In the United States Court of Federal Claints

NO. l5-l495 C
(Filed UNDER SEAL February 26, 2016)
Reissued March 8, 2016‘

PRECISI()N ASSET )
MANAGEMENT C()RP., )
Plaintiff, ) Post-Award Bid Protest; Subject
v. ) l\/Iatter Jurisdiction; Standing;

) Economic Interest; Substantial Chance.

THE UNITED STATES,
Defendant,

KM MINEMIER &

ASSOCIATION., LLC,
intervenor

\./\_/\_/£\}\./

Sharon A. Roach, Benton Potter & Murdocl<, P.C., Falls Church, VA for
plaintiff. Jam`ne S. Bentorz, Kathy C. Pozter, John M. Murdoc/c and Rosanne E.

Slafiej, of counsel.

Marz‘z`n M. Tonilz`nsorz, Commercial Litigation Branch, Civil Division, United
States Department of Justice, Washington, DC, with whom appeared Berzjamz`n C.
Mz'zer, Principal Deputy Assistant Attorney General, Roberz.‘ E. Kirschman, Jr.,
Director and Deborah A. Bynum, Assistant Director, for defendant

Kazhryn V. F/ooa’, Pilierol\/lazza, PLLC, Washington, DC for defendant-
intervenor, KM Minemier & Associates, LLC. Pamela J. Mazza, Patrz`ck T.
Roz‘hm)e/l, and Jczcqzze/irze K. Unger, of counsel.

OPINION

Precision Asset Management Corporatiori ("plaintiff’ or "Precision") filed the
instant post-award bid protest on Deceinl:)er l(), 2()15. See Doc. l. in the complaint,
plaintiff alleges that the Departinent of Housing and Urban Development ("HUD")
failed to fairly evaluate its proposal to manage certain property for the government,
and asks that the court direct HUD to reconsider its submission See z`a’. at 2-3.

l Reissued with redactions pursuant to defendant’s status report, doc. 37, providing notice of all
parties’ agreed proposed redactions, filed l\/larch 4, 20l6.

I. BACKGR()UND AND RELEVANT FACTS

The Federal Housing Authority ("FHA"), which is part of HUD, "administers
the single-family mortgage insurance program." See Doc. 27 at ll. When a
homeowner defaults on an FHA-insured loan, many times, HUD ultimately acquires
title to the property. See z`a’. HUD outsources the management of these properties,
contracting with various outfits for asset management services. Asset management
includes services related to the marketing and sales of the properties HUD has

acquired. See z'd.
A. The Solicitati0n

On July 25, 2014, HUD issued Solicitation No. DU204SA-l3-R-()OO5 (the
"solicitation"), requesting proposals for asset management services in twelve
geographic areas. See AR at 44. The area at issue in this action, Area 5A, involves
property in the states of North and South Carolina. See AR at 4031.2 Once the
government received the requested proposals, the evaluation process involved two
steps. First, HUD determined whether each proposal was technically acceptable, on
a pass/fail basis. See AR at 4()45.

Those proposals that were deemed technically acceptable, were then
evaluated with the goal of determining which was the best value to HUD. See z`a’.
This analysis considered past performance and price, assigning approximately the
same relative importance to each. See z`d. In order to determine the strength of a
bidder’s past performance, the technical evaluation panel ("TEP") analyzed the
recency, relevancy, and quality of that performance, along with the panel’s
confidence in the bidder’s ability to perform under the contract. See AR at 4048,

4052.

The TEP assigned each proposal one of five adjectival ratings for confidence
and quality of past performance: eXcellent/liigh confidence, good/significant
confidence, fair/some confidence, no confidence, and neutral/unknown confidence
See i`a’. in coming to these determinations, the TEP was to evaluate the three most
recent, relevant references provided by the bidder. See AR at 4038.

2 Because HUD amended the solicitation subsequent to its initial request for proposals, appropriate
references are made to the terms ofthe amended document

2

B. Plziintif`f’s Proposal

Plaintiff submitted its initial proposal for all twelve geographic areas on
Septernber  2014. See AR at 1224 For Area SA, the only area at issue in this
protest, plaintiff was to XXXXXXXXXXXXXXXXXXXXXXXXXXXXX, and
the proposed cost was XXXXXXXXXXXXXX}~IXXX. See AR at 1224, 1483
Plaiiitiff’s proposal also included XXXXX contract references on which HUD was
to inal<e its past performance evaluation_ See AR at 1418

By letter, dated August 27, 20 l 5, HUD notified plaintiff that it had established
a coinpetitive range and was iiiitiatiiig discussions ~.S`ee AR at 2996_ The letter also
stated that the TEP found plaintiff s proposal to be "Teclinically' Acceptable." See
id. ln an attachment enclosed with the letter, HUD noted that it had identified XXXX
XXXX XXXXXXXXXXX in plaintiff s proposal, and that it had XXXXXXXX
XXXXXXX XXXXXXXXX AR at 2958. The only substantive note on the
attachment was that \»\»e'liile plaintiffs XXXXXX XXXXXXXX XXXXXX X.XXXX
XXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXX, Id.

