                           REDACTED OPINION

       In the United States Court of Federal Claims
                                    No. 18-1C
                            Filed: February 23, 2018
             Redacted Version Issued for Publication: March 19, 2018 1


    * * * * * * * * * * *         * * * *
    IAN, EVAN & ALEXANDER               *
    CORPORATION,                        *      Bid Protest; Request for Injunctive
                                        *      Relief; Cross-Motions for
              Protestor,                *      Judgment on the Administrative
       v.                               *      Record; Motion to Dismiss;
                                        *      Competition in Contracting Act;
  UNITED STATES,                        *      Out-of-Scope Modification
                                        *
              Defendant,                *
                                        *
       v.                               *
                                        *
  XCELERATE SOLUTIONS,                  *
                                        *
              Defendant-Intervenor. *
                                        *
  * * * * * * * * * * * * * * *
      John R. Prairie, Wiley Rein LLP, Washington, D.C., for protestor. Of counsel were
Brian G. Walsh, Kendra P. Norwood, and Cara L. Lasley, Wiley Rein LLP, Washington,
D.C.

       Douglas T. Hoffman, Trial Attorney, Commercial Litigation Branch, Civil Division,
United States Department of Justice, Washington, D.C., for defendant. With him were
Franklin E. White, Jr., Assistant Director, Commercial Litigation Branch, Robert E.
Kirschman, Jr., Director, Commercial Litigation Branch, and Chad A, Readler, Acting
Assistant Attorney General, Civil Division, Department of Justice.

       Michelle E. Litteken, PilieroMazza PLLC, Washington, D.C., for defendant-
intervenor. Of counsel were Jonathan T. Williams, Samuel Finnerty, Meghan F.
Leemon, PilieroMazza PLLC, Washington, D.C.




1 This opinion was issued under seal on February 23, 2018. The parties were asked to
propose redactions prior to public release of the opinion. This opinion is issued with some
of the redactions that the parties proposed in response to the court’s request. Words
which are redacted are reflected with the notation: “[redacted].” The court made additional
conforming redactions for consistency.
                                        OPINION
HORN, J.

       In the above-captioned bid protest, protestor Ian, Evan & Alexander Corporation
(IEA) asserts that the Defense Security Services (DSS) violated the Competition in
Contracting Act (CICA) when the DSS issued an allegedly out-of-scope modification to a
contract it held with Celerity Government Solutions LLC, doing business as Xcelerate
Solutions (Xcelerate Solutions).

                                    FINDINGS OF FACT

        On October 28, 2013, the Department of Defense (DoD) Washington Headquarter
Services (WHS), a separate organization within the DoD, had awarded IEA Contract No.
HQ0034-14-A-0004, which, according to the parties’ Joint Stipulation of Facts, was one
of five awards made under “a small business set-aside blanket purchase agreement
(‘BPA’) known as Technical, Analytical Administrative and Security (‘TAAS’).” The BPA
between the WHS and IEA had an ordering period of October 28, 2013 through August
14, 2018. The BPA stated that IEA “shall provide a variety of professional, technical,
analytical and administrative services to assist the Office of the Under Secretary of
Defense (Intelligence) (OUSD(I)) in the areas of world-wide counterintelligence, security,
intelligence, surveillance and reconnaissance (ISR) missions.” The “principal user of the
BPAs” was OUSD(I), although “other customers supported by Washington Headquarters
Services, Acquisition Directorate may use the BPA with the consent of the Contracting
Officer.” As discussed below, IEA was awarded a task order that expired on January 22,
2018 under its BPA with the WHS.

        The parties state in their Joint Stipulation of Facts that, following the September
2013 shooting at the Washington Navy Yard, the Secretary of Defense directed
concurrent internal and independent reviews of the DoD’s programs, policies, and
procedures regarding the granting and renewing of security clearances for DoD personnel
and contractor personnel. In March 2014, based on the findings and recommendations of
the DoD’s internal and independent reviews, the Secretary of Defense identified “four key
recommendations,” one of which was to implement Continuous Evaluation (CE) of
personnel with access to DoD facilities or classified information. Additionally, DoD
Instruction No. 5200.02, which was also issued in March 2014, states that “[a]ll personnel
in national security positions shall be subject to continuous evaluation.” See Dep’t of Def.
Instruction, No. 5200.02, at 11 (Mar. 21, 2014). In their Joint Stipulation of Facts, the
parties state:

       Continuous evaluation, or CE, is a vetting process to review the background
       of an individual who has been determined to be eligible for access to
       classified information or to hold a sensitive position at any time during the
       period of eligibility. CE is intended to fill the gap that exists between periodic
       reinvestigations in which issues relevant to an individual’s continued
       eligibility for a security clearance may go unreported or unknown. For
       example, while the Federal Investigative Standards have allowed for

                                               2
      periodic reinvestigations to be conducted at any time following the
      completion of the previous investigation or reinvestigation, agencies have
      not been required to conduct them more frequently than every five years, at
      most, depending on the clearance level and investigative standards in
      effect. Like periodic reinvestigations, the purpose of CE is to assist agencies
      in evaluating an individual’s continued eligibility for access to classified
      information.

      CE involves automated record checks conducted on a more frequent basis,
      whereas periodic reinvestigations are conducted less frequently and may
      include, among other things, subject and reference interviews. The types of
      records checked as part of CE are the same as those checked for other
      personnel security purposes. Security-relevant information discovered in
      the course of CE is to be investigated and adjudicated under the existing
      standards.

       In October 2014, the DoD initiated a CE pilot program that was to be conducted in
a phased approach, with the number of individuals enrolled in the DoD’s CE pilot program
to increase over time. Initially, the DoD’s CE pilot program included approximately
[redacted] military, civilian, and contractor security clearance holders. DoD expanded the
number of security clearance holders enrolled in the CE pilot program to approximately
[redacted] in December 2015, approximately [redacted] in December 2016, and
approximately [redacted] in September 2017.

       On September 22, 2015, WHS awarded IEA Order No. 08 under Contract No. HQ-
0034-14-A-0004 (IEA’s Task Order), which was titled “DoD Continuous Evaluation
Validation Cell.” IEA’s Task Order was a firm-fixed-price task order and had a total value
of approximately $16.8 million. 2 IEA’s Task Order had an initial period of performance
from September 23, 2015 to September 22, 2016, and contained four one-year option
periods. Under IEA’s Task Order, IEA was to

      [o]btain a knowledge-based analytic capability to validate alerts generated
      by the DoD Continuous Evaluation (CE) Program. The validation cell will
      use supporting systems to receive and determine the CE results meet
      established reporting criteria before forwarding adjudicatively-relevant and
      actionable information to the DoD Consolidated Adjudication Facility (DoD
      CAF) and DoD Component security officials, as appropriate.

      IEA’s Task Order’s performance work statement stated that the DoD “is evolving
its CE program as directed by the Secretary of Defense’s February 21, 2014
memorandum,” and that IEA “shall provide the personnel necessary to support the
accurate and timely validation CE flags as the program scales.” IEA’s Task Order’s
performance work statement also provided that IEA’s “[e]fforts included, but are not


2IEA was awarded other orders under Contract No. HQ-0034-14-A-0004, however, Order
No. 08 is the one relevant to the above-captioned bid protest.
                                            3
limited to, developing processes and procedures, assessing and validating flags
generated by the DoD CE capability, developing business rules, drafting research reports,
collecting metrics, and developing future CE requirements.”

      Additionally, Section C-2 of IEA’s Task Order, titled “PERFORMANCE
REQUIREMENTS (TASKS),” listed the following “Performance Objectives and
Performance Elements” for IEA’s Task Order:

   •   Receive, evaluate, and disseminate flags from the DoD CE capability in
       accordance with DoD established policy, guidelines, and procedures.

   •   Assess and validate CE flags using available data sources to attribute the
       information to a specific subject and determine if the information is relevant
       and actionable, in accordance with DoD established guidelines and
       procedures.

   •   Disseminate CE results and related correspondence to personnel security
       specialists, CI, insider threat (InT), and/or law enforcement (LE) personnel,
       as applicable, and within DoD established guidelines.

   •   Develop tracking tools, matrices, and templates to efficiently analyze data
       and produce metrics which identify trends, referral status, and business
       rules efficiency.

   •   Support the DoD CE Program as required, including policy development,
       comment adjudication, formal coordination, and resource assessments.
       Provide logistical, data gathering, and presentation support to meet
       OUSD(I) and DoD CE Program requirements. Continually monitor and
       review CE processes and procedures to inform the government where
       efficiencies can be realized.

   •   Provide feedback to the DoD CE Program regarding the relevance and
       validity of the business rules for flags. Policies, procedures and strategies
       will be planned and integrated into the CE program as needed. Support the
       development and delivery of CE-related reports, briefings, and training as
       needed.

   •   Assist with the agenda setting and facilitation of the DoD Personnel Security
       IT Governance Board, DoD CE Functional Working Group, and other CE-
       related forums as required.

   •   Provide administrative support as necessary, to include planning meetings,
       tracking action items, and preparing read-ahead briefing material, meeting
       minutes, formal correspondence packages, activity reports, senior
       leadership reports, and travel/training/personnel documents.


                                             4
   •   Complete online mandatory training modules, as identified by the COR
       [Contracting Officer Representative], prior to rendering any alert
       dispositions.

