Government Contracts Monitor

Federal Circuit Does Not Agree With Contractor’s Contention That “Where There’s Smoke, There’s Fire”

August 26, 2013

The Federal Circuit recently set a high bar to hurdle for any company wishing to file bid protests in these times of sequestration and partially cancelled solicitations. Croman Corp. v. United States, No. 2012-5138 (Fed. Cir. July 31, 2013) involved a 2011 Solicitation by the Forest Service for heavy and medium helicopters to use for firefighting support missions from selected operations bases. The original 2011 Solicitation had one set of performance specifications for heavy-lift capabilities (CLIN 1-15) and one set of performance specifications for medium-lift capabilities (CLIN 16-34). Selection was to be made based on “overall best value considering price and other factors” and expressly stated that “the critical factor in making any price/technical trade-off is not the spread between the technical scores, but, rather, the significance of that difference.”

In the middle of the procurement process, the Forest Service re-evaluated its need for firefighting helicopter services in light of shrinking budget constraints. As a result, only thirty of the original thirty-four CLINs were awarded, eliminating CLINs 21, 22, 27 and 34 for medium-lift helicopters. Of the CLIN’s awarded, the Forest Service selected the awardees based on the results of a computerized optimization model (“OM”) “which generated recommendations upon considering factors related to the technical and price evaluation process.” In effect, the OM replaced most of the functions of the Forest Services’ Technical Evaluation Team and made the process much more efficient.

Croman Corporation (“Croman”) submitted proposals for CLINs 16-34, but was not recommended for any award. Croman and two other contractors filed bid protests with the GAO. As result of the other two protests, the Forest Service initiated corrective action and re-evaluated three of the five technical factors. A new OM analysis was performed, and the Contracting Officer, Technical Evaluation Team, and Source Selection Authority all agreed with that the OM “recommendations should be awarded, as modeled, without necessitating any human element changes.” As a result, the other two GAO protestors – but not Croman – were ultimately awarded Forest Service contracts.

Croman filed a bid protest with the Court of Federal Claims (“COFC”). While Croman’s case in the COFC was pending in 2012, the Forest Service issued a new solicitation – essentially reinstating the four cancelled CLINs from the 2011 solicitation. The COFC denied the protest, finding the Forest Service’s determinations were rational and that there was nothing improper about cancelling a portion of the solicitation due to budgetary constraints. Croman appealed on two grounds: (1) the Forest Service improperly cancelled the four CLINs for alleged budgetary reasons; and (2) the Forest Service failed to conduct a proper technical/price trade off pursuant to FAR 15.308. The Federal Circuit found no merit to either ground of appeal.

The Federal Circuit explained that “Croman’s speculations that there actually were no budgetary concerns are not enough to overcome the presumption that the Government acted in good faith.” In particular, “Croman has failed to show that the partial cancellation of the 2011 Solicitation was in bad faith or lacking in rational basis. Given the level of discretion the Forest Service has to make decisions responsive to its actual needs, this court finds nothing arbitrary or capricious in the decision to cancel and re-solicit certain portions of the 2011 Solicitation.”

The Federal Circuit similarly dismissed Croman’s second argument that “the record contains no declarations or the like by the [Source Selection Authority] as to the relative strengths he found in any proposal” and that a tradeoff analysis cannot be based merely on point scores. The court discussed the analytical workings of the OM and how “the OM provided a mathematical solution that recommended awards for all fifteen (15) CLINs based upon the importance the Forest Service assigned to the technical evaluation.” Because of the type of information that was input into the OM and how the OM was designed to weigh the input data against each of the relevant selection factors, the FAR 15.308 tradeoff analysis was sufficiently detailed. Based on such detailed computer analysis, the court ruled that the “Forest Service’s decision not to award Croman a contract had a rational basis.”

From this case, it is apparent that the courts will likely be unsympathetic to claims involving agency decisions to withdraw or curtail solicitations in light of budget constraints and will be highly deferential to such agency determinations. Similarly, the courts are also likely to find a “rational basis” in computer generated technical/price tradeoffs, provided sufficiently detailed data are input and sufficiently explained computations are performed. This has the possibility to remove the human or subjective factor from technical/price comparisons (reducing agency staffing costs) and still allow such analyses to withstand legal challenge.

Michael J. Schrier is the attorney responsible for the content of this article.