Kwr Construction, Inc. v. United States ( 2015 )

In the United States Court of Federal Claims
No. 15-156C
(Filed: July 21, 2015)*
*Opinion originally filed under seal on March 23, 2015
)
KWR CONSTRUCTION, INC. )
)
Plaintiff, )
) Bid Protest; Price Completeness; Price
v. ) Reasonableness; Price Realism;
) Remand to Agency
THE UNITED STATES, )
)
Defendant. )
)
)
Frances J. Haynes, Phoenix, AX, for plaintiff.
Matthew P. Roche, Civil Division, United States Department of Justice,
Washington, DC, with whom were Benjamin C. Mizer, Acting Assistant Attorney
General, Robert E. Kirschman, Jr., Director, and Franklin E. White, Jr., Assistant
Direector. Erika L. Whelan Retta, Air Force Legal Operations Agency, Joint Base
Andrews, MD, of counsel.
OPINION
FIRESTONE, Judge.
Pending before the court are cross-motions for judgment on the administrative
record filed by plaintiff, KWR Construction, Inc. (“KWR”), and defendant the United
States (“the government”), in connection with the United States Air Force’s (“agency”)
award of Contract Nos. F4887-14-D-0002, FA4887-14-D-0003, FA4887-14-D-0004, and
FA4887-14-D-0005 to Herman Construction Group, Inc. (“Herman”), Rore, Inc.
(“Rore”), Mirack & Macro-Z Technology (“M & M”), and Premier Engineering
Corporation (“Premier”). In its complaint filed under 28 U.S.C. § 1491(b), KWR alleges,
among other things, that: (1) the Air Force’s determination that KWR’s price proposal
was unacceptable on the grounds that it was incomplete, unreasonable, and unrealistic is
not supported by the record and thus the decision to eliminate KWR from the competition
was irrational; (2) the Air Force violated procurement law by phoning KWR and
encouraging KWR to lower its prices in connection with an amendment to the solicitation
that required offerors to review their price proposals; (3) the solicitation’s price terms and
evaluation standards violated the FAR; (4) the Air Force applied more stringent standards
to KWR’s price evaluation than to the other offerors and the awardees; (5) the Air Force
engaged in bad faith tradeoffs; and (6) the Source Selection Evaluation Board’s (“SSEB”)
decision failed to provide the best value for the government by failing to consider KWR’s
past performance evaluation prior to rejecting its price proposal.
For the reasons that follow, the court finds that KWR’s challenges to the Air
Force’s rejection of its price proposal are well-founded and that a remand to the Air
Force is necessary in order for the Air Force to properly explain its rejection of KWR’s
price proposal with a reasoned explanation or adopt a different decision with a reasoned
explanation.
I. Background
A. The Procurement
At issue in this case is a Multiple Award Construction Contract (“MACC”)
Indefinite-Delivery Indefinite-Quantity for Luke Air Force Base in Glendale, Arizona.
Administrative Record (“AR”) 1447, 1625. The MACC will be used to award multi-
2
discipline construction requirements (i.e., civil, mechanical, electrical, demolition, etc.)
with additional capability to perform large-scale design build projects necessary to
support larger requirements at Luke Air Force Base. AR 1625. Under the terms of the
MACC, contractors are to furnish all plant, labor, material, equipment, transportation,
and supervision necessary to accomplish each task order in accordance with the contract,
specifications, and additional terms and conditions. Id. The Air Force anticipated
awarding three to five contracts, which represented the best value in the areas of past
performance and price, to include a base year period beginning on August 1, 2014, and
four one-year option periods. Id. at 183, 1447. The solicitation, RFQ FA4887-13-R-
0005 (solicitation or RFP), was posted to Federal Business Opportunities website on June
20, 2013 with a closing date of July 30, 2013. Id. at 118.
1. Relevant Solicitation Provisions
The evaluation process was set out in Section M(C)(1) of the Solicitation which
stated that “[e]ach step of this process is codependent upon the step immediately
preceding; the government will only rate those proposals in Step 2 [Price of
Demonstration Project] that were deemed Acceptable in Step 1 [Technical Acceptability].