(capitalization in original). According to IEA’s motion for judgment on the Administrative
Record in the above-captioned bid protest, a “DoD CE Automated System” would
automatically flag records and send those records to IEA. IEA alleges that it would
evaluate and validate the records flagged by the DoD CE Automated System. IEA states
that it would then send the validated flagged records to the “PSMO-I [Personnel Security
Management Office for Industry] contractor,” who would assign the validated flagged
records a “risk priority.”

      IEA’s Task Order estimated that IEA would need to provide twelve full-time
equivalent personnel security analysts during IEA’s Task Order’s base period of
performance and indicated that the number of full-time equivalent personnel security
analysts working under the Task Order would increase during the options periods as the
DoD CE program scaled. During the base period of performance of IEA’s Task Order, the
WHS paid IEA approximately $1.5 million for its performance.

        On June 24, 2016, the DSS, not WHS, which had awarded IEA’s previous task
orders, issued Solicitation No. HS0021-16-R-0001 (the Solicitation), which was set-aside
for small businesses. The Solicitation was a negotiated procurement that sought
contractor support for the Personnel Security Management Office for Industry (PSMO-I)
within the DSS. Section 1.2 of the Solicitation, titled “Background,” provided the following
information regarding the procurement:

       PSMO-I: On May 3, 2012, the Deputy Secretary of Defense directed
       complete consolidation of the functions, resources, and assets of seven of
       the Department’s distinct Component Central Adjudication Facilities
       (CAFs), including DSS’ Defense Industrial Security Clearance Office for
       Industry (DISCO), under the authority, direction and control of the Director
       for Administration and Management effective October 21, 2012. Due to the
       DSS responsibility for the administration and implementation of the National
       Industrial Security Program (NISP) on behalf of the Secretary of Defense
       and other government agencies, some DSS personnel were exempt from
       CAF consolidation and remained with the DSS. The specific functions
       performed by these personnel include personnel security management and
       statistical analysis/planning for cleared Industry executed by the newly
       established PSMO-I in October 2012.

       Continuous Evaluation and Defense Insider Threat Management and
       Analysis Center: On September 19, 2014, the Deputy Secretary of Defense
       approved the Washington Navy Yard Implementation Plan to implement the
       March 18, 2014 key recommendations following the tragic shooting at the
       Washington Navy Yard on September 16, 2013. The Department of
       Defense (DoD) was directed to: 1) Implement Continuous Evaluation (CE)

                                             5
       of personnel with access to DoD facilities or classified information; and 2)
       Establish the Defense Insider Threat Management and Analysis Center
       (DITMAC) to assess, recommend intervention or mitigation, oversee case
       action on threats that insiders may pose to their colleagues and/or DoD
       missions and resources, and to fulfill certain requirements of the national
       insider threat policy and minimum standards. Processing information
       pertaining to cleared Industry from CE and DITMAC will be a new mission
       for DSS and PSMO-I effective FY15.

       Section 1.3 of the DSS Solicitation, titled “Objectives,” stated that the Solicitation’s
“PWS [performance work statement] provides continuous Personnel Security Operational
Support to review and process personnel security documentation as it relates to the NISP
[National Industrial Security Program].” Section 1.4 of the Solicitation, titled “Scope,”
provided that the awardee “shall be responsible for providing operational support to assist
in the personnel clearance oversight and management as prescribed by the DoD
Personnel Security Program, Industrial Security Program and National Industrial Security
Program Operating Manual (NISPOM) in support of National Security, DoD Readiness
and Military Operations.”

      Part 5 of the DSS Solicitation identified the following “Specific Tasks” to be
performed under the resulting contract:

       5.1. Basic Services: The Vendor shall support duties and processing
       requests to include OPM [United States Office of Personnel Management
       (OPM)] Unacceptable Notifications, OPM Discontinue Notifications, OPM
       Separation/Transfer, OPM Catch‘em in CONUS [continental United States
       (CONUS)], DOHA [Defense Office of Hearing and Appeals (DOHA)]
       Reapplications, Personal Identification Data Changes, Record and Data
       Management, Process SF-312s Non-Disclosure Agreements, Processing
       of Incident Reports, e-QIP [electronic questionnaires for investigations
       processing (e-QIP)] Review, Triage Outreach Program, Personnel
       Clearance (PCL) Oversight Functions and other evolving initiatives as
       related to Continuous Evaluation and the Defense Insider Threat
       Management Analysis Center. Vendor support shall perform functions and
       analysis to facilitate personnel security clearance tasks as described
       throughout Section 5.

       5.2 Unacceptable Notification: Unacceptable notifications are received from
       the OPM when an investigation request is not complete or does meet [sic]
       the timeline for submission. Once the case becomes Unacceptable, Vendor
       personnel updates the subject’s eligibility in accordance with Standard
       Operating Procedures.

       5.3 Discontinue Notifications: Vendor personnel will receive Discontinued
       Notifications from OPM via system notifications and in the mail. The Vendor



                                              6
shall process Discontinue Notices in accordance with Standard Operating
Procedures.

5.4 Separation/Transfer Notifications: Vendor personnel receive
Separation/Transfer notifications via system notifications from the
system(s) of record. The Vendor shall process Separation/Transfer
Notifications in accordance with Standard Operating Procedures.

5.5 Catch ‘em [sic] in CONUS: Vendor personnel shall process information
received from FSO’s [facility security officer (FSO)] regarding a subject’s
dates of availability for a CONUS interview with OPM. Once the information
is received, the Vendor personnel shall notify OPM’s Catch ‘em [sic] In
CONUS Team for scheduling of the subject interview.

5.6 Defense Office of Hearing and Appeals (DOHA) Reapplication: Vendor
personnel process the e-QIPs as received by government personnel for
individuals whose security clearance was Denied or Revoked by DOHA.
Vendor personnel prepare a package consisting of the e-QIP and signature
pages to PSMO-I management for further processing. Vendor personnel
notify DOHA of the subject’s reapplication and of the subject’s intent to
reapply for a security clearance.

5.7 Personal Identification Data Changes: Vendor personnel are
responsible for correcting Personal Identification Data (PID) changes upon
request from FSO’s or submitting a request for the correction, to the
appropriate database owner.

5.8 Record and Data Management: Vendor personnel create and modify
records in personnel security databases; add, delete, and create
documents for workflow process and assignment. Vendor personnel
receive, distribute and send mail.

5.9 Process Standard Form-312: Vendor personnel shall review all
submitted Classified Information Non-Disclosure Agreements (SF-312) for
completeness and separate forms as either acceptable or rejected in order
to process acceptable SF-312’s into designated database and process
rejected messages to FSO via the system(s) of record.

5.10 Incident Reports: Vendor personnel will review, analyze, and distribute
all Incident Reports sent to PSMO-I in accordance with DSS/DoD CAF
CONOPS [Consolidated Adjudications Facility Concept of Operations (CAF
CONOPS)]. The analysis will consist of ranking reports into three
categories: Low, Medium, and High. Vendor personnel will upload the
Incident Reports into CATS [Case Adjudication Tracking System (CATS)]
and determine the severity and risk of the Incident Report. Low Incident
Reports will be forwarded to PSMO-I government personnel to close in

                                     7
system(s) of record. Medium Incident Reports will be forwarded by Vendor
personnel to the DoD CAF [Department of Defense Consolidated
Adjudications Facility (DoD CAF)] for adjudicative action. High Incident
Reports will be forwarded to the PSMO-I Interim Suspension personnel and
the DoD CAF for immediate action.

5.11 Electronic Questionnaires for Investigations Processing (e-QIP)
Review: Vendor personnel shall review initial investigation submissions for
completeness and route to government personnel for final approval and
release to OPM.

5.12 Triage Outreach Program (TOP): Vendor personnel shall perform TOP
activities for approximately 5,000 NISP [National Industrial Security
Program (NISP)] facilities annually. TOP activities include: research of
security involvement in the NISP, company website information, JPAS
[Joint Personnel Adjudication System (JPAS)] activity and PCLs [personnel
security clearance (PCL)], federal and state business records, transmit and
suspense TOP survey to FSO via automated SharePoint workflow, evaluate
and document TOP survey responses against established NISPOM
[National Industrial Security Program Operating Manual (NIPSOM)] criteria,
conduct telephonic follow-up with the FSO to correct security relevant
issues and ambiguous TOP survey responses, and transmission of facility
security posture to assigned Industrial Security Representative via
automated SharePoint workflow.

5.13 Personnel Clearance (PCL) Oversight Functions: Vendor personnel
shall perform research on overdue periodic reinvestigation and aging
interim clearance population and take authorized actions as directed by
PSMO-I. This research includes but not limited to checking the status of the
open and closed investigations, submitting requests for information and
expanded focus investigations and enhanced subject interviews. Vendor
personnel will assist with additional pending adjudication actions as
required.

5.14 Customer Service Requests: Vendor personnel will review, process
and respond to customer service requests for issue resolution action. The
customer service request may be in the form of an e-mail, phone call, fax,
system(s) of record, or other mode of communication.

5.15 DSS Knowledge Center Support: Vendor personnel will answer phone
calls from security community and subjects of investigation, focusing on
issue resolution. Vendor personnel will utilize system(s) of record of record
to provide responses to inquiries involving the personnel security clearance
process. Vendor personnel will respond to inquiries on functional questions
of e-QIP, perform e-QIP account resets, and respond to any issues
involving the initiation/continuation of e-QIP investigation requests. In

                                     8
       addition, Vendor personnel will answer questions from security
       professionals regarding clearance(s). Vendor Task Lead will identify trends
       to support the update of training, communication and knowledge
       applications.

