Axiom Resource Management, Inc. v. United States

United States Court of Appeals for the Federal Circuit
2008-5072, -5073

AXIOM RESOURCE MANAGEMENT, INC.,

Plaintiff-Appellee,

v.

UNITED STATES,

Defendant-Appellant,

and

LOCKHEED MARTIN FEDERAL HEALTHCARE, INC.,

Defendant-Appellant.

James S. DelSordo, Argus Legal, LLC, of Manassas, Virginia, argued for plaintiff-
appellee.

William G. Kanellis, Trial Attorney, Commercial Litigation Branch, Civil Division,
United States Department of Justice, of Washington, DC, argued for defendant-
appellant United States. With him on the brief were Jeanne E. Davidson, Director, and
Kirk Manhardt, Assistant Director. Of counsel was James A. Lewis, Lieutenant Colonel,
United States Army Judge Advocate General’s Corps, Department of the Army, of
Arlington, Virginia.

Marcia G. Madsen, Mayer Brown LLP, of Washington, DC, argued for defendant-
appellant Lockheed Martin Federal Healthcare, Inc. With her on the brief were Luke
Levasseur and Robert L. Bronston. Of counsel was Melissa L. Baker.

Appealed from: United States Court of Federal Claims

Judge Susan G. Braden
 United States Court of Appeals for the Federal Circuit
2008-5072, -5073

AXIOM RESOURCE MANAGEMENT, INC.,

Plaintiff-Appellee,

v.

UNITED STATES,

Defendant-Appellant,

and

LOCKHEED MARTIN FEDERAL HEALTHCARE, INC.,

Defendant-Appellant.

Appeals from the United States Court of Federal Claims in 07-CV-532, Judge Susan G.
Braden.

__________________________

DECIDED: May 4, 2009
__________________________

Before LINN and PROST, Circuit Judges, and ARTERTON, District Judge. ∗

PROST, Circuit Judge.

Lockheed Martin Federal Healthcare, Inc. (“Lockheed”) and the government

(collectively, “Appellants”) appeal the February 26, 2008 decision of the United States

Court of Federal Claims setting aside the United States Army’s award of a TRICARE

contract to Lockheed, effective July 21, 2008. For the reasons set forth below, we

reverse.

∗
Honorable Janet Bond Arterton, District Judge, United States District
Court for the District of Connecticut, sitting by designation.
 I. BACKGROUND

The United States Department of Defense offers a health care program called

TRICARE for active and retired members of the military and their families. This

program is managed by the TRICARE Management Activity (“TMA”). TMA hires

contractors to perform various services relating to TRICARE operations. TMA classifies

the services for which it hires contractors into two categories: (1) “purchased care”

requirements, which are requirements for actual health care services; and (2) “non-

purchased care” requirements, which are requirements for non-health care services

such as support services and infrastructure. The contract at issue in this case is for a

non-purchased care requirement.

Because TMA hires contractors to provide a wide variety of services, there are

concerns that in some circumstances contractors that are awarded multiple contracts

may be subject to organizational conflicts of interest (“OCIs”). Sections 9.500 et seq. of

the Federal Acquisition Regulation (“FAR”) provide rules and procedures for “identifying,

evaluating, and resolving organizational conflicts of interest.” 48 C.F.R. § 9.500(a).

Under 48 C.F.R. § 9.504(a), contracting officers (“COs”) are required to “analyze

planned acquisitions in order to (1) [i]dentify and evaluate potential organizational

conflicts of interest as early in the acquisition process as possible; and (2) [a]void,

neutralize, or mitigate significant potential conflicts before contract award.”

In order to assist COs and contractors in identifying OCIs, TMA classifies its non-

purchased care requirements into three categories:

Category 1: TMA Internal Support: Services which, by their very nature,
give the Contractor access to extensive data about the contracts of all
other TMA contractors.