At the conclusion of Step 2, the government would evaluate Past Performance of the
lowest priced acceptable offerors, assign a Past Performance Confidence rating and
continue in succession based on price assigning Past Performance Confidence ratings.”
Id. at 189. Accordingly, a technical proposal that was “Unacceptable” in Step 1 would
not be evaluated in Step 2; in turn, a price proposal that was not complete, reasonable,
and realistic in Step 2 would not be evaluated for past performance in Step 3. Id.3
With respect to the price evaluation performed in Step 2, the Solicitation provided
that proposals would be evaluated in three ways. First, the Air Force would determine
whether the price submission was complete, providing “[a]ll information/data required by
the solicitation” and that all information received was free of omissions or errors. Id. at
186, 189. Second, prices would be evaluated for reasonableness; that is, the total price
“represents an amount that a prudent person would pay in a competitive business
environment.” Id. at 186. Third, the agency would determine whether the price proposal
was realistic. Section M(B)(1)(b)(i) and Section M(B)(3)(d) of the Solicitation provide
that “[r]ealism is based on the items of the demonstration project price proposal to
determine whether prices are realistic for the work to be performed, reflect a clear
understanding of the requirements, and are consistent with the various elements of the
offeror’s technical proposal.” Id. The Solicitation provided that “[u]nrealistically low or
high prices may be grounds for eliminating a proposal from competition on the basis that
the offeror does not understand the requirement.” Id.The Solicitation also stated that the “Government intends to evaluate proposals
without discussions with offerors. Therefore, it is imperative that each offeror submit
their best terms with their initial proposal . . . . Offerors will not assume that they will be
contacted or afforded an opportunity to qualify, discuss or revise their proposals.” Id. at
173-74.
2. Amendments to the Solicitation
4
Eight amendments were issued before initial proposals were due. See generally
Id. at 194-248. The RFP’s closing date was extended from July 30, 2013 to August 5,
2013 to account for these changes. Id. at 118, 238.
B. Initially, the Source Selection Board Approved KWR’s Proposal
On August 5, 2013, the Air Force received twenty-five proposals; it anticipated
issuing awards within 120 days of receipt. Id. at 1447, 118, 233. The SSEB conducted
an initial evaluation of the 25 proposals received. Id. at 1633. The SSEB found 13 of the
proposals received, including KWR’s, to be technically acceptable during Step 1 of the
evaluation. Id. In Step 2, the Air Force evaluated the price proposals of the 13
technically acceptable offerors, of which 11 were found to be “complete, reasonable, and
realistic” in accordance with the solicitation, including KWR’s. Id. at 1633-34. KWR’s
price proposal was then evaluated for past performance during Step 3, which resulted in a
performance confidence rating of “Substantial Confidence.” Id. at 1953 n. 4.
C. Prior to Award, the Air Force Amended Its Solicitation Again to
Require Offerors to Provide Updated Resumes and Verify Pricing
Although the evaluation process was concluded in a timely manner, various
events—including the sequestration and furloughs of Government personnel—resulted in
significant delays to the award of the contracts. Id. at 1947. Accordingly, the Air Force
issued Amendment 0009 on April 23, 2014, requesting that offerors verify that the prices
in the proposal were still current (or provide updated pricing with a detailed explanation
5
underlying the changes) and resubmit resumes of key personnel to account for any
changes in employment.1 Id. at 242-43. Amendment 0009 stated:
The purpose of this amendment is to obtain current resumes (Factor 1,
Subfactor 3 – Management Plan) of key personnel in accordance with
Section L(B)(1)(c)(2) and any unit price changes (Factor 2 – Price
Proposal) in accordance with Section L(B)(2)(a), due to the duration of
elapsed time since receipt of proposals, Offerors are urged to submit in
strict compliance with both the Section L references above and the table
found at Section M(B)(1)(d)(iii). It should be further noted that any unit
price changes in response to Factor 2 – Price Proposal shall include detailed
explanations for any resultant unit price changes to the price proposal
submission.