       5.16 Continuous Evaluation (CE): Vendor personnel will support the DoD
       CE mission. The records flagged by CE will be reviewed, analyzed, and
       distributed into Low, Medium, High risk categories. Low, Medium and High
       Risk Reports will be forwarded to appropriate government office(s) for
       action and recorded in the system(s) of record.

       5.17 Reports: The Vendor shall provide the required reports in accordance
       with the deliverables schedule located in Technical Exhibit 2.

(emphasis in original).

        Section 7.1 of the DSS Solicitation established a performance objective, a
standard for assessing whether contractor performance satisfied the objective, a
performance threshold, and a method of surveillance for each “Specific Task” contained
in Part of 5 the Solicitation. The performance objective for Section 5.16 of the Solicitation,
titled “Continuous Evaluation (CE),” was “[t]he Vendor shall process Continuous
Evaluation reports IAW [in accordance with] Section 5.16 of the PWS.” The standard for
assessing whether performance satisfied the objective for Section 5.16 of the Solicitation
was “[t]he Vendor processed reports accurately, using proper procedures in the
necessary timeframe,” and the performance threshold for Section 5.16 of the Solicitation
was “[p]rocessed data with a minimum of 95% accuracy.” Section 7.3 of the Solicitation
estimated that there would be 225,000 CE reports to process per year and estimated that
it would take four minutes to process a report. In accordance with a section of the
Solicitation titled “Evaluation Factors for Award,” proposals received by the DSS were to
be evaluated on the following three factors: (1) past performance; (2) technical capability;
and (3) price.

       Prior to the DSS Solicitation’s closing time on July 8, 2016, the DSS received
proposals from Advanced Onion, Inc. (Advanced Onion), Sayres and Associates
Corporation, ANASEC, Inc., and Xcelerate Solutions. The DSS’ technical evaluation
team, contract specialist, and contracting officer began evaluating the four proposals on
July 12, 2016. On July 21, 2016, the contract specialist “sent discussions items” to
Advanced Onion, Sayres and Associates Corporation, ANASEC, Inc., and Xcelerate
Solutions and established a post-discussions proposal submission deadline on July 27,
2016. All four vendors timely submitted post-discussion proposal revisions.

       Advanced Onion’s proposal listed IEA as a proposed subcontractor. In its post-
discussion proposal, Advanced Onion included the following discussion of Section 5.16
of the Solicitation and its CE efforts:




                                              9
       [redacted]

(alterations and emphasis in original). Advanced Onion’s proposal did not appear to
provide how many full-time equivalents would be dedicated to performing the
requirements set forth in Section 5.16 of the Solicitation.

        In its proposal, Xcelerate Solutions also addressed how it would execute the
specific task listed in Section 5.16 of the Solicitation. Xcelerate Solutions’ post-discussion
proposal included the following discussion regarding performance of Section 5.16 of the
Solicitation:

       [redacted]

In the staffing plan contained in Xcelerate Solutions’ post-discussions proposal, Xcelerate
Solutions allocated [redacted] full-time equivalents to performing the requirements set
forth in Section 5.16 of the Solicitation.

        On August 11, 2016, the DSS awarded Contract No. HS0021-16-C-0006 to
Xcelerate Solutions (the Xcelerate Solutions’ Contract). The Xcelerate Solutions’ Contract
was a firm-fixed-price contract with a base period of performance of four months, from
August 15, 2016 through December 14, 2016, and contained four one-year option
periods. As awarded, Xcelerate Solutions’ Contract had a total potential contract value of
approximately $15.3 million if all four option periods were exercised. Under the Xcelerate
Solutions’ Contract as awarded, the base period was valued at $1,040,377.60, the first
option period was valued at $3,121,132.80, the second option period was valued at
$3,152,544.00, the third option period was valued at $3,184,012.80, and the fourth option
period was valued at $3,216,096.00. Under the Xcelerate Solutions’ Contract, Xcelerate
Solutions was required “to provide operational Vendor support to the Personnel Security
Management Office for Industry (PSMO-I) with the Defense Security Service (DSS).”
Xcelerate Solutions’ Contract contained the same Background, Objectives, Scope, and
Specific Tasks sections as were provided for in the Solicitation. The Specific Task
relevant to CE, contained in Section 5.16 of the Xcelerate Solutions’ Contract, stated, as
it also did in the Solicitation, that “Vendor personnel will support the DoD CE mission. The
records flagged by CE will be reviewed, analyzed, and distributed into Low, Medium, High
risk categories. Low, Medium and High Risk Reports will be forwarded to appropriate
government office(s) for action and recorded in the system(s) of record.”

       Approximately one month after the DSS awarded the Xcelerate Solutions’ Contract
to Xcelerate Solutions, on September 7, 2016, the WHS issued Modification No. 01 to
IEA’s Task Order, which, effective September 23, 2016, exercised the first option period
under IEA’s Task Order pursuant to Federal Acquisition Regulation (FAR) 52.217-9. 3


3The regulation at FAR 52.217-9, titled “Option To Extend the Term of the Contract,” as
modified in IEA’s Task Order, provides:

       (a) The Government may extend the term of this contract by written notice
                                             10
Modification No. 01 of IEA’s Task Order stated that the period of performance for the first
option period of IEA’s Task Order was September 23, 2016 to September 22, 2017, and
provided that the “total cost of this contract was increased by $2,779,781.84 from
$1,506,694.36 (EST) to $4,286,476.20 (EST).” According to the parties’ Joint Stipulation
of Facts, although Modification No. 01 of IEA’s Task Order was issued by the WHS, the
DSS had begun to provide the funding for IEA’s Task Order “since at least September 23,
2016.”

       In addition, as Xcelerate Solutions was nearing the end of the base period of
performance of the Xcelerate Solutions’ Contract with the DSS, on December 7, 2016,
the DSS issued Modification No. P00001 to the Xcelerate Solutions’ Contract, which
exercised the first option period under the Xcelerate Solutions’ Contract pursuant to FAR
52.217-9. Xcelerate Solutions’ Contract’s first option period began on December 15,
2016, and concluded on December 14, 2017.

       Following the issuances of Modification No. 01 to IEA’s WHS Task Order on
September 7, 2016, and Modification No. P00001 to Xcelerate Solutions’ Contract on
December 7, 2016, on December 19, 2016, the DoD issued a memorandum regarding
the “Realignment of the Department of Defense Continuous Evaluation Mission and
Resources to the Defense Security Service.” In the December 19, 2016 memorandum,
the then-Director for Defense Intelligence (Intelligence & Security) stated:

      I hereby realign the Department of Defense (DoD) Continuous Evaluation
      (CE) mission and CE Validation Cell resources from the Security Policy and
      Oversight Division (SPOD) to the Defense Security Service (DSS). Upon
      this realignment, DoD’s CE efforts will be managed by the DSS Personnel
      Security Management Office for Industry (PSMO-I). The Director, DSS, will
      prepare the Department to meet its goal of implementing CE on one million
      cleared personnel by the end of calendar year 2017.

      The Security Policy and Oversight Division will support DSS in the
      establishment of a CE Program of Record. Additionally, SPOD will update
      relevant DoD policies to outline the associated responsibilities, functions,
      relationships, and authorities.



          to the Contractor within before the end of the period of performance;
          provided that the Government gives the Contractor a preliminary written
          notice of its intent to extend any time before the contract expires. The
          preliminary notice does not commit the Government to an extension.

      (b) If the Government exercises this option, the extended contract shall be
          considered to include this option clause.

      (c) The total duration of this contract, including the exercise of any options
          under this clause, shall not exceed 60 months.
                                            11
       DSS will provide quarterly progress updates to me or my designee until
       further notice. In accordance with the Office of the Secretary of Defense
       core functions, the Office of the Under Secretary of Defense for Intelligence
       will retain all policy oversight and training authorities.

        By letter dated August 30, 2017, the WHS informed IEA of its intention to extend
the term of IEA’s WHS Task Order by four months in accordance with FAR 52.217-8. 4
The August 30, 2017 letter also stated that “[t]his task order is no longer a requirement of
the Office of the Under Secretary of Defense for Intelligence and Washington
Headquarters Services.” Thereafter, IEA sent several email messages to a contracting
officer for the DSS requesting an opportunity to discuss the transfer of the CE “Validation
Cell” from the WHS to the DSS, which does not appear to have happened.

        On September 14, 2017, the WHS issued Modification No. 03 to IEA’s Task Order
pursuant to FAR 52.217-8 (2017). 5 Modification No. 03 to IEA’s Task Order, which had
an effective date of September 22, 2017, stated that its purpose was “to incorporate CLIN
[Contract Line Item Number] 1003 to extend the task order for four months. All other terms
and conditions remain the same.” Modification No. 03, therefore, extended IEA’s
performance under IEA’s Task Order with the WHS until January 22, 2018. Modification
No. 03 also provided that the “total cost of this contract was increased by $925,427.28
from $4,286,476.20 (EST) to $5,211,903.48 (EST).” The parties’ Joint Stipulation of
Facts, which was submitted to the court on January 9, 2018, states, “[a]t this time, the
[IEA’s] contract is staffed with [redacted] FTEs [full-time equivalents] under the task
order.”