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 Category 2: Program Management Support: Services which assist TMA in
planning and managing its activities and programs. This includes, for
example: requirements analysis, acquisition support, budget planning and
management, business process reengineering, program planning and
execution support, and independent technical management support.

Category 3: Product Support: Services or end items required to meet the
mission requirements of TMA’s non-purchased care activities and
programs. This includes, for example: concept exploration and
development; system design; system development and integration; COTS
procurement and integration; internal development testing; deployment;
installation; operations; and maintenance.

Axiom Res. Mgmt., Inc. v. United States, 78 Fed. Cl. 576, 579 (2007) (“Axiom I”). The

following explanation was included in the Request for Quotations (“RFQ”) issued for the

contract at issue in this case:

Contractor participation in more than one of these areas may give rise to
an unfair competitive advantage resulting from access to advance
acquisition planning, source selection sensitive or proprietary information.
Furthermore, contractor participation in more than one area may give rise
to a real or apparent loss of contractor impartiality and objectivity where its
advisory or planning assistance in one area potentially affects its present
or future participation in another area.

Id.

The contract at issue is for program management support for the TRICARE

Acquisitions Directorate and falls within Category 2. The RFQ was issued on July 30,

2006, and bids were submitted by Lockheed and Axiom Resource Management, Inc.

(“Axiom”), the incumbent contractor for the services, on August 14, 2006. After rating

each bid, the CO awarded the contract to Lockheed on September 19, 2006.

On September 25, 2006, Axiom filed its first bid protest with the Government

Accountability Office (“GAO”), alleging, inter alia, that the award to Lockheed was illegal

because of an unmitigated OCI. The GAO dismissed the protest on October 31, 2006,

after the CO notified the GAO that he would analyze the alleged OCI and issue a new

2008-5072, -5073 3
source selection decision. Approximately one month later, the CO completed his OCI

assessment, concluding that an unequal access to information conflict 1 would arise in

the future if Lockheed were to bid on requirements for purchased care services.

However, the CO also concluded that the mitigation plan Lockheed submitted along with

its bid was sufficient to protect the government against this potential future OCI.

Accordingly, the CO awarded the contract to Lockheed.

Upon learning of the renewed award, Axiom reasserted its allegation that

Lockheed’s OCI disqualified it from performing the contract in a second bid protest with

the GAO. In response, the CO again agreed to reevaluate the alleged OCI. After

another review, which included an extensive analysis by TMA, the CO again concluded

that an unequal access to information conflict might arise if Lockheed bid on purchased

care requirements in the future. However, the CO also concluded that this OCI and any

potential OCIs arising out of Lockheed’s work on Category 3 contracts were resolved by

Lockheed’s mitigation plan and a prohibition against Lockheed bidding on future

purchased care requirements. The CO again awarded the contract to Lockheed.

On April 3, 2007, Axiom filed a third bid protest based on the same alleged OCI.

On July 12, 2007, the GAO denied the protest, finding that the CO’s “extensive analysis”

and “comprehensive approach used to address[] any conflicts that may arise” were not

unreasonable. In re Axiom Res. Mgmt., Inc., No. B-298870.3, 2007 WL 2141694, at *6

(Comptroller General July 12, 2007).

1
“An ‘unequal access to information’ conflict occurs when a government
contractor has access to non-public information in connection with performance of a
government contract that may afford a competitive advantage in subsequent
competition for a government contract.” Axiom I, 78 Fed. Cl. at 593 n.16.

2008-5072, -5073 4
 On July 17, 2007, Axiom filed a complaint in the United States Court of Federal

Claims alleging, inter alia, that the government violated FAR § 9.500 et seq. and acted

arbitrarily and capriciously by awarding the contract to Lockheed. Axiom I, 78 Fed. Cl.

at 585. In its September 28, 2007 decision, the court determined that the CO

abused his discretion in violation of FAR § 9.5 by awarding the Task Order
to Lockheed Martin, without developing a mitigation plan that does not
afford Lockheed Martin any significant competitive advantages, is
enforceable, i.e., subject to court order, and otherwise does not impose
any anticompetitive effects on future competition.