Id. at 1150. Offerors were also asked to extend the proposal acceptance period and
instructed to respond to Amendment 0009 by April 30, 2014. Id.D. After KWR Revised Its Offer, the Source Selection Evaluation Board
Found KWR’s Price Proposal Unacceptable
After receiving the responses to Amendment 0009, the SSEB performed new
evaluations of proposals that had been revised. See id. at 1948 n.1. KWR’s offer was re-
evaluated because it had submitted a revised price proposal. Compare id. at 677-78, with
id. at 781-82. In its submission following Amendment 0009, KWR stated: “KWR
Construction Inc. appreciates the opportunity to update our Price Proposal to reflect
current commodity conditions and labor hour estimates. Our overhead factors have
1
Prior to the issuance of Amendment 0009, the contracting officer called offerors to inform them
that the amendment was being issued and its requirements—that is, updated resumes and
verification that prices were still current. See AR 1146-48. Because calls are not included in the
record, it is not known whether the CO called all offerors. He then emailed the amendment and
accompanying memorandum to each of the 25 offerors. Id.6
recently changed due to current volume of work in progress. We have lowered our profit
margin in order to be as competitive as possible.” AR 780.
In evaluating KWR’s revised price proposal, the SSEB noted several deficiencies
in KWR’s Construction Cost Estimate Breakdown (AF Form 3052). Id. 1416, 5264-
5267. The summary sheet taken from the evaluators also states that KWR’s proposal was
also unreasonable and unrealistic based on its pricing. Id. In particular, the evaluation
summary states:
DESCRIPTION YES NO NOTES
The offeror failed to include
Completeness: Did the offeror pricing for roof work, the
provide all information/data Netshelter SX enclosure, test &
required to render the price as balance (air or CFMs), and training
complete? X and asbuilts
Price Reasonableness:
Reasonableness is based on the
total evaluated price compared to
historical prices for similar efforts,
comparison to the Independent
Government Estimate (IGE), and
price competition obtained by the The offeror’s price was [. . .]%
other offerors’ proposals submitted lower than IGE and [. . . ]% lower
in response to this RFP. Did the than the average of the proposed
offeror provide a reasonable price Technically Acceptable offeror’s
that a prudent person would pay in [sic]. This price is unreasonably
a competitive business low based on the offeror’s technical
environment? X approach.
Price Realism: Did the offeror
provide a Realistic price based on
the items of the demonstration The offeror’s material and labor
project for the work to be cost alone is [. . . ]% less than the
performed, reflect a clear IGE. The offeror’s average labor
understanding of the requirements, rate is $[. . .] less than IGE and
and are [sic] consistent with the other offers. Based on the TEP, it
various elements of the offeror’s is unrealistic that KWR can
technical proposal? accomplish the demonstration
(Unrealistically low or high prices X project.
7
may be grounds for eliminating a
proposal from competition on the
basis that the offeror does not
understand the requirement.)
Id. at 1416. Based on this evaluation, the Air Force determined that KWR’s price
proposal was incomplete, unreasonable and unrealistic, and its proposal was not further
considered. Id. at 1415-16.
Ten offerors were determined to have complete, reasonable, and realistic prices.
AR 1634. Those offerors’ total evaluated prices were ranked from lowest to highest, and
their proposals were evaluated for past performance in Step 3. Id. at 1635-36. On July
28, 2014, at the conclusion of the past performance evaluation, the Air Force made
awards to Herman, Rore, M&M, and Premier, the four offerors with the lowest total
evaluated prices that also received a Substantial Confidence Past Performance rating. Id.
at 1636-37. KWR was notified accordingly and received the requested debriefing. Id. at
1818-19, 1882-1903.
The reasons for rejecting KWR’s proposal at the debriefing, however, differed
from those identified in the SSEB summary, noted above. The debriefing materials stated
as follows:
DESCRIPTION YES NO NOTES
The offeror failed to include labor
Completeness: Did the offeror pricing for HVAC installation,
provide all information/data Server Rack installation, and
required to render the price as incorrectly inputted Elec load
complete? X study in material
Price Reasonableness: The offeror’s price was [. . .]%
Reasonableness is based on the total lower than IGE and [. . .]% lower
evaluated price compared to than the average of the proposed
historical prices for similar efforts, X Technically Acceptable offeror’s
8
comparison to the Independent [sic]. The offeror’s material and
Government Estimate (IGE), and labor cost alone is [. . . ]% less
price competition obtained by the than the IGE. A prudent person
other offerors’ proposals submitted would not pay this price knowing
in response to this RFP. Did the it has missing items.
offeror provide a reasonable price
that a prudent person would pay in a
competitive business environment?