       Three days later, on September 17, 2017, the “Chief, CE Cell” within the DSS
submitted a document containing the subject “Recommendation to Modify Contract:
HS0021-16-C0006” (Recommendation to Modify), which recommended that the DSS
modify Xcelerate Solutions’ Contract. The Recommendation to Modify Xcelerate
Solutions’ Contract stated:

       PSMO-I is requesting to increase the resources within the scope of the


4The regulation at FAR 52.217-8, titled “Option To Extend Services,” as modified in IEA’s
Task Order, provides:

       The Government may require continued performance of any services within
       the limits and at the rates specified in the contract. These rates may be
       adjusted only as a result of revisions to prevailing labor rates provided by
       the Secretary of Labor. The option provision may be exercised more than
       once, but the total extension of performance hereunder shall not exceed 6
       months. The Contracting Officer may exercise the option by written notice
       to the Contractor at any time prior to the expiration of the order.
5Modification No. 02 of IEA’s Task Order was issued to “correct the lines of accounting
on CLIN [Contract Line Item Number] 1001 and 1002 via SLINs 100101 and 100201.”
                                            12
      PSMO-I Support Services Contract. We are not adding scope to the
      contract, but clarifying activities that are in support of an existing task area.
      Per contract HS0021-16-C-0006, Item 5.16, Continuous Evaluation (CE),
      “Vendor personnel will support the DoD CE mission.”

The Recommendation to Modify Xcelerate Solutions’ Contract with DSS also included the
following background information:

      •   At the time the contract was awarded, the full CE mission had not yet
          been moved to DSS PSMO-I (per USD/I memo signed 16DEC16) and
          the vendor’s role was anticipated to be primarily flagging and
          categorizing the records for industry personnel. With PSMO- I assuming
          the full CE mission, the CE activities the vendor personnel will perform
          extend to the end-to-end processing of the CE alerts for the entire DoD
          enterprise population.

      •   Moving the work from the WHS contract to the PSMO-I contract will
          provide efficiencies by combining the two efforts into a single effort with
          no hand-off required. The current PSMO-I contract includes 4 minutes
          for flagging and categorizing each CE record (based on a quantity of
          225,000 records), for a total of approximately 8 FTE. There is also an
          Analytic Cell contract that takes over 20+ minutes (depending on alert)
          to process each CE record; resulting in an estimated 32 FTE to process
          225,000 records for a total of 41 FTE to support the end-to-end CE
          mission. The goal within DoD is to enroll over 3M personnel into CE
          based on risk and position with an estimated alert volume resulting in
          ~20% for action.

      •   The current period of performance (HS0021-16-C-0006) ends 14 Dec
          2017 and provides the opportunity to modify before exercising Option
          Year 2.

Included in the Recommendation to Modify Xcelerate Solutions’ Contract was a proposed
modified performance work statement, which was red-lined from the existing Xcelerate
Solutions’ Contract, a justification and approval, market research analysis, independent
government cost estimate market research, and independent government cost estimate
historic data.

       On October 23, 2017, a contracting officer for DSS sent an email message to
Xcelerate Solutions regarding the Xcelerate Solutions’ Contract. In her email, the
contracting officer for the DSS requested a quote from Xcelerate Solutions for the
attached “additional support services requirement under the PSMO-I Support Services
contract HS0021-16-C-0006. DSS has updated the HS0021-16-C-0006 PWS to include
the CE Cell effort and all changes are red-lined in the attached PWS for ease of review.”
In response, Xcelerate Solutions submitted its initial proposal for the proposed additional
work on November 9, 2017, a second, revised proposal on December 5, 2017, and a

                                             13
third, revised proposal on December 6, 2017. In its third, revised proposal, Xcelerate
proposed adding [redacted] full-time equivalents for additional PSMO-I support and
[redacted] equivalents for CE support during the second option period of the Xcelerate
Solutions’ Contract. Prior to the modification of the Xcelerate Solutions’ Contract,
Xcelerate Solutions had been providing “[redacted] FTEs [full-time equivalents], with
[redacted] providing CE support.”

       On December 14, 2017, the contracting officer for Xcelerate Solutions’ Contract
with the DSS issued a Memorandum for Record regarding “PSMO-I Option Year II
Exercise & In-scope Increase for CE Cell Mission.” The Memorandum for Record stated
the

      purpose of this modification is twofold: 1) Exercise Option Period II as
      requested by the Personnel Security Management Office for Industry
      (PSMO-I) Directorate of Defense Security Service (DSS) in the Purchase
      Request Memo received on 9 November 2017 and 2) execute an inscope
      [sic] increase to accommodate a growing Continuous Evaluation (CE)
      Mission and an increased budgetary authority and need for Personnel
      Security Investigations for Industry.

Additionally, the Memorandum for Record provided:

      At the time of contract award, the full CE mission had not come to fruition
      and pieces of the effort were still owned by Washington Headquarters
      Services (WHS). Per the Under Secretary of Defense for Intelligence’s
      memo signed 16 December 2016, these efforts needed to come together
      and be unified under one contract and the full CE mission materialized in
      the HS0021-16-C-0006 PWS. At the time, the Contractor’s role was
      anticipated to be primarily flagging and categorizing records for industry
      personnel without the full understanding of the entire mission. With
      PSMO-I now assuming the full CE mission, the CE activities the Contractor
      personnel will perform will now encompass the end-to-end processing of
      the CE alerts for the entire DoD enterprise population. Looking closer at the
      different contracts, the current PSMO-I contract provides four (4) minutes
      for flagging and categorizing of each CE record (based on a quantity of
      225,000 records), for approximately eight Full Time Equivalents (FTE). The
      WHS Analytic Cell contract includes over 20 minutes (depending on alert)
      of processing for each CE record; resulting in an estimated 32 FTEs to
      process 225,000 records. Transferring the work from the WHS contract to
      the PSMO-I contract will provide efficiencies through consolidation of
      previously-separately-managed pieces of a singular effort.

        According to the Memorandum for Record, “combining the two Government efforts
into one complete CE effort” would not impact offerors who submitted proposals in
response to the Solicitation “because the work is not different from what was initially
solicited but now better defined or just increased.” The contracting officer reasoned that

                                           14
“[c]ontractors could have anticipated that as we gained a better understanding of this new
CE mission that we might need to further define our requirement in order to support the
greatest performance and success of the winning Contractor.” Additionally, the
contracting officer stated in her Memorandum for Record that “[a]n increase to the PSMO-
I support is also only an increase not a change in the type of work being done,” and that
“[c]ontractors could also have anticipated that the Government might have an increased
need for Personnel Security Investigations for Industry support over time as well.”

       That same day, December 14, 2017, the DSS issued Modification No. P00002 to
Xcelerate Solutions’ Contract (the Xcelerate Solutions’ Modified Contract), which
exercised the second option period of Xcelerate Solutions’ Contract pursuant to FAR
52.217-9 and issued what was described in Modification No. P00002 as “an inscope [sic]
change to the PWS” pursuant to FAR 52.212-4(c). 6 Section 5.1 of Xcelerate Solutions’
Modified Contract, titled “Basic Services,” was modified to provide that “[t]he vendor
support shall perform functions, as directed by the government lead to facilitate Personnel
Security Clearance / Continuous Evaluation tasks as described throughout Section 5.”
Section 5.16 of Xcelerate Solutions’ Contract, titled “Continuous Evaluation (CE),” was
renumbered to become Section 5.12 in Xcelerate Solutions’ Modified Contract. Section
5.12 of Xcelerate Solutions’ Modified Contract provided:

       Vendor personnel will receive, evaluate, and disseminate flags from the
       DoD CE capability in accordance with DoD established policy, guidelines,
       and procedures. Assess and validate CE flags using available data sources
       to attribute the information to a specific subject and determine if the
       information is relevant and actionable, in accordance with DoD established
       guidelines and procedures. Disseminate CE results and related
       correspondence to personnel security specialists, CI, insider threat (InT),
       and/or law enforcement (LE) personnel, as applicable, and within DoD
       established guidelines. Develop tracking tools, matrices, and templates to
       efficiently analyze data and produce metrics which identify trends, referral
       status, and business rules efficiency. Support the DoD CE Program as
       required, including policy development, comment adjudication, formal
       coordination, and resource assessments. Provide logistical, data gathering,
       and presentation support to meet DoD CE Program requirements.
       Continually monitor and review CE processes and procedures to inform the
       government where efficiencies can be realized. Provide feedback to the DoD
       CE Program regarding the relevance and validity of the business rules for
       flags. Policies, procedures and strategies will be planned and integrated into
       the CE program as needed. Support the development and delivery of CE-
       related reports, briefings, and training as needed. Assist with the agenda
       setting and facilitation of DoD CE Working Groups, and other CE-related
       forums as required. Provide administrative support as necessary, to include

6 The regulation at FAR 52.212-4, titled “Contract Terms and Conditions Commercial
Items,” states, in part, that “[c]hanges in the terms and conditions of this contract may be
made only by written agreement of the parties.” See FAR 52.212-4(c) (2017).

                                            15
       planning meetings, tracking action items, and preparing read-ahead briefing
       material, meeting minutes, formal correspondence packages, activity
       reports, senior leadership reports, and travel/training/personnel documents. 7

Section 7.3 of Xcelerate Solutions’ Modified Contract with DSS estimated that Xcelerate
Solutions would process 80,000 CE reports per year, with each CE report taking
approximately thirty-six minutes to process.