Id. at 600. However, the court did not immediately enter a permanent injunction barring

Lockheed from performing the contract. Instead, the court asked for additional briefing

from the parties and stated that it would request advice from the Federal Trade

Commission Bureau of Competition on whether the public interest favored an injunction.

Id. at 601.

On February 26, 2008, the court issued its final decision. Axiom Res. Mgmt., Inc.

v. United States, 80 Fed. Cl. 530 (2008) (“Axiom II”). In its decision, the court noted that

the Federal Trade Commission declined the court’s invitation to comment. Id. at 531

n.8. Additionally, the court outlined its attempts to reach an agreement with the

government to have an independent auditor put in place to monitor the enforcement of

Lockheed’s mitigation plan. Id. at 532-35. Because the government would not accept

the proposed oversight, the court enjoined the government from exercising its option to

renew Lockheed’s contract on July 21, 2008. Id. at 539. Lockheed and the government

appealed. We have jurisdiction under 28 U.S.C. § 1295(a)(3).

II. DISCUSSION

Appellants allege that the Court of Federal Claims committed two principal errors.

2008-5072, -5073 5
First, they argue that the court violated established principles of administrative law by

permitting Axiom to supplement the record with affidavits created for litigation and then

extensively relying on those affidavits to support its decision. Second, they assert that

the court failed to properly review the record under the “arbitrary and capricious”

standard set forth in the Administrative Procedure Act (“APA”). We agree on both

grounds.

A. Supplementation of the Record

“Evidentiary determinations by the Court of Federal Claims, including motions to

supplement the administrative record, are reviewed for abuse of discretion.” Murakami

v. United States, 398 F.3d 1342, 1346 (Fed. Cir. 2005). A trial court’s determination of

an evidentiary matter constitutes an abuse of discretion if, for example, it is “clearly

unreasonable, arbitrary, or fanciful” or is “based on an erroneous construction of the

law.” Air Land Forwarders, Inc. v. United States, 172 F.3d 1338, 1341 (Fed. Cir.

1999). 2

Appellants argue that the Court of Federal Claims erred by permitting Axiom to

supplement the record with materials that were not before the agency, including legal

pleadings filed before the GAO, declarations of Axiom’s employees, and declarations

2
Appellants urge us to distinguish our decision in Banknote Corp. of
America, Inc. v. United States, 365 F.3d 1345, 1358 (Fed. Cir. 2004), as applying only
to decisions denying requests to supplement the record and not to decisions granting
requests to supplement. But even assuming for the sake of argument that neither
Murakami—which the parties overlook—nor Banknote is directly controlling here, we
need not adopt a variable standard of review. Appellants’ claim—that the Court of
Federal Claims relied on the wrong legal standard in permitting supplementation of the
administrative record—is exactly the kind of error that we said in Air Land Forwarders
would amount to an abuse of discretion. Consistent with our earlier opinions, we will
review the trial court’s decision to allow Axiom to supplement the record for abuse of
discretion.

2008-5072, -5073 6
from consultants retained for litigation. During a telephone conference with the trial

court, the government objected to Axiom’s request to add these documents to the

record. The government acknowledged during the conference that the law of the Court

of Federal Claims allows supplementation in at least some circumstances identified in

Esch v. Yeutter, 876 F.2d 976, 991 (D.C. Cir. 1989). The government asserted,

however, that Axiom had not provided any explanation as to why it would be proper to

add documents to the record in this case. The court responded:

Well, let me cut to the chase here. My practice . . . since I’ve been on the
Court is to allow everybody to put . . . whatever they want to put into the
record in trial and even in an administrative record to supplement.

My own view is that I don’t know what’s important or not until I finally get
around to looking at the record, which would be some time from now.

You know, I think that I have enough experience. Just because it’s in the
record doesn’t mean I’m going to rely on it for any reason. I may never
even bother to do anything with it, but I do think it’s better to get it in there.