Price Realism: Did the offeror
provide a Realistic price based on
the items of the demonstration
project for the work to be
performed, reflect a clear
understanding of the requirements,
and are [sic] consistent with the
various elements of the offeror’s
technical proposal? (Unrealistically The offeror failed to price test &
low or high prices may be grounds balance (air or CFMs), training,
for eliminating a proposal from and asbuilts in accordance with
competition on the basis that the their technical approach. The
offeror does not understand the offeror did not reflect a clear
requirement.) X understanding of the requirements.
There is no explanation in the record for these differences.
D. The Air Force Denies KWR’s Agency Level Protest
KWR filed a protest with the agency on August 8, 2014, followed by an amended
protest on August 15, 2014. Id. at 5614-99. In its agency-level protest, KWR alleged
that its proposal was reasonable and realistic, id. at 5614-15, 5620-21; that its proposal
was complete, id. at 5616, 5622; that the SSEB neglected to appropriately consider and
apply its own overarching evaluation criteria, id. at 5617, 5623; and that its submission of
AF Form 3052 was in compliance with the instructions to offerors, id. at 5625. On
November 7, 2014, the agency denied KWR’s agency protest. Id. at 5645.
E. The GAO Dismisses KWR’s Protest
9
On November 17, 2014, KWR filed a protest at the Government Accountability
Office (GAO) and submitted a supplemental protest on December 29, 2014. Id. at 1904,
5279. In its protest, KWR alleged that the Air Force made an improper “Best Value”
determination; failed to make tradeoffs that considered KWR’s past performance; failed
to adequately document and support its evaluation and award decision; and failed to
account for publicly available suspect information regarding the awardees. Id. at 1905,
1907, 1914. Additionally, KWR alleged that is price was complete, reasonable and
realistic. Id. at 1908, 1911.
In its supplemental protest, KWR alleged that the Air Force lacked necessary
evaluation documentation, did not meaningfully consider KWR’s proposal or compare
KWR’s “superior positioning” to that of other offerors or otherwise follow its own
evaluation criteria; and based its decision on a flawed competitive range determination.
Id. at 5791-92.
Additionally, KWR alleged that the Air Force failed to consider its pre-
Amendment 0009 evaluation of KWR’s past performance; failed to adequately document
and support its decisions regarding KWR’s labor rates; and circumvented the Small
Business Act. Id. Finally, KWR alleged that the Air Force acted in bad faith by using
tradeoffs but then telling KWR that it did not use tradeoffs. Id. at 5792.
On January 28, 2015, GAO dismissed KWR’s protests. Id. at 5964. The GAO
explained that because Equa Solutions, Inc. v. United States, No. 14-1214C (Fed. Cl.)—
which involved the same procurement—was pending before the United States Court of
Federal Claims, the case had to be dismissed.
10
On February 18, 2015, KWR timely filed the pending complaint in this Court.
Briefing was completed on an expedited basis and oral argument was held on March 20,
2015.
II. STANDARD OF REVIEW
The standard of review in bid protest cases is well-established. The court will
uphold a procurement decision unless it is found to be “arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law.” Banknote Corp. of Am., Inc. v.
United States, 365 F.3d 1345, 1350 (Fed. Cir. 2004). To prevail, the protester must
demonstrate that either (1) the agency’s decision was irrational, id. at 1351, or (2) the
agency violated a regulation or procedure in a manner that significantly prejudiced the
protester, Weeks Marine, Inc. v. United States, 575 F.3d 1352, 1358 (Fed. Cir. 2009).
Where a protester seeks to demonstrate that the procurement decision was irrational, it
must demonstrate that the agency’s exercise of discretion lacked any “coherent and
reasonable explanation.” Banknote, 365 F.3d at 1351. This standard is “highly
deferential,” Weeks Marine, 575 F.3d at 1368-69, and a plaintiff “bears a heavy burden
of showing that the award decision had no rational basis,” Banknote, 365 F.3d at 1351.
