealed.
We have jurisdiction under 28 U.S.C. § 1295(a)(3).
II
A
We review the legal determinations of the Court of Fed-
eral Claims de novo and any underlying factual findings for
clear error. Palladian Partners, Inc. v. United States,
783 F.3d 1243, 1252 (Fed. Cir. 2015). In a bid protest, we
follow Administrative Procedure Act § 706 and set aside
agency action “if it is arbitrary, capricious, an abuse of dis-
cretion, or otherwise not in accordance with law.” Id. (quot-
ing Savantage Fin. Servs. v. United States, 595 F.3d 1282,
1285 (Fed. Cir. 2010)). A procurement decision fails under
§ 706 if “(1) the procurement official’s decision lacked a ra-
tional basis; or (2) the procurement procedure involved a
violation of regulation or procedure.” Id. (quoting Sa-
vantage Fin. Servs., 595 F.3d at 1285–86).
B
To the extent that Veteran Shredding appears to chal-
lenge the cancellation of the prior ’181 solicitation, it is pre-
cluded from doing so.
Veteran Shredding has already challenged that cancel-
lation at the Court of Federal Claims. It lost there for lack
of standing and chose not to appeal. Veteran Shredding,
Case: 20-1336 Document: 50 Page: 4 Filed: 01/13/2021
4 VETERAN SHREDDING, LLC v. UNITED STATES
LLC v. United States, 140 Fed. Cl. 759, 760 (2018) (“Vet-
eran Shredding I”). It cannot collaterally attack that judg-
ment now. The government argues as much, and Veteran
Shredding provides no response. We agree with the gov-
ernment.
But even to the extent that Veteran Shredding’s argu-
ments about the ’181 solicitation’s cancellation inform its
challenge to the later ’276 solicitation, we see no “lack[] [of]
a rational basis” or “violation of regulation or procedure” in
the cancellation decision. Veterans Contracting Grp., Inc.
v. United States, 920 F.3d 801, 806 (Fed. Cir. 2019). In-
deed, all the bids vastly exceeded the cost estimate and
funding for the contract, and the cost estimate and reason-
ableness analysis were not irrational or contrary to law.
See Veteran Shredding II, 146 Fed. Cl. at 577–78, 580–81.
We have noted, as the Court of Federal Claims has, that
excessively high bids provide a “compelling reason” to can-
cel a solicitation initially set aside under the Rule of Two.
E.g., Veterans Contracting Grp., 920 F.3d at 806–07; see
also 48 C.F.R. § 14.404-1(c)(6); Land Shark Shredding,
LLC v. United States, No. 20-1231, slip op. at 7 (Fed. Cir.
Jan. 11, 2021); Veteran Shredding II, 146 Fed. Cl.
at 580–81. Accordingly, we are unconvinced that the
’181 solicitation’s cancellation violated the Rule of Two,
lacked a rational basis, or violated a law or procedure.
C
The only issue remaining is whether the ’276 solicita-
tion should have been set aside for SDVOSBs under the
Rule of Two. The Court of Federal Claims concluded that
it should not, and we agree.
The Rule of Two requires (with exceptions not relevant
here) that competition be restricted to SDVOSBs when a
contracting officer for the VA reasonably expects two
things: (1) that two or more SDVOSBs will submit bids and
(2) that an award can be made at a fair and reasonable
price. 38 U.S.C. § 8127(d); Kingdomware Techs., Inc. v.
Case: 20-1336 Document: 50 Page: 5 Filed: 01/13/2021
VETERAN SHREDDING, LLC v. UNITED STATES 5
United States, 136 S. Ct. 1969, 1973–94 (2016). Accord-
ingly, the VA must conduct a Rule of Two analysis before
issuing a solicitation, but only if the Rule is triggered by
the twin expectations must it restrict competition accord-
ingly.
Here, the VA engaged in the required Rule of Two anal-
ysis. It did not simply reissue the solicitation without
again looking into the appropriateness of a set-aside. Ra-
ther, it conducted multiple rounds of market research. See,
e.g., Veteran Shredding II, 146 Fed. Cl. at 549–52, 578–79.
It reached out to various veteran-owned businesses, id.
at 550, but ultimately found that it expected that particu-
lar bids would be too high or that particular firms lacked
the required capabilities. It issued a sources-sought notice
to determine interest (only two SDVOSBs responded, and
each had submitted an unreasonably high bid in the ’181
solicitation). Id. at 550. It updated its cost estimate. Id.
at 550–51. It issued another sources-sought notice (again,
only two SDVOSBs responded). Id. at 551. In the end,
however, it concluded that there was a lack of capable
SDVOSBs that it expected would submit reasonable offers.
Id. at 551–52. The solicitation was set aside instead for
competition among all small businesses.
The Court of Federal Claims analyzed Veteran Shred-
ding’s arguments at length and found them unpersuasive
in light of the VA’s analysis on the record. See id.
at 567–81. In reviewing the VA’s cost estimate, market
analysis, and reasonableness assessments, we too cannot
say that any of it lacked a rational basis or violated a reg-
ulation or procedure. Nothing in § 8127(d), which simply
requires that competition be restricted if certain conditions
are met, rendered the VA’s determinations irrational or un-
lawful here. Because the twin expectations of the Rule of
Two were not met, there was no requirement to set aside
the ’276 solicitation for competition among veteran-owned
businesses.
Case: 20-1336 Document: 50 Page: 6 Filed: 01/13/2021
6 VETERAN SHREDDING, LLC v. UNITED STATES
III
We have considered Veteran Shredding’s remaining ar-
guments and find them unpersuasive. For the reasons dis-
cussed above, we affirm the Court of Federal Claims’
judgment dismissing Veteran Shredding’s complaint.
AFFIRMED
COSTS
No costs.