If it goes up on appeal, that way the Appellate Court has a full record to
work with, and the parties have put in everything that they feel they need
to have to put forward their best argument. I do it on both sides.

I’m not going to change that practice in this case. I don’t see any
prejudice to the government because you don’t know what I’m going to do
one way or the other with any of the stuff. The same thing for the Plaintiff.
If they want to put it in, I’ll put it in.

J.A. 2034. When the government then requested to add its own supplementary

evidence to the record, the court urged government counsel not to “hold back,” saying:

“I let everybody put in what they want to . . . put in. The world will not come to an end.

Western civilization will not crumble based upon this value judgment.” J.A. 2035.

While we recognize the need for an adequate record during judicial review, the

parties’ ability to supplement the administrative record is limited. In Camp v. Pitts, the

2008-5072, -5073 7
Supreme Court stated that “the focal point for judicial review should be the

administrative record already in existence, not some new record made initially in the

reviewing court.” 411 U.S. 138, 142 (1973). “The task of the reviewing court is to apply

the appropriate APA standard of review, 5 U.S.C. § 706, to the agency decision based

on the record the agency presents to the reviewing court.” Fla. Power & Light Co. v.

Lorion, 470 U.S. 729, 743-44 (1985) (emphasis added). The purpose of limiting review

to the record actually before the agency is to guard against courts using new evidence

to “convert the ‘arbitrary and capricious’ standard into effectively de novo review.”

Murakami v. United States, 46 Fed. Cl. 731, 735 (2000), aff’d, 398 F.3d 1342 (Fed. Cir.

2005). Thus, supplementation of the record should be limited to cases in which “the

omission of extra-record evidence precludes effective judicial review.” Id.

We conclude that the trial court abused its discretion in this case by adding

Axiom’s documents to the record without evaluating whether the record before the

agency was sufficient to permit meaningful judicial review. The court made clear that it

would freely allow the parties to supplement the record “with whatever they want,” and,

by so doing, failed to make the required threshold determination of whether additional

evidence was necessary.

In its written decision finding that the government violated FAR § 9.5, the court

offered an additional explanation for its determination that supplementation was

warranted in this case:

Although the Federal Circuit has not ruled on whether, or the
circumstances under which, the Administrative Record may be
supplemented, the United States Court of Appeals for the D.C. Circuit has
allowed the Administrative Record to be supplemented in circumstances
similar to those presented in this bid protest. See Esch v. Yeutter, 876
F.2d 976, 991 (D.C. Cir. 1989) (“[T]he procedural validity of the

2008-5072, -5073 8
 Department’s action . . . remains in serious question. Particularly in this
context, it may sometimes be appropriate to resort to extra-record
information to enable judicial review to become effective.”).

Axiom I, 78 Fed. Cl. at 586 n.10. Relying on Esch in this fashion is problematic in at

least two respects. First, the eight exceptions to the rule against extra-record evidence

described in Esch originated in an article, predating Florida Power & Light, which

described itself as “a guide for lawyers challenging informal administrative action when

they are attempting to submit evidence not in the formal record as assembled by the

agency.” Steven Stark & Sarah Wald, Setting No Records: The Failed Attempts to Limit

the Record in Review of Administrative Action, 36 Admin. L. Rev. 333, 336 (1984).

Second, and more critically, Esch’s vitality even within the D.C. Circuit is

questionable in light of more recent opinions by that court which demonstrate a more

restrictive approach to extra-record evidence. See, e.g., IMS, P.C. v. Alvarez, 129 F.3d

618, 624 (D.C. Cir. 1997) (affirming the district court’s decision to strike affidavits not in

the agency record based on the appellant’s failure to show that “the agency failed to

examine all relevant factors or to adequately explain its grounds for decision, or that the

agency acted in bad faith or engaged in improper behavior”); Saratoga Dev. Corp. v.