Where a rational basis exists, the court shall not substitute its judgment for that of the
agency, “even though it might, as an original proposition, have reached a different
conclusion as to the proper administration and application of the procurement
regulations.” Honeywell, Inc. v. United States, 870 F.2d 644, 648 (Fed. Cir. 1989)
(citing M. Steinthal & Co. v. Seamans, 455 F.2d 1289, 1301 (D.C. Cir. 1971)).
11
Pursuant to this standard, an agency’s procurement decisions are entitled to a
“presumption of regularity,” and “the agency’s action must be upheld as long as a
rational basis is articulated and relevant factors are considered.” Emery Worldwide
Airlines, Inc. v. United States, 264 F.3d 1071, 1085 (Fed. Cir. 2001) (citations omitted);
Orion Tech., Inc. v. United States, 704 F.3d 1344, 1351 (Fed. Cir. 2013) (“Agencies are
entitled to a high degree of deference when faced with challenges to procurement
decisions. A protestor . . . may only prevail when it is clear that the agency’s
determinations are irrational and unreasonable.” (citations omitted)) (citing R & W
Flammann GmbH v. United States, 339 F.3d 1320, 1322 (Fed. Cir. 2003); Impresa
Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324, 1332-33 (Fed.
Cir. 2001)).
In reviewing a motion for judgment upon the administrative record pursuant to
Rule 52.1 of the Rules of the United States Court of Federal Claims, the court must
decide whether, given all the disputed and undisputed facts, a party is entitled to
judgment based upon that evidence. A&D Fire Protection, Inc. v. United States, 72 Fed.
Cl. 126, 131 (2006) (citing Bannum, Inc. v. United States, 404 F.3d 1346, 1356 (Fed. Cir.
2005)). In sum, in order to set aside a procurement decision, the protestor has the heavy
burden of establishing that: (1) the procurement official’s decision “had no rational
basis;” or (2) there has been a “clear and prejudicial violation of applicable statutes or
regulations.” Centech Group v. United States, 554 F.3d 1029, 1037 (Fed. Cir. 2009)
(quoting Impresa, 238 F.3d at 1333).
III. DISCUSSION
12
A. The Agency’s Decision Rejecting KWR’s Price Proposal Is Not
Supported by the Administrative Record
The court finds that the dispute in this case turns on whether the Air Force’s
decision that KWR’s price proposal was incomplete, unreasonable, and unrealistic is
rationally supported. After reviewing the record and considering the parties’ arguments,
the court finds that the Air Force’s decision is wrong in several respects and conflicting
in others. As such, it is impossible for the court to determine the basis of the Air Force’s
decision to reject KWR’s price proposal.
First, as noted above, the record demonstrates that the Air Force provided a
different rationale for rejecting the price proposal before the SSEB than at the debriefing.
During the evaluation, the SSEB created the following summary:
DESCRIPTION YES NO NOTES
The offeror failed to include
Completeness: Did the offeror pricing for roof work, the
provide all information/data Netshelter SX enclosure, test &
required to render the price as balance (air or CFMs), and training
complete? X and asbuilts
Price Reasonableness:
Reasonableness is based on the
total evaluated price compared to
historical prices for similar efforts,
comparison to the Independent
Government Estimate (IGE), and
price competition obtained by the The offeror’s price was [. . . ]%
other offerors’ proposals submitted lower than IGE and [. . . ]% lower
in response to this RFP. Did the than the average of the proposed
offeror provide a reasonable price Technically Acceptable offeror’s
that a prudent person would pay in [sic]. This price is unreasonably
a competitive business low based on the offeror’s technical
environment? X approach.
Price Realism: Did the offeror The offeror’s material and labor
provide a Realistic price based on cost alone is [. . .]% less than the
the items of the demonstration X IGE. The offeror’s average labor
13
project for the work to be rate is $[. . .] less than IGE and
performed, reflect a clear other offers. Based on the TEP, it
understanding of the requirements, is unrealistic that KWR can
and are [sic] consistent with the accomplish the demonstration
various elements of the offeror’s project.
technical proposal?