HUD revised the solicitation several times, and plaintiff submitted its revised
proposal on Septeinber 9, 2015. See AR at 3 l 76~3207. lts revised proposal included

XXXX XXXXXX XXXXX XXXXXXXX XXXXXX XXXX Doc. l at 8~9.
Plaintiff lo\~vered its original price by nearly XXXXXXXXX to XXXXXXX XXX,

and included XXXXXX contract references. Seeid.,AR at358l. After conducting
its past performance evaluation, HUD assigned plaintiff s proposal a
"Netitral/'Unl<iio\yii Coiifideiice" rating See AR at 3687.

C. The Aw'zird and Plaintiff’s Challenge

The record lists the entities deemed technically acceptable, and in the
coinpetitive raiige, as follows

     

 

Total Value of
Contract

Cotripany

  
   
  

Conf`idence Rating l

   

Netttral./Uiikiiotivii Coiifideiice
Good/"Sigiiificaiit C`oiifideiice

     

    
    

K_M. l\/Iineinier &
Associates, LLC

§>33,l7l,9l2.89

Netitral/Unl<iio\vii C ontideiice
l§xcellerit/'Hi ~ h CoiiHdence
Fair!'Soiiie Conlidence

recision Netitral./Uiil<riowii Contidence

‘ Maiiagenieiit
Netttral./Unkno\w'ii Contidence

Excellerit/Hivli C`oiitidence
Netitral/Uiil<iio\vii Contidence

 

See Doc. 27 at 30 (citing AR at 3687).

The TEP recommended that HUD award the contract for Area 5A to KM
Mineinier & Associates ("Miiieiiiier"). AR at 3700-01_ Mineinier received a
"Good/'Sigiiiticziiit C`ioiifideiice” rating, and offered a price of S33g,`l7l,9l2.89. See
ic/. The TEP chose l\/lineinier’s proposal as a compromise between price and
confidence rating In selecting Mineinier, the TEP reasoned

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Id_

Plaintiff iio\v takes issue \vitli the way in \vliich HUD conducted this
evaluation, and contends that it should have received a liiglier, "‘if not the highest,"
confidence rating Doc. l at l3. HUD, allegedly, did not adhere to the evaluation
criteria as listed in the solicitation, resulting in a rating that was arbitrary and
capricious, lacking a rational basis See z`a’. at 14. Specitically, plaintift`alleges that:
"HUD incorrectly evaluated its past performance by: (a) failing to fully and fairly
consider its references; (b) assigning a rating that by the terms of the Solicitation

4

was not applicable; (c) failing to evaluate a further reference once it determined that
one of Precision’s references was ‘not relevant."’ Doc. 31 at 7-8. Plaintiff also
contends that HUD violated its duty to engage in meaningful discussions, pursuant
to 48 C.F.R. § 15.306(d). See Doc. 1 at 14.

1n addition to the allegations of error with regard to the TEP’s evaluation of
its proposal, plaintiff also argues in its motion for judgment on the administrative
record that "the rating assigned to Minemier . . . bears no rational relation or
connection with Minemier’s actual proposal." Doc. 24 at 25. See also Doc. 31 at
30 ("There is, in fact, no rational or coherent basis for the TEP’s assignment of a
‘Good/Significant Confidence’ rating to Minemier."). Plaintiff suggests it was
prejudiced not only by the errors in its own evaluation, but also by HUD’s improper
evaluation of Minernier. lt claims that "[h]ad HUD conducted meaningful
discussions and had HUD evaluated Precision’s proposal in accordance with the
Solicitation instead of treating it as a joke and had HUD evaluated l\/lineinier’s
proposal in accordance with the facts, Precision would have stood a substantial
chance ofreceiving this award." Doc. 24 at 28.