United States, 21 F.3d 445, 457-58 (D.C. Cir. 1994) (explaining that additional

administrative discovery is permissible only if necessary “for effective judicial review” or

if the existing “record cannot be trusted”). 3 Thus, Esch not only is “heavily in tension”

with existing precedent, ARINC Eng’g Servs. LLC v. United States, 77 Fed. Cl. 196, 201

3
In an unpublished opinion, the D.C. Circuit repudiated Esch more directly,
noting that the eight exceptions listed were dicta and of limited “probative value.”
Peterson Farms I v. Espy, 15 F.3d 1160 (Table), 1994 WL 26331, at *3 (D.C. Cir. Jan.
25, 1994).

2008-5072, -5073 9
n.5 (2007), but some of its exceptions “are so broadly-worded as to risk being

incompatible with the limited nature of arbitrary and capricious review, particularly if

construed to allow the introduction of new evidence or theories not presented to the

deciding agency,” Murakami, 46 Fed. Cl. at 735 n.4. For these reasons, insofar as Esch

departs from fundamental principles of administrative law as articulated by the Supreme

Court in Pitts and Florida Power & Light, it is not the law of this circuit.

The focus of judicial review of agency action remains the administrative record,

which should be supplemented only if the existing record is insufficient to permit

meaningful review consistent with the APA. Faced with the request to supplement the

administrative record in this case, the Court of Federal Claims should have determined

whether supplementation of the record was necessary in order not “to frustrate effective

judicial review.” Pitts, 411 U.S. at 142-43. By admitting Axiom’s extra-record evidence

without making such determination, the court abused its discretion.

B. The Court of Federal Claims’ Review of the Record

Appellants argue that the Court of Federal Claims’ decision to enjoin Lockheed’s

performance of the contract resulted from the use of an incorrect standard of review on

an improperly supplemented record. Specifically, they allege that the court erred by

declining to use the APA’s “arbitrary and capricious” standard and instead undertaking

what was essentially a de novo review of the CO’s evaluation of the mitigation efforts.

They contend that the record before the CO sufficiently supports the CO’s decision

under a proper application of “arbitrary and capricious” review.

1. The Court of Federal Claims’ Standard of Review

Before the trial court, Appellants argued that the court’s task under the APA was

2008-5072, -5073 10
to determine whether the CO acted reasonably in awarding the contract to Lockheed.

The court, however, disagreed. In the court’s view, “reasonableness” is the proper

standard of review “when the court’s evaluation is made under the APA’s ‘arbitrary and

capricious’ prong, but [not] where the record contains substantial evidence that one or

more FAR provisions have been violated.” Axiom I, 78 Fed. Cl. at 599. Because the

court believed that the CO had violated FAR § 9.504, it defined its task as “determin[ing]

whether or not there may be [a] potential violation of law and, if so, is the mitigation

proposal an actual remedy.” Id.

We agree with Appellants that the court erred by failing to review the CO’s

decision under the “arbitrary and capricious” standard set forth in 5 U.S.C. § 706(2)(A).

In Impresa Construzioni Geom. Domenico Garufi v. United States, this court explained

that bid protest cases are reviewed under the standard set forth in the APA. 238 F.3d

1324, 1332 (Fed. Cir. 2001). Adopting the articulation of the test set forth in a line of

D.C. Circuit cases, we stated that “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.” Id. A court evaluating a challenge on

the first ground must determine “whether the contracting agency provided a coherent

and reasonable explanation of its exercise of discretion.” Id. at 1333 (quotation marks

omitted). “When a challenge is brought on the second ground, the disappointed bidder

must show a clear and prejudicial violation of applicable statutes or regulations.” Id.

(quotation marks omitted).

FAR § 9.504(a) provides that “contracting officers shall analyze planned

acquisitions in order to (1) [i]dentify and evaluate potential organizational conflicts of

2008-5072, -5073 11
interest as early in the acquisition process as possible; and (2) [a]void, neutralize, or

mitigate significant potential conflicts before contract award.” 48 C.F.R. § 9.504(a).