(Unrealistically low or high prices
may be grounds for eliminating a
proposal from competition on the
basis that the offeror does not
understand the requirement.)
Id. at 1416. However, the rationale provided as part of the debriefing included the
following summary:
DESCRIPTION YES NO NOTES
The offeror failed to include labor
Completeness: Did the offeror pricing for HVAC installation,
provide all information/data Server Rack installation, and
required to render the price as incorrectly inputted Elec load
complete? X study in material
Price Reasonableness:
Reasonableness is based on the total
evaluated price compared to
historical prices for similar efforts, The offeror’s price was [. . . ]%
comparison to the Independent lower than IGE and [. . . ]% lower
Government Estimate (IGE), and than the average of the proposed
price competition obtained by the Technically Acceptable offeror’s
other offerors’ proposals submitted [sic]. The offeror’s material and
in response to this RFP. Did the labor cost alone is [. . .]% less than
offeror provide a reasonable price the IGE. A prudent person would
that a prudent person would pay in a not pay this price knowing it has
competitive business environment? X missing items.
Price Realism: Did the offeror
provide a Realistic price based on
the items of the demonstration
project for the work to be The offeror failed to price test &
performed, reflect a clear balance (air or CFMs), training,
understanding of the requirements, and asbuilts in accordance with
and are [sic] consistent with the their technical approach. The
various elements of the offeror’s offeror did not reflect a clear
technical proposal? (Unrealistically X understanding of the requirements.
14
low or high prices may be grounds
for eliminating a proposal from
competition on the basis that the
offeror does not understand the
requirement.)
Id. at 1899.
Based on the evidence in the record, it is not possible to determine whether the Air
Force’s rationale included all of the stated reasons or whether it was changed after the
fact. For example, the items that the Air Force found to be missing are different in each
version of the summary, with no explanation as to why the agency chose to focus on
different items. This is especially important where one of the original items (roof work)
has now been conceded by the government to not be missing and another (Netshelter SX
enclosure) was not required to be its own line item and was not priced separately in the
proposals of successful offerors.
Second, it is not clear how the price evaluation completed by the evaluators
became the rationale stated in the decision, as the single sheet provided in the record
includes check marks under both “YES” and “NO” for some items, positive and negative
comments, and appears to have been filled in or supplemented at a later date.2 Id. at
5264-66.
2
It is not clear from the record why KWR’s price proposal was apparently re-evaluated on June
18, 2014 and again on June 20, 2014, as the evaluation sheet indicates. AR 5264-5267. This
may have been part of the post-amendment re-evaluation, or may have been a separate re-
evaluation unique to KWR.
15
Third, there is nothing in the record to suggest that the Air Force considered
KWR’s explanation of the post-amendment reductions in its price. When it submitted its
post-amendment price reductions, KWR explained its reasoning and methods in a letter
to the CO, stating: “KWR Construction Inc. appreciates the opportunity to update our
Price Proposal to reflect current commodity conditions and labor hour estimates. Our
overhead factors have recently changed due to current volume of work in progress. We
have lowered our profit margin in order to be as competitive as possible.” AR 780.
There is no indication that the Air Force considered the provided reasoning when making
its reasonableness determination. This is especially important considering that, prior to
the amendment, the Air Force had determined the proposal to be reasonable. An
examination of the changed costs reveals that, while many prices were altered somewhat,
the major changes occurred in KWR’s profit and overhead and labor rates for supervisory
positions, as well as prices for HVAC equipment and electrical load studies. As the
agency’s analysis focused almost exclusively on a gross percentage difference between
KWR’s proposal and the IGE, it is not clear to the court what aspects of the proposal
caused it to be deemed unreasonable.3
Fourth, it is unclear how the Air Force performed the math to arrive at the
percentages used to determine reasonability. The agency found that KWR’s materials
and labor “alone” were [. . .]% less than the IGE. However, the price proposal provided a
3
At oral argument, the government argued that the initial finding of reasonableness was an error
by the agency. While this may be true, there is no evidence in the record to support such a
finding.
16
material cost of $[. . .] and a labor cost of $[. . .], for a total material and labor cost of $[. .