        Modification No. P00002 to Xcelerate Solutions’ Contract further stated that the
“total cost of this contract was increased by $7,100,371.20 from $4,161,510.40 to
$11,261,881.60.” Of the $7,100,371.20, the exercise of the second option period originally
contained in Xcelerate Solutions’ Contract, which was contained in Contract Line Item
Numbers 2001, 2002, and 2003, increased the total cost of Xcelerate Solutions’ Modified
Contract by $3,152,544.00. 8 The additional work added to the Xcelerate Solutions’
Modified Contract for “DoD Continuous Evaluation Mission support increase/further
definition in accordance with the updated Performance Work Statement Part 5, executed
in P00002,” which was contained in Contract Line Item Number 2005, increased the total
cost of the Xcelerate Solutions’ Modified Contract by [redacted]. The additional work for
“[i]ncreased Personnel Security Operational support in accordance with the updated
Performance Work Statement Part 5, executed in P00002,” which was contained in
Contract Line Item Number 2004, increased the total cost of the Xcelerate Solutions’
Modified Contract by [redacted]. Additionally, Modification No. P00002 contained two
individually-priced option periods totaling [redacted] for “DoD Continuous Evaluation
Mission support increase/further definition,” as reflected in Contract Line Item Numbers
3005 and 4005, and two individually-priced option periods totaling [redacted] for
“[i]ncreased Personnel Security Operational support,” as reflected in Contract Line Item
Numbers 3004 and 4004. 9 Cumulatively, the total potential value of Modification No.

7The majority of the specific tasks listed in Section 5.12 of Xcelerate Solutions’ Modified
Contract are identical to the performance requirements contained in Section C-2 of IEA’s
Task Order described above.
8 Contract Line Item Number 2001 was an option for “PSMO-I: Personnel Security
Operational support to review and process personnel security documentation as it relates
to the NISP in accordance with PWS Part 5.” Contract Line Item Number 2002 was an
option for “Contract Manpower Reporting In Accordance With PWS Section 1.6.12.”
Contract Line Item Number 2003 was an option for work “[i]n accordance with the
attached CDRLs [contract data requirements lists] in Section J of the Contract.”
9 The parties, in their Joint Stipulation of Facts, state that “[s]imilar CLINs [Contract Line
Item Numbers] were included for the third and fourth option years. The CLINs for all option
years, when combined, equaled $7,100,731.” (internal reference omitted). The prices for
the four Contract Line Item Numbers which represent the option periods established for
the newly established third and fourth option periods in Contract Line Item Numbers 3004,
3005, 4004, and 4005 under Xcelerate Solutions’ Modified Contract, however, are
[redacted]; [redacted]; [redacted]; and [redacted]. When added together, the new Contract
Item Line Numbers “for the third and fourth option years” total [redacted].
                                             16
P00002 of Xcelerate Solutions’ Contract, excluding the previously existing option period
contained in Contract Line Item Numbers 2001, 2002, and 2003 under Xcelerate
Solutions’ Contract, was [redacted].

      Also on December 14, 2017, the DoD issued an online press release regarding
Xcelerate Solutions’ Modified Contract, which provided:

       Celerity Government Solutions, LLC dba Xcelerate Solutions in McLean,
       VA, was awarded a $7,100,731.20 contract modification (P00002) to
       previously awarded contract HS0021-16-C-0006 for the Defense Security
       Service Personnel Security Management Office for Industry (PSMO-I)
       Support Services effort. The modification increases the total cumulative
       face value of the contract by $7,100,371.20 from $4,161,510.40 to
       $11,261,881.60. This modification exercised the next option, increases the
       definition of the Continuous Evaluation Mission and increases the already
       existing PSMO-I support for continued Personnel Security Operational
       Support to review and process personnel security documentation. Work will
       be performed at the Government’s facility located in Hanover, Maryland with
       an expected completion date for this option period of December 14, 2018
       or a potential ultimate contract completion date of June 14, 2021. This
       option will be fully funded. The Defense Security Service Office of
       Acquisitions, Quantico, Virginia is the contracting activity (HS0021-16-C-
       0006).

Xcelerate Solutions issued its own online press release regarding the Xcelerate Solutions’
Modified Contract on December 14, 2017, which stated:

       Xcelerate Solutions has been awarded a $7,100,731 contract modification
       to their Defense Security Service (DSS) Personnel Security Management
       Office for Industry (PSMO-I) support services effort. Along with exercising
       the second option year of the contract, this modification increases the
       current PSMO-I support for continued personnel security operational
       support in reviewing and processing documentation for Department of
       Defense (DoD) contractors’ personnel security clearances. This
       modification also significantly expanded the contract’s Continuous
       Evaluation (CE) mission, incorporating the work previously performed by
       the CE Analytical Cell. Xcelerate will develop CE processes, procedures,
       and business rules; draft research reports; collect metrics; and assess and
       validate CE flags.

        IEA filed a single-count complaint in the above-captioned bid protest on January
2, 2018. In its complaint, IEA alleges that, because the DSS’ modification of “the Xcelerate
PSMO-I Contract to have Xcelerate perform analytical and policy development support
for the DoD CE Program exceeds the scope of the contract as solicited, Defendant’s use
of the PSMO-I Contract to obtain those services is unlawful and contrary to CICA’s



                                            17
statutory mandate for full and open competition.” 10 IEA argues that the Solicitation did not
contemplate the awardee providing “any direct support” for the DoD CE program, and the
specific tasks listed in the performance work statement of Xcelerate Solutions’ Contract
“makes clear that CE is an entirely separate function.” (emphasis in original). IEA’s
complaint seeks a “preliminary and permanent injunctions enjoining Defendant from
procuring analytical and policy development support services for the DoD CE Program
under Xcelerate’s PMSO-I contract, or any other non-competitively-awarded task order
or contract, pending adjudication of this protest . . . .” Additionally, IEA requests this court
“enter an order directing Defendant to acquire analytical and policy development support
for the DoD CE Program through the previously competed and competitively awarded
task order held by IEA until such time as Defendant makes another competitive award of
a contract for such services . . . .” IEA also filed an application for an emergency temporary
restraining order and preliminary injunction on January 2, 2018, which the court denied
at an in-person hearing on January 3, 2018.

       On January 12, 2018, IEA, defendant, and defendant-intervenor filed simultaneous
motions for judgment on the Administrative Record pursuant to Rule 52.1(c) (2017) of the
Rules of the United States Court of Federal Claims (RCFC), and the defendant filed a
motion to dismiss for lack of subject matter jurisdiction pursuant to RCFC 12(b)(1) (2017).
IEA asserts in its motion for judgment on the Administrative Record that its protest must
be sustained because the DSS acted contrary to law when it allegedly failed to comply
with CICA by issuing a modification that was not within the scope of Xcelerate Solutions’
Contract. In its motion to dismiss and cross-motion for judgment on the Administrative
Record, the defendant argues that Modification No. P00002 was within the scope of
Xcelerate Solutions’ Contract, and, “[b]ecause the base PSMO-I Contract was properly
modified, this Court lacks jurisdiction over IEA’s claim.” Defendant-intervenor argues that
“Xcelerate has been providing CE support since the PSMO-I Contract was awarded, and
the Modification did not change the type of services that Xcelerate is providing. Rather,
the Modification increased the amount of work.” The protestor, defendant, and defendant-
intervenor filed simultaneous replies to their motions for judgment on the Administrative
Record on January 16, 2018. On January 18, 2018, the court held an oral argument in
the above-captioned bid protest. On January 19, 2018, in order to provide the parties with
a resolution of the above-captioned bid protest prior to the expiration of IEA’s Task Order
with the WHS on January 22, 2018, the court issued an oral decision in a hearing with the
parties. This decision incorporates and memorializes the January 19, 2018 oral decision.

                                        DISCUSSION

       RCFC 52.1(c) governs motions for judgment on the Administrative Record. The
court’s inquiry is directed to “‘whether, given all the disputed and undisputed facts, a party
has met its burden of proof based on the evidence in the record.’” Mgmt. & Training Corp.


10 IEA did not challenge Modification No. P00002’s exercise of the previously existing
second option period under Xcelerate Solutions’ Contract, as reflected in Contract Line
Item Numbers 2001, 2002, and 2003, or the requirement of “[i]ncreased Personnel
Security Operational support,” as reflected in Contract Line Item Number 2004.
                                              18
v. United States, 115 Fed. Cl. 26, 40 (2014) (quoting A & D Fire Prot., Inc. v. United
States, 72 Fed. Cl. 126, 131 (2006) (citing Bannum, Inc. v. United States, 404 F.3d 1346,
1356-57 (Fed. Cir. 2005))); see also Informatics Applications Grp., Inc. v. United States,
132 Fed. Cl. 519, 524 (2017) (citation omitted); Strategic Bus. Sols., Inc. v. United States,
129 Fed. Cl. 621, 627 (2016); Rotech Healthcare Inc. v. United States, 118 Fed. Cl. 408,
413 (2014); Eco Tour Adventures, Inc. v. United States, 114 Fed. Cl. 6, 21 (2013); DMS
All-Star Joint Venture v. United States, 90 Fed. Cl. 653, 661 (2010). Pursuant to RCFC
52.1, in a bid protest, the court reviews the agency’s procurement decision to determine
whether it is supported by the administrative record. See CW Gov’t Travel, Inc. v. United
States, 110 Fed. Cl. 462, 481 (2013).