Section 9.504(e) further provides that “[t]he contracting officer shall award the contract

to the apparent successful offeror unless a conflict of interest is determined to exist that

cannot be avoided or mitigated.” Id. § 9.504(e). However, the FAR recognizes that the

identification of OCIs and the evaluation of mitigation proposals are fact-specific

inquiries that require the exercise of considerable discretion. See 48 C.F.R. § 9.505

(“Each individual contracting situation should be examined on the basis of its particular

facts and the nature of the proposed contract. The exercise of common sense, good

judgment, and sound discretion is required in both the decision on whether a significant

potential conflict exists and, if it does, the development of an appropriate means for

resolving it.”); see also ARINC, 77 Fed. Cl. at 202 (“The responsibility for determining

whether such unequal access exists and what steps should be taken in response

thereto rests squarely with the contracting officer.”).

In light of the discretion given to COs, we cannot agree with the Court of Federal

Claims that the CO in this case “violated” FAR § 9.504 in such a way as to warrant de

novo review of “whether or not there may be [a] potential violation of law” and, if so,

whether “the mitigation proposal [is] an actual remedy.” Axiom I, 78 Fed. Cl. at 599.

Under the trial court’s rationale, courts might never review a CO’s OCI determination

under the “arbitrary and capricious” standard because every instance in which the court

disagreed with the CO’s decision could be fashioned as a violation of FAR § 9.504 that

triggers de novo review. This result would be inconsistent with the discretion given to

the CO by FAR § 9.505 and the principles underlying the APA. Accordingly, we

2008-5072, -5073 12
conclude that the Court of Federal Claims erred in this case by failing to evaluate the

CO’s decision under the APA’s “arbitrary and capricious” standard.

2. The Court of Federal Claims’ Decision on the Merits

Appellants next argue that the Court of Federal Claims’ determination that

Lockheed’s mitigation plan did not adequately resolve the alleged OCI is contrary to the

record before the CO. The court decided

that the CO abused his discretion in violation of FAR § 9.5 by awarding
the Task Order to Lockheed Martin, without developing a mitigation plan
that does not afford Lockheed Martin any significant competitive
advantages, 4 is enforceable, i.e., subject to court order, and otherwise
does not impose any anticompetitive effects on future competition.

Id. at 600. Because the antitrust concerns were originally raised by the trial court and

are not relied upon by Axiom in this appeal, we will limit our review to the adequacy and

enforceability of the mitigation plan.

In its discussion of the adequacy of Lockheed’s mitigation plan, the Court of

Federal Claims relied heavily on two expert witness declarations that the court permitted

Axiom to add to the record. See Axiom I, 78 Fed. Cl. at 596-98. The first declaration,

that of Nancy Adams, a former Senior Advisor to the Director of TMA, expressed the

opinion that it would be impossible for Lockheed to prevent information relevant to its

Category 2 contracts from reaching its employees who were working on its Category 3

contracts. Id. at 596-97. Accordingly, Ms. Adams believed that Lockheed’s mitigation

4
It is unclear whether the court ultimately found that Lockheed’s mitigation
plan, if actually enforced, would be inadequate to mitigate the alleged unequal access to
information conflict. While this portion of Axiom I suggests that the court viewed the
mitigation plan as insufficient, the court stated in Axiom II that it did not “have any
problem with the mitigation efforts . . . other than they’re voluntary.” Axiom II, 80 Fed.
Cl. at 532. For the sake of completeness, we will address sufficiency of the mitigation
plan.

2008-5072, -5073 13
plan could not adequately resolve all OCIs. Id. In the second declaration, Ronald

Richards, who was formerly TMA’s Chief of the Central Operations Office, stated his

belief that the Category 2 work would provide Lockheed with information that could give

Lockheed an unfair competitive advantage when bidding for future purchased care and

Category 3 non-purchased care contracts. Id. at 597-98.