.]. AR 781. The IGE provided a material cost of $[. . .] and a labor cost of $[. . .], for a
total material and labor cost of $[. . .]. Id. at 2. It is undisputed that KWR’s material and
labor cost “alone” is therefore not [. . .]% lower than the IGE’s material and labor cost,
but rather [. . .]% higher.4
In this connection, the Air Force’s method for analyzing KWR’s price proposal to
the IGE is not clear. It appears that the major deviation in costs from the IGE was the
APC UPS Upgrade: the IGE priced it at $[. . .] in direct costs alone, id. at 7, while KWR
priced it at $[. . .] in material costs alone, id. at 781. Especially considering that this
element’s price provided a significant portion of the agency’s reasoning for finding the
proposal unreasonable, the lack of a clear explanation of whether KWR’s proposed price
for the item was reasonable makes it difficult to determine whether the overall
determination of reasonableness was rational. Further, these missing explanations are
made more important by the fact that the agency found another offeror’s price proposal to
be complete, reasonable, and realistic when it was [. . .]% higher than the IGE, [. . .]%
higher than the average of technically-acceptable offerors, had a material cost that was [. .
. ]% higher than the IGE, and had a labor cost that was [. . .]% higher than the IGE. Id. at
4
The government argues that the percentage can be explained by adding in the direct costs, as
identified on the front page of the evaluation sheet. AR 5264. However, the back page of the
sheet indicates that there was a difference in “materials costs” that is not supported. Id. at 1187.
Moreover, the final summary refers to material and labor costs. Id. at 1416. Accordingly, it is
unclear which one of these three possibilities the Air Force was applying when it made its
decision to reject KWR’s price proposal.
17
1421-22. There is no explanation as to why prices significantly higher than the IGE were
acceptable, whereas those lower than the IGE were not.
Finally, the Air Force may have failed to consider all of the factors required for
price evaluation in the solicitation. The Air Force was required to consider historical
prices, the IGE and comparative prices in making its price reasonableness determination.
Id. at 186. It is unclear whether the agency considered historical prices at all in
determining the reasonableness of the pricing, as required by the solicitation. While the
government argued that historical prices were incorporated by reference in the IGE,
which was based on previous projects and their prices, see id. at 1, historical prices were
included as a separate evaluation factor and thus should have been separately evaluated
even if they were used in creating the IGE.
IV. CONCLUSION
Based on the facts of this case, the court finds that it must vacate the Air Force’s
rejection of KWR’s proposal for award consideration, and therefore a remand to the Air
Force is necessary. Florida Power & Light Co. v. Lorion, 470 U.S. 729, 744 (1985). The
Tucker Act provides this court with “the power to remand appropriate matters to any
administrative or executive body or official with such direction as it may deem proper
and just.” 28 U.S.C. § 1491(a)(2).
Accordingly, plaintiff’s motion for judgment on the administrative record is
GRANTED-IN-PART and the government’s cross-motion for judgment on the
18
administrative record is DENIED.5 The agency’s decision to reject KWR based on its
price proposal is hereby VACATED and REMANDED to the Air Force for a period of
14 days, until Monday, April 6, 2015.6 On remand, the Air Force must explain its
rejection of KWR’s price proposal with a reasoned explanation or adopt a different
decision with a reasoned explanation. Under either approach, the agency should address
the issues identified above. Pursuant to RCFC 52.2(b), the government shall submit a
status report on or before the conclusion of the remand period informing the court of the
status of the remand proceedings.
IT IS SO ORDERED.
s/Nancy B. Firestone
NANCY B. FIRESTONE
Judge
5
The court need not reach the other arguments raised by plaintiff in its motion for judgment on
the administrative record because of this decision. Plaintiff additionally filed two motions to
supplement the administrative record, a motion to strike, a renewed motion for preliminary and
permanent injunctions, a motion for leave to file a brief on available remedies, and moved for
discovery in the alternative to its motion for judgment on the administrative record. Based on
the court’s remand of the agency decision, those motions are DENIED as MOOT.
6
As the government has represented that no action will be taken on the pending issuance of task
orders under this contract until some time after April 9, 2015, the court finds that it is possible to
fully resolve these issues before that date. Accordingly, the court need not consider the propriety
of injunctive relief.
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