1n order to determine whether HUD acted in an arbitrary or capricious manner
in evaluating and assigning a rating to plaintiffs proposal or Minemier’s proposal,
the court would need to wade more deeply into the terms of the solicitation and
HUD’s application of those terms in the evaluation process. Before addressing the
full merits of plaintiffs claims, however, the court must determine whether plaintiff
has standing to bring this case. See Myers Investz`gcztz`ve & Sec. Se)"vs. v. Um`ted
States, 275 F.3d 1366, 1369 (Fed. Cir. 2002) (noting that "standing is a threshold

jurisdictional issue").
II. MOTION TO DISMISS

The government has filed a motion to dismiss, alleging that this court lacks
subject matter jurisdiction to consider plaintiffs case on the basis that plaintiff lacks
standing to bring it. See Doc. 27 at 28-3-4. Plaintiff bears the burden of establishing
the court’s subject matter jurisdiction by a preponderance of the evidence. See
Brana’t v. Unitea’ Szfates, 710 F.3d 1369, 1373 (Fed. Cir. 2013). In determining
whether the court has jurisdiction over plaintiffs claims, the court "must accept as
true all undisputed facts asserted in the plaintiffs complaint and draw all reasonable
inferences in favor of the plaintif ." Trusted ]ntegratz`orz, Inc. v. Unz`tea’ Stczz‘es, 659
F.3d 1159, 1163 (Fed. Cir. 2011) (citing Henke v. Unz`ted Sz‘az‘es, 60 F.3d 795, 797

(F@d.cir.w%)).

This court’s jurisdiction is based on the Tucl<er Act, which states in relevant
part, that the Court of Federal Claims:

shall have jurisdiction to render judgment on any action by an interested
party objecting to a solicitation by a Federal agency for bids or
proposals for a proposed contract or to a proposed award or the award
of a contract or any alleged violation of statute or regulation in
connection with a procurement or a proposed procurement.

23 u.s.c_ § 1491@>)(1).

Under this section, a plaintiff must demonstrate that it is an "interested party,"
in order to establish this court’s jurisdiction. As the Federal Circuit has held, the
"interested party" requirement in the Tucker Act "imposes more stringent standing
requirements than Article 111." Weeks Marine, Inc. v. United Stczles, 575 F.3d 1352,
1359 (Fed. Cir. 2009). Though the term "interested party" is not defined by the
statute, courts have construed it to require that a protestor "establish that it ‘(1) is an
actual or prospective bidder and (2) possess[es] the requisite direct economic
interest." See z`d. (citing Rex Serv. Corp. v. Unz`tea’ States, 448 F.3d 1305, 1308 (Fed.

cir. 2006)).

The record clearly demonstrates that plaintiff is an actual bidder, but the
government maintains that plaintiff does not have the requisite economic interest to
pursue its claim. See Doc. 27 at 29. 1n order to demonstrate sufficient economic
interest to support standing, plaintiff "must show that there was a ‘substantial
chance’ it would have received the contract award but for the alleged error in the
procurement process." Info. Tech. & Applz'catz`ons Corp. v. U)'zz'tea.’ Stazes, 316 F.3d
1312, 1319 (Fed. Cir. 2003) (citing Alfa Lava/ Sepczrarz'on, [nc. v. Um'ted Smtes, 175
F.3d 1365, 1367 (Fed. Cir. 1999)).3

The court, then, is left to the task of determining whether plaintiff has
demonstrated that it would have a substantial chance of receiving the Area 5A award,
but for the various alleged errors in HUD’S evaluation process. Plaintiff argues that
it has met this burden because had the TEP not made the alleged errors, plaintiffs
proposal would have received a higher rating than the "Neutral/Unknown
Confidence" rating that the TEP ultimately assigned, and l\/linemier’s proposal

3 The court notes that although it was not entirely clear from the initial briefing that plaintiffagreed
that this standard governs the dispute, counsel for plaintiff acknowledged at oral argument that the
"substantial chance" standard does indeed apply.

6

would have received a lower rating than "Good/Significant Confidence." See Doc.
24 at 27. See also Doc. 3l at 33-35. ln other words, it is plaintiffs position that a
higher performance/confidence rating for it, and a lower rating for Minemier, would
have given plaintiff a substantial chance of receiving the award, irrespective of the
price attached to its proposal. See Doc. 3l at 35 (arguing that the relatively small
"differential between Precision’s price and another offeror’s price is not a barrier to

award in a best value procurement").

The government counters that even the highest possible rating,
"Excellent/Higli Confidence," would not have given plaintiff a substantial chance of

receiving the award because its price was too high.