       The Administrative Dispute Resolution Act of 1996 (ADRA), Pub. L. No. 104-320,
§§ 12(a), 12(b), 110 Stat. 3870, 3874 (1996) (codified at 28 U.S.C. § 1491(b)(1)–(4)
(2012)), amended the Tucker Act to establish a statutory basis for bid protests in the
United States Court of Federal Claims. See Impresa Construzioni Geom. Domenico
Garufi v. United States, 238 F.3d 1324, 1330-32 (Fed. Cir. 2001); see also Sys.
Application & Techs., Inc. v. United States, 691 F.3d 1374, 1380 (Fed. Cir. 2012)
(explaining that the Tucker Act expressly waives sovereign immunity for claims against
the United States in bid protests). The statute provides that protests of agency
procurement decisions are to be reviewed under Administrative Procedure Act (APA)
standards, making applicable the standards outlined in Scanwell Labs., Inc. v. Shaffer,
424 F.2d 859 (D.C. Cir. 1970), and the line of cases following that decision. See, e.g., Per
Aarsleff A/S v. United States, 829 F.3d 1303, 1309 (Fed. Cir. 2016) (quoting NVT Techs.,
Inc. v. United States, 370 F.3d 1153, 1159 (Fed. Cir. 2004)) (“Protests of agency
procurement decisions are reviewed under the standards set forth in the Administrative
Procedure Act (‘APA’), see 28 U.S.C. § 1491(b)(4) (citing 5 U.S.C. § 706), ‘by which an
agency's decision is to be set aside only if it is arbitrary, capricious, an abuse of discretion,
or otherwise not in accordance with law[.]’”); Impresa Construzioni Geom. Domenico
Garufi v. United States, 238 F.3d at 1332); Res. Conservation Grp., LLC v. United States,
597 F.3d 1238, 1242 (Fed. Cir. 2010) (“Following passage of the APA in 1946, the District
of Columbia Circuit in Scanwell Labs., Inc. v. Shaffer, 424 F.2d 859 (D.C. Cir. 1970), held
that challenges to awards of government contracts were reviewable in federal district
courts pursuant to the judicial review provisions of the APA.”); Galen Med. Assocs., Inc.
v. United States, 369 F.3d 1324, 1329 (Fed. Cir. 2004) (citing Scanwell Labs., Inc. v.
Shaffer, 424 F.2d at 864, 868, for its “reasoning that suits challenging the award process
are in the public interest and disappointed bidders are the parties with an incentive to
enforce the law”); Banknote Corp. of Am., Inc. v. United States, 365 F.3d 1345, 1351
(Fed. Cir. 2004) (“Under the APA standard as applied in the Scanwell line of cases, and
now in ADRA cases, ‘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.’” (quoting Impresa Construzioni Geom. Domenico Garufi v.
United States, 238 F.3d at 1332)); Info. Tech. & Applications Corp. v. United States, 316
F.3d 1312, 1319 (Fed. Cir. 2003).

      When discussing the appropriate standard of review for bid protest cases, the
United States Court of Appeals for the Federal Circuit addressed subsections (2)(A) and

                                               19
(2)(D) of 5 U.S.C. § 706, see Impresa Construzioni Geom. Domenico Garufi v. United
States, 238 F.3d at 1332 n.5, but focused its attention primarily on subsection (2)(A). See
Croman Corp. v. United States, 724 F.3d 1357, 1363 (Fed. Cir.) (“‘[T]he proper standard
to be applied [to the merits of] bid protest cases is provided by 5 U.S.C. § 706(2)(A)
[(2006)]: a reviewing court shall set aside the agency action if it is “arbitrary, capricious,
an abuse of discretion, or otherwise not in accordance with law.”’” (quoting Banknote
Corp. of Am. v. United States, 365 F.3d at 1350-51 (citing Advanced Data Concepts, Inc.
v. United States, 216 F.3d 1054, 1057-58 (Fed. Cir.), reh’g and reh’g en banc denied
(Fed. Cir. 2000)), reh’g and reh’g en banc denied (Fed. Cir. 2013) (alterations in original).
The statute says that agency procurement actions should be set aside when they are
“arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,” or
“without observance of procedure required by law.” 5 U.S.C. § 706(2)(A), (D) (2012); 11


11 The   language of 5 U.S.C. § 706 provides in full:

         To the extent necessary to decision and when presented, the reviewing
         court shall decide all relevant questions of law, interpret constitutional and
         statutory provisions, and determine the meaning or applicability of the terms
         of an agency action. The reviewing court shall—

            (1) compel agency action unlawfully withheld or unreasonably delayed;
                and

            (2) hold unlawful and set aside agency action, findings, and conclusions
                found to be—

                (A) arbitrary, capricious, an abuse of discretion, or otherwise not in
                    accordance with law;

                (B) contrary to constitutional right, power, privilege, or immunity;

                (C) in excess of statutory jurisdiction, authority, or limitations, or short
                    of statutory right;

                (D) without observance of procedure required by law;

                (E) unsupported by substantial evidence in a case subject to sections
                    556 and 557 of this title or otherwise reviewed on the record of
                    an agency hearing provided by statute; or

                (F) unwarranted by the facts to the extent that the facts are subject
                    to trial de novo by the reviewing court.

         In making the foregoing determinations, the court shall review the whole
         record or those parts of it cited by a party, and due account shall be taken
         of the rule of prejudicial error.

                                                20
see also Tinton Falls Lodging Realty, LLC v. United States, 800 F.3d 1353, 1358 (Fed.
Cir. 2015); Orion Tech., Inc. v. United States, 704 F.3d 1344, 1347 (Fed. Cir. 2013);
COMINT Sys. Corp. v. United States, 700 F.3d 1377, 1381 (Fed. Cir. 2012) (“We evaluate
agency actions according to the standards set forth in the Administrative Procedure Act;
namely, for whether they are ‘arbitrary, capricious, an abuse of discretion, or otherwise
not in accordance with law.’” (quoting 5 U.S.C. § 706(2)(A); Bannum, Inc. v. United
States, 404 F.3d at 1351)); Savantage Fin. Servs. Inc., v. United States, 595 F.3d 1282,
1285-86 (Fed. Cir. 2010); Weeks Marine, Inc. v. United States, 575 F.3d 1352, 1358 (Fed.
Cir. 2009); Axiom Res. Mgmt., Inc. v. United States, 564 F.3d 1374, 1381 (Fed. Cir. 2009)
(noting arbitrary and capricious standard set forth in 5 U.S.C. § 706(2)(A), and reaffirming
the analysis of Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d
at 1332); Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308, 1312 (Fed. Cir. 2007)
(“‘[T]he inquiry is whether the [government]’s procurement decision was “arbitrary,
capricious, an abuse of discretion, or otherwise not in accordance with law.”’” (quoting
Bannum, Inc. v. United States, 404 F.3d at 1351 (quoting 5 U.S.C. § 706(2)(A) (2000)));
NVT Techs., Inc. v. United States, 370 F.3d at 1159 (“Bid protest actions are subject to
the standard of review established under section 706 of title 5 of the Administrative
Procedure Act (‘APA’), 28 U.S.C. § 1491(b)(4) (2000), by which an agency’s decision is
to be set aside only if it is ‘arbitrary, capricious, an abuse of discretion, or otherwise not
in accordance with law,’ 5 U.S.C. § 706(2)(A) (2000).”) (internal citations omitted); Info.
Tech. & Applications Corp. v. United States, 316 F.3d at 1319 (“Consequently, our inquiry
is whether the Air Force’s procurement decision was ‘arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law.’ 5 U.S.C. § 706(2)(A) (2000).”);
Synergy Sols., Inc. v. United States, 133 Fed. Cl. 716, 734 (2017) (citing Banknote Corp.
of Am. v. United States, 365 F.3d at 1350); Eco Tour Adventures, Inc. v. United States,
114 Fed. Cl. at 22; Contracting, Consulting, Eng’g LLC v. United States, 104 Fed. Cl. 334,
340 (2012). “In a bid protest case, the agency’s award must be upheld unless it is
‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.’”
Turner Constr. Co. v. United States, 645 F.3d 1377, 1383 (Fed. Cir.) (quoting PAI Corp.
v. United States, 614 F.3d 1347, 1351 (Fed. Cir. 2010)), reh’g and reh’g en banc denied
(Fed. Cir. 2011); see also Tinton Falls Lodging Realty, LLC v. United States, 800 F.3d at
1358 (“In applying this [arbitrary and capricious] standard to bid protests, our task is to
determine whether the procurement official’s decision lacked a rational basis or the
procurement procedure involved a violation of a regulation or procedure.”) (citing
Savantage Fin. Servs., Inc. v. United States, 595 F.3d at 1285–86); Glenn Def. Marine
(ASIA), PTE Ltd. v. United States, 720 F.3d 901, 907 (Fed. Cir.), reh’g en banc denied
(Fed. Cir. 2013); McVey Co., Inc. v. United States, 111 Fed. Cl. 387, 402 (2013) (“The
first step is to demonstrate error, that is, to show that the agency acted in an arbitrary and
capricious manner, without a rational basis or contrary to law.”); PlanetSpace, Inc. v.
United States, 92 Fed. Cl. 520, 531-32 (2010) (“Stated another way, a plaintiff must show
that the agency’s decision either lacked a rational basis or was contrary to law.” (citing
Weeks Marine, Inc. v. United States, 575 F.3d at 1358)).



5 U.S.C. § 706.

                                             21
       The United States Supreme Court has identified sample grounds which can
constitute arbitrary or capricious agency action:

       [W]e will not vacate an agency’s decision unless it “has relied on factors
       which Congress has not intended it to consider, entirely failed to consider
       an important aspect of the problem, offered an explanation for its decision
       that runs counter to the evidence before the agency, or is so implausible
       that it could not be ascribed to a difference in view or the product of agency
       expertise.”

