By: Eric Whytsell
In Dellew Corp. v. United States, No. 12-627C (Fed. Cl. Dec. 20, 2012), Judge Miller weighs in on the issue of insourcing and finds the plaintiff had standing but was not entitled to injunctive relief. The case involved an Air Force decision to insource awards and decorations and personnel-management support services at nine Air Force bases half-way through the fourth option year of Dellew’s contract.
About a week before the Government’s termination for convenience took effect, Dellew filed a bid protest in the Court of Federal Claims. The protest argued that the agency’s in-sourcing decision violated applicable statutes and regulations and its cost-comparison analysis was flawed.
After setting out a comprehensive review of the relevant statutory and regulatory history, Judge Miller determined that the dispute fell within the COFC’s subject matter jurisdiction under 28 U.S.C. §1491(b). Citing Distributed Solutions, Inc. v. United States, 539 F.3d 1340, 1346 (Fed. Cir 2008)), the Court noted that the “Air Force’s decision to in-source therefore involved a ‘process for determining a need for property or services’ and was made ‘in connection with a procurement or proposed procurement.’” It went on to find that Dellew had satisfied the “interested party” requirement of 1491(b) because, absent the in-sourcing decision, it likely would have continued to provide the services in question to the Air Force in the future and, therefore, amounted to an “‘actual or prospective bidder or offeror’ with a ‘direct economic interest in the procurement or proposed procurement.’” Although the Government also argued that the complaint was moot because the court was unable to redress plaintiff’s injury, the Court ruled that “a remedy could be fashioned for plaintiff, assuming success on its claim for permanent injunctive relief,” because the “court could order a return to the pre-termination status quo for the remaining months of the fourth option year.”
Having decided the plaintiff had standing to sue (a fairly unusual outcome compared to many previous COFC insourcing bid protest decisions that have ended with an adverse standing decision), the Court went on to consider Dellew’s request for injunctive relief. Analyzing the four injunctive relief factors, Judge Miller concluded that the plaintiff’s claim failed on the merits because it had not demonstrated that the “decision to in-source based upon the 2010 cost comparison resulted in a clear and prejudicial violation of law or lacked a rational basis.” For this reason the public interest factor also favored the Air Force. However, the Court held that Plaintiff’s claim for the opportunity to compete would have constituted irreparable harm and, consistent with her mootness reasoning, rejected the notion that balance of hardships would necessarily have favored the Air Force. On the latter point, Judge Miller explained that, while the Court “could not order reinstatement” because of a statutory prohibition on conducting a public-private competition, “it could have enjoined the Air Force from proceeding with the in-sourcing during the balance of the option period.”
Unfortunately for Plaintiff, such contemplation of potential relief was merely theoretical in this case and its lack of success of the merits resulted in the Court’s rejecting the claim for injunctive relief. It remains to be seen whether protesters in future insourcing bid protests will be able to run the table and not only demonstrate standing but also obtain meaningful injunctive relief.
Eric Whytsell is the attorney responsible for the content of this article.