The simple, unavoidable fact is that even if [Minernier] had received a
worse confidence rating, and Precision had received a better confidence
rating, there was an o]j"eror whose past/present performance evaluation
Precision has not challenged that received the highest possible
conj?a’ence rating ana’ whose price was over X ).CXXXX less

than Precision ’si

See Doc. 27 at 3l. (emphasis in original) (footnote omitted). The offeror to which
the government refers in this passage is XXXXXXXXXXXXXXXXXX, as

represented in the chart above.

Notably, the substantial chance requirement does not mean that plaintiff must
prove it was next in line for the award but for the government’s errors. See Scz'. &
Mg)nt. Res., [nc. v. Unz`tea' States, ll7 Fed. Cl. 54, 62 (2014); see also Data Gen.
Corp. v. Johnson, 78 F.3d 1556, 1562 (Fed. Cir. 1996) ("To establish prejudice, a
protester is not required to show that but for the alleged error, the protester would
have been awarded the contract."). Demonstrating prejudice does require, however,
that the plaintiff show more than a bare possibility of receiving the award. See
Bannunv, lnc. v. Unitea’ States, 404 F.3d 1346, 1358 (Fed. Cir. 2005) (affirining the
trial court’s determination that the plaintiff had not demonstrated a substantial
chance of award when its "arguinent rest[ed] on mere numerical possibility, not

evidence").

ln information Technologie.s‘, for example, the Federal Circuit found that the
plaintiff had established a "substantial chance" of receiving the contract at issue
because the record supported the conclusion that had the alleged errors been cured,
"[t]here is no question . . . its proposal would have been improved and its chances of
securing the contract increased." ]nfo. Tech., 316 F.3d at l3l9.

7

Here, plainitif`t` lias failed to present ev~'irlence that its chances of securing the
contract \votilcl have increased, even given the cliaiiges it believes would result if the
evaluations’ alleged errors were cured. Assume that the TEP assigned plaintiff the
liighest confidence rating. Assume, further, that l\/lirieniier’s confidence rating was
downgraded A revised chart of the competitive range tvould appear as follows

Company Total Value of Coxli`ldence Rating
Contract

f Netitral/'Uiil<:no\vii Confidence
 Mineniier & $33,171,912.89 Fair/Some Conf`ldence
Associates. LLC

   
  
  
 

Netltral/Uiil<iio\vri Confidence
Excelleiits'Higli Confidence
Fair/Soine Confidence
Precision Asset Excellent/Higli Conf`idence

M

Neutralr’Uiikiiovvn Confidence
EXcelleritfHigli Coiifidence
Netttral/Uiiknowii Confidence

Even if we iiext assume that the TEP would not select l\/lineniier’s proposal
given a Fairi'Soiiie Confideiice rating, XXXXXXXXXXXXXXXXXXXX still
offers an Excelleiit/`Higli Confidence rating, at a lower price than plaintiff s. This
fact alone does not prevent plaintiff from establishing standing but it does require
that plaintiff make an additional sliovtfiiig that it offered some experience or service
that inight have caused the 'l"EP to value its proposal above
XXXXXXXXXXXXXXXXXXX, despite the liiglier price

ln A/]Z‘z Law'z/ Sepcn~czfz'o)v \»’. Unifed Sfcr)‘e.s, the Federal Circ.uit explained that
"\vliile price differential may be taken into account, it is not solely dispositive; vve
must consider all the surrounding circumstances in determining whether there was a
substantial chance that a protester would have received an a\vard but for a significant
error in the procurement process." 175 F._`)d 1365, 1368 (Fed. Cir. 1999). Absent a
sliowing of what those surrounding circuinstaiices inight be, the court has no
evidence on which to base a finding that plaintiff had not only a chance to receive

the award, but a .s'ub.s'ranria/ cliance.

The record here is devoid of such evidence. Plaintiff has made no argument
and presented no facts to demonstrate that it offered something better or different
from XXXXXXXXXXXXXXXX that might justify selection of the higher priced
proposal, even assuming that the two companies had the same past
performance/quality rating. The court, therefore, cannot find that plaintiff had a
substantial chance of receiving the award absent HUD’s alleged errors.

III. CONCLUSION

The court GRANTS the government’s motion to dismiss, see Doc. 27, and
the clerk of court is directed to enter judgment in favor of the government As such,
the following motions are dismissed as moot: plaintiffs motion for preliminary and
permanent injunction, see Doc. 4; plaintiffs motion for judgment on the
administrative record, see Doc. 23; and l\/linemier’s cross motion for judgment on

the administrative record, see Doc. 28.

SO ()RDERED.

s/ J ames F. l\/lerow
James F. l\/Ierow,
Senior Judge