Nat’l Ass’n of Home Builders v. Defenders of Wildlife, 551 U.S. 644, 658 (2007) (quoting
Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)); see
also Tinton Falls Lodging Realty, LLC v. United States, 800 F.3d at 1358; F.C.C. v. Fox
Television Stations, Inc., 556 U.S. 502, 552 (2009); Ala. Aircraft Indus., Inc.-Birmingham
v. United States, 586 F.3d 1372, 1375 (Fed. Cir. 2009), reh’g and reh’g en banc denied
(Fed. Cir. 2010); In re Sang Su Lee, 277 F.3d 1338, 1342 (Fed. Cir. 2002) (“[T]he agency
tribunal must present a full and reasoned explanation of its decision. . . . The reviewing
court is thus enabled to perform meaningful review . . . .”); Textron, Inc. v. United States,
74 Fed. Cl. 277, 285-86 (2006), appeal dismissed sub nom. Textron, Inc. v. Ocean
Technical Servs., Inc., 223 F. App’x 974 (Fed. Cir. 2007). The United States Supreme
Court also has cautioned, however, that “courts are not free to impose upon agencies
specific procedural requirements that have no basis in the APA.” Pension Benefit Guar.
Corp. v. LTV Corp., 496 U.S. 633, 654 (1990).

        Under an arbitrary or capricious standard, the reviewing court should not substitute
its judgment for that of the agency, but should review the basis for the agency decision to
determine if it was legally permissible, reasonable, and supported by the facts. See Motor
Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. at 43 (“The scope of
review under the ‘arbitrary and capricious’ standard is narrow and a court is not to
substitute its judgment for that of the agency.”); see also Turner Constr. Co., Inc. v. United
States, 645 F.3d at 1383; R & W Flammann GmbH v. United States, 339 F.3d 1320, 1322
(Fed. Cir. 2003) (citing Ray v. Lehman, 55 F.3d 606, 608 (Fed. Cir.), cert. denied, 516
U.S. 916 (1995)); Synergy Sols., Inc. v. United States, 133 Fed. Cl. at 735 (citing Impresa
Construzioni Geom. Domenico Garufi v. United States, 238 F.3d at 1332-33). “‘“If the
court finds a reasonable basis for the agency’s action, the court should stay its hand even
though it might, as an original proposition, have reached a different conclusion as to the
proper administration and application of the procurement regulations.”’” Weeks Marine,
Inc. v. United States, 575 F.3d at 1371 (quoting Honeywell, Inc. v. United States, 870
F.2d 644, 648 (Fed. Cir. 1989) (quoting M. Steinthal & Co. v. Seamans, 455 F.2d 1289,
1301 (D.C. Cir. 1971))); Limco Airepair, Inc. v. United States, 130 Fed. Cl. 544, 550 (2017)
(citation omitted); Jordan Pond Co., LLC v. United States, 115 Fed. Cl. 623, 631 (2014);
Davis Boat Works, Inc. v. United States, 111 Fed. Cl. 342, 349 (2013); Norsat Int’l
[America], Inc. v. United States, 111 Fed. Cl. 483, 493 (2013); HP Enter. Servs., LLC v.
United States, 104 Fed. Cl. 230, 238 (2012); Vanguard Recovery Assistance v. United
States, 101 Fed. Cl. 765, 780 (2011).



                                             22
       Stated otherwise by the United States Supreme Court:

       Section 706(2)(A) requires a finding that the actual choice made was not
       “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance
       with law.” To make this finding the court must consider whether the decision
       was based on a consideration of the relevant factors and whether there has
       been a clear error of judgment. Although this inquiry into the facts is to be
       searching and careful, the ultimate standard of review is a narrow one. The
       court is not empowered to substitute its judgment for that of the agency.

Citizens to Pres. Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971), abrogated on
other grounds by Califano v. Sanders, 430 U.S. 99 (1977) (internal citations omitted); see
also U.S. Postal Serv. v. Gregory, 534 U.S. 1, 6-7 (2001); Bowman Transp., Inc. v.
Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 285 (1974), reh’g denied, 420 U.S. 956
(1975); Co-Steel Raritan, Inc. v. Int’l Trade Comm’n, 357 F.3d 1294, 1309 (Fed. Cir. 2004)
(In discussing the “arbitrary, capricious, and abuse of discretion, or otherwise not in
accordance with the law” standard, the Federal Circuit stated: “the ultimate standard of
review is a narrow one. The court is not empowered to substitute its judgment for that of
the agency.”); In re Sang Su Lee, 277 F.3d at 1342; Advanced Data Concepts, Inc. v.
United States, 216 F.3d at 1058 (“The arbitrary and capricious standard applicable here
is highly deferential. This standard requires a reviewing court to sustain an agency action
evincing rational reasoning and consideration of relevant factors.” (citing Bowman
Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. at 285)); Lockheed Missiles &
Space Co. v. Bentsen, 4 F.3d 955, 959 (Fed. Cir. 1993); By Light Prof’l IT Servs., Inc. v.
United States, 131 Fed. Cl. 358, 366 (2017); BCPeabody Constr. Servs., Inc. v. United
States, 112 Fed. Cl. 502, 508 (2013) (“The court ‘is not empowered to substitute its
judgment for that of the agency,’ and it must uphold an agency’s decision against a
challenge if the ‘contracting agency provided a coherent and reasonable explanation of
its exercise of discretion.’” (quoting Keeton Corrs., Inc. v. United States, 59 Fed. Cl. 753,
755, recons. denied, 60 Fed. Cl. 251 (2004); Axiom Res. Mgmt., Inc. v. United States,
564 F.3d at 1381)), appeal withdrawn, 559 F. App’x 1033 (Fed. Cir. 2014) (internal
citations omitted); Supreme Foodservice GmbH v. United States, 109 Fed. Cl. 369, 382
(2013); Alamo Travel Grp., LP v. United States, 108 Fed. Cl. 224, 231 (2012); ManTech
Telecomms. & Info. Sys. Corp. v. United States, 49 Fed. Cl. 57, 63 (2001), aff’d, 30 F.
App’x 995 (Fed. Cir. 2002); Ellsworth Assocs., Inc. v. United States, 45 Fed. Cl. 388, 392
(1999) (“Courts must give great deference to agency procurement decisions and will not
lightly overturn them.” (citing Fla. Power & Light Co. v. Lorion, 470 U.S. 729, 743–44
(1985))), appeal dismissed, 6 F. App’x 867 (Fed. Cir. 2001), and superseded by regulation
as recognized in MVS USA, Inc. v. United States, 111 Fed. Cl. 639 (2013).

       According to the United States Court of Appeals for the Federal Circuit:

       Effective contracting demands broad discretion. Burroughs Corp. v. United
       States, 223 Ct. Cl. 53, 617 F.2d 590, 598 (1980); Sperry Flight Sys. Div. v.
       United States, 548 F.2d 915, 921, 212 Ct. Cl. 329 (1977); see NKF Eng’g,
       Inc. v. United States, 805 F.2d 372, 377 (Fed. Cir. 1986); Tidewater

                                             23
       Management Servs., Inc. v. United States, 573 F.2d 65, 73, 216 Ct. Cl. 69
       (1978); RADVA Corp. v. United States, 17 Cl. Ct. 812, 819 (1989), aff’d, 914
       F.2d 271 (Fed. Cir. 1990). Accordingly, agencies “are entrusted with a good
       deal of discretion in determining which bid is the most advantageous to the
       Government.” Tidewater Management Servs., 573 F.2d at 73, 216 Ct. Cl.
       69.

Lockheed Missiles & Space Co. v. Bentsen, 4 F.3d at 958-59; see also Res-Care, Inc. v.
United States, 735 F.3d 1384, 1390 (Fed. Cir.) (“DOL [Department of Labor], as a federal
procurement entity, has ‘broad discretion to determine what particular method of
procurement will be in the best interests of the United States in a particular situation.’”
(quoting Tyler Constr. Grp. v. United States, 570 F.3d 1329, 1334 (Fed. Cir. 2009))), reh’g
en banc denied (Fed. Cir. 2014); Grumman Data Sys. Corp. v. Dalton, 88 F.3d 990, 995
(Fed. Cir. 1996); Geo-Med, LLC v. United States, 126 Fed. Cl. 440, 449 (2016); Cybertech
Grp., Inc. v. United States, 48 Fed. Cl. 638, 646 (2001) (“The court recognizes that the
agency possesses wide discretion in the application of procurement regulations.”);
Furthermore, according to the Federal Circuit:

       Contracting officers “are entitled to exercise discretion upon a broad range
       of issues confronting them in the procurement process.” Impresa
       Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324,
       1332 (Fed. Cir. 2001) (internal quotation marks omitted). Accordingly,
       procurement decisions are subject to a “highly deferential rational basis
       review.” CHE Consulting, Inc. v. United States, 552 F.3d 1351, 1354 (Fed.
       Cir. 2008) (internal quotation marks omitted).

PAI Corp. v. United States, 614 F.3d at 1351; see also Weeks Marine, Inc. v. United
States, 575 F.3d at 1368-69 (“We have stated that procurement decisions ‘invoke[ ]
“highly deferential” rational basis review.’ Under that standard, we sustain an agency
action ‘evincing rational reasoning and consideration of relevant factors.’” (quoting CHE
Consulting, Inc. v. United States, 552 F.3d at 1354 (quoting Advanced Data Concepts,
Inc. v. United States, 216 F.3d at 1058))).