As discussed previously, supplementation of the administrative record is only

appropriate in limited circumstances. Because we have not been presented with any

persuasive explanation of why the record before the CO precluded effective judicial

review in this case, we do not find the court’s reliance on the Richards and Adams

declarations well placed. However, even if we were to give some weight to these

declarations, they do not end the inquiry. After all, a decision is not necessarily

unreasonable simply because the disappointed bidder is able to find two witnesses who

disagree with it.

Notwithstanding the contrary opinions of Axiom’s declarants, we conclude that

the CO’s decision to award the contract to Lockheed was not arbitrary or capricious.

Mindful of the confidential nature of Lockheed’s mitigation efforts, we note that the CO

and TMA reviewed the OCI Mitigation Plan and comparative analysis submitted by

Lockheed and determined that the processes and procedures described therein would

be sufficient to mitigate the alleged conflicts. We see nothing unreasonable about that

determination. Additionally, TMA barred Lockheed from bidding on future purchased

care requirements. Finally, we agree with the government that it is reasonable for the

CO to defer evaluating certain potential unequal access to information conflicts until

Lockheed actually bids on future contracts for which it has obtained non-public

2008-5072, -5073 14
information by virtue of its performance of the contract at issue in this case. See

ARINC, 77 Fed. Cl. at 202 (setting out a four-part test to be applied when a protester

alleges that the successful bidder on a current contract unfairly benefited from non-

public information obtained through a prior contract); see also Axiom, No. B-298870.3,

2007 WL 2141694, at *5 (“In our view, conflicts that might arise from subsequent

awards can properly be analyzed as part of those subsequent award decisions, and

need not be addressed at this juncture.”).

Turning to the enforceability of Lockheed’s mitigation plan, the parties agree that

the government would have had legal recourse if Lockheed failed to adhere to the plan.

Oral Arg. at 30:00-30:44, available at http://oralarguments.cafc.uscourts.gov/mp3/2008-

5072.mp3. However, the trial court doubted that the CO could be trusted with future

enforcement of the plan. See, e.g., Axiom II, 80 Fed. Cl. at 533 (“I don’t know if I can

put it any better than to say that I’ve kind of lost confidence in this CO’s ability to be the

proper person to monitor this.”); id. at 539 (“[T]he court has little confidence that the CO

will identify and properly mitigate potential or actual OCIs in the future.”). The court

expressed interest in finding a monitor to serve as “a pair of independent eyes for the

Court,” id. at 533, and ordered the parties to show cause “why the court should not

enter an order that designated the United States Army Audit Agency (‘USAAA’) to

submit an annual compliance report to the court regarding implementation of the

proposed mitigation plan,” id. at 534. Ultimately, the government took the position that it

would prefer to have the contract set aside instead of submitting to continuing oversight

by an auditor and the court. Id.

2008-5072, -5073 15
 While we doubt that it would ever be appropriate for the court to interfere with the

performance of a contract based solely on its belief or suspicion that the CO cannot be

trusted, court interference is certainly inappropriate in this case because the CO did not

act arbitrarily or capriciously in evaluating the mitigation efforts. The Supreme Court

has warned against undue judicial interference with the lawful discretion given to

agencies. See Norton v. S. Utah Wilderness Alliance, 542 U.S. 55, 67 (2004) (“The

prospect of pervasive oversight by federal courts over the manner and pace of agency

compliance with such congressional directives is not contemplated by the APA.”).

Moreover, “[g]overnment officials are presumed to do their duty, and one who contends

they have not done so must establish that defect by clear evidence.” Carolina Tobacco

Co. v. Bureau of Customs & Border Prot., 402 F.3d 1345, 1350 (Fed. Cir. 2005)

(quotation marks omitted). Accordingly, we conclude that the Court of Federal Claims

erred by finding that the “unenforceability” of Lockheed’s mitigation plan was grounds

for setting aside the contract.

III. CONCLUSION

For the foregoing reasons, we reverse the Court of Federal Claims’ decision

setting aside the United States Army’s contract award to Lockheed.

REVERSED

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