       On a motion for judgment on the administrative record, a disappointed bidder has
the burden of demonstrating the arbitrary and capricious nature of the agency decision
by a preponderance of the evidence. See Tinton Fall Lodging Realty, LLC v. United Sates,
800 F.3d at 1364; see also Grumman Data Sys. Corp. v. Dalton, 88 F.3d at 995-96;
Enhanced Veterans Sols., Inc. v. United States, 131 Fed. Cl. 565, 578 (2017); Davis Boat
Works, Inc. v. United States, 111 Fed. Cl. at 349; Contracting, Consulting, Eng’g LLC v.
United States, 104 Fed. Cl. at 340. The Federal Circuit has indicated that “[t]his court will
not overturn a contracting officer’s determination unless it is arbitrary, capricious, or
otherwise contrary to law. To demonstrate that such a determination is arbitrary or
capricious, a protester must identify ‘hard facts’; a mere inference or suspicion . . . is not
enough.” PAI Corp. v. United States, 614 F.3d at 1352 (citing John C. Grimberg Co. v.
United States, 185 F.3d 1297, 1300 (Fed. Cir. 1999)); see also Turner Constr. Co., Inc.
v. United States, 645 F.3d at 1387; Sierra Nevada Corp. v. United States, 107 Fed. Cl.

                                             24
735, 759 (2012); Filtration Dev. Co., LLC v. United States, 60 Fed. Cl. 371, 380 (2004).

       A bid protest proceeds in two steps. First . . . the trial court determines
       whether the government acted without rational basis or contrary to law when
       evaluating the bids and awarding the contract. Second . . . if the trial court
       finds that the government’s conduct fails the APA review under 5 U.S.C.
       § 706(2)(A), then it proceeds to determine, as a factual matter, if the bid
       protester was prejudiced by that conduct.

Bannum, Inc. v. United States, 404 F.3d at 1351; T Square Logistics Servs. Corp. v.
United States, Fed. Cl. 550, 555 (2017); FirstLine Transp. Sec., Inc. v. United States, 119
Fed. Cl. 116, 126 (2014); Eco Tour Adventures, Inc. v. United States, 114 Fed. Cl. at 22;
Archura LLC v. United States, 112 Fed. Cl. 487, 496 (2013). To prevail in a bid protest
case, the protestor not only must show that the government’s actions were arbitrary,
capricious, or otherwise not in accordance with the law, but the protestor also must show
that it was prejudiced by the government’s actions. See 5 U.S.C. § 706 (“[D]ue account
shall be taken of the rule of prejudicial error.”); see also Glenn Def. Marine (ASIA), PTE
Ltd. v. United States, 720 F.3d at 907 (“In a bid protest case, the inquiry is whether the
agency’s action was arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with law and, if so, whether the error is prejudicial.”); IT Enter. Sols. JV, LLC
v. United States, 132 Fed. Cl. 158, 173 (2017) (citing Bannum v. United States, 404 F.3d
at 1357-58); Linc Gov’t Servs., LLC v. United States, 96 Fed. Cl. 672, 694-96 (2010). In
describing the prejudice requirement, the Federal Circuit also has held that:

       To prevail in a bid protest, a protester must show a significant, prejudicial
       error in the procurement process. See Statistica, Inc. v. Christopher, 102
       F.3d 1577, 1581 (Fed. Cir. 1996); 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.” Data General, 78 F.3d at 1562 (citation
       omitted). Rather, the protester must show “that there was a substantial
       chance it would have received the contract award but for that error.”
       Statistica, 102 F.3d at 1582; see CACI, Inc.-Fed. v. United States, 719 F.2d
       1567, 1574-75 (Fed. Cir. 1983) (to establish competitive prejudice, protester
       must demonstrate that but for the alleged error, “‘there was a substantial
       chance that [it] would receive an award--that it was within the zone of active
       consideration.’”) (citation omitted).

Alfa Laval Separation, Inc. v. United States, 175 F.3d 1365, 1367 (Fed. Cir.), reh’g denied
(Fed. Cir. 1999); see also Glenn Def. Marine (ASIA), PTE Ltd. v. United States, 720 F.3d
at 912; Allied Tech. Grp., Inc. v. United States, 649 F.3d 1320, 1326 (Fed. Cir.), reh’g en
banc denied (Fed. Cir. 2011); Info. Tech. & Applications Corp. v. United States, 316 F.3d
at 1319; Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d at
1332-33; OMV Med., Inc. v. United States, 219 F.3d 1337, 1342 (Fed. Cir. 2000);
Advanced Data Concepts, Inc. v. United States, 216 F.3d at 1057; Stratos Mobile
Networks USA, LLC v. United States, 213 F.3d 1375, 1380 (Fed. Cir. 2000).

                                            25
      In Data General Corp. v. Johnson, the United States Court of Appeals for the
Federal Circuit wrote:

       We think that the appropriate standard is that, to establish prejudice, a
       protester must show that, had it not been for the alleged error in the
       procurement process, there was a reasonable likelihood that the protester
       would have been awarded the contract . . . . The standard reflects a
       reasonable balance between the importance of (1) averting unwarranted
       interruptions of and interferences with the procurement process and (2)
       ensuring that protesters who have been adversely affected by allegedly
       significant error in the procurement process have a forum available to vent
       their grievances. This is a refinement and clarification of the “substantial
       chance” language of CACI, Inc.-Fed. [v. United States], 719 F.2d at 1574.

Data Gen. Corp. v. Johnson, 78 F.3d 1556, 1562 (Fed. Cir.), reh’g denied, en banc
suggestion declined (Fed. Cir. 1996); see also Glenn Def. Marine (ASIA), PTE Ltd. v.
United States, 720 F.3d at 912; Bannum, Inc. v. United States, 404 F.3d at 1353, 1358
(“The trial court was required to determine whether these errors in the procurement
process significantly prejudiced Bannum . . . . To establish ‘significant prejudice’ Bannum
must show that there was a ‘substantial chance’ it would have received the contract award
but for the [government’s] errors” in the bid process. (citing Info. Tech. & Applications
Corp. v. United States, 316 F.3d at 1319; Alfa Laval Separation, Inc. v. United States,
175 F.3d at 1367; Statistica, Inc. v. Christopher, 102 F.3d at 1581; and Data Gen. Corp.
v. Johnson, 78 F.3d at 1562); see also Todd Constr., L.P. v. United States, 656 F.3d
1306, 1315 (Fed. Cir. 2011); Advanced Data Concepts, Inc. v. United States, 216 F.3d at
1057 (using a “reasonable likelihood” rule); Vintage Autoworks, Inc. v. United States, 132
Fed. Cl. 143, 149 (2017) (using a “substantial chance” test); Active Network, LLC v. United
States, 130 Fed. Cl. 421, 427 (2017) (using a “substantial chance” test); Stratos Mobile
Networks USA, LLC v. United States, 213 F.3d at 1380 (using a “substantial chance”
test); Archura LLC v. United States, 112 Fed. Cl. at 496 (using a “substantial chance”
test); Info. Scis. Corp. v. United States, 73 Fed. Cl. 70, 96 (2006) (using a “substantial
chance” test), recons. in part, 75 Fed. Cl. 406 (2007).

       As described above, IEA asserts that the DSS’ issuance of Modification No.
P00002 to Xcelerate Solutions’ Contract was contrary to law because Modification No.
P00002 to Xcelerate Solutions’ Contract violated “CICA’s requirements for full and open
competition.” CICA generally directs executive agencies, “in conducting a procurement
for property or services” to “obtain full and open competition though the use of competitive
procedures.” 41 U.S.C. § 3301(a)(1) (2012). As stated by the United States Court of
Appeals for the Federal Circuit:

       CICA, however, does not prevent modification[ 12] of a contract by requiring
       a new bid procedure for every change. Rather only modifications outside


12 According to FAR 2.101(b), “[c]ontract modification means any written change in the
terms of a contract (see [FAR] 43.103).” FAR 2.101(b) (2017). FAR 43.103 further
                                            26
      the scope of the original competed contract fall under the statutory
      competition requirement. CICA sets forth no standard for determining when
      modification of an existing contract requires a new competition or falls within
      the scope of the original competitive procurement.

AT & T Commc’ns, Inc. v. Wiltel, Inc., 1 F.3d 1201, 1204-05 (Fed. Cir.) (footnote
removed), reh’g denied, en banc suggestion declined (Fed. Cir.), suggestion for reh’g
declined (Fed. Cir. 1993). Contract modification for changes beyond the scope of the
original procurement, however, should not be utilized as a way to avoid competition. See
Tetra Tech, Inc. v. United States, 131 Fed. Cl. 653, 661 (2017); HDM Corp. v. United
States, 69 Fed. Cl. 243, 253 (2005) (citation omitted); CESC Plaza Ltd. P’ship v. United
States, 52 Fed. Cl. 91, 93 (2002). Modifying an existing contract so that it materially
departs from the scope of the original procurement violates CICA by preventing potential


provides that:

      [c]ontract modifications are of the following types:

      (a) Bilateral. A bilateral modification (supplemental agreement) is a contract
      modification that is signed by the contractor and the contracting officer.
      Bilateral modifications are used to—

             (1) Make negotiated equitable adjustments resulting from the
                 issuance of a change order;

             (2) Definitize letter contracts; and

             (3) Reflect other agreements of the parties modifying the terms of
                 contracts.

      (b) Unilateral. A unilateral modification is a contract modification that is
      signed only by the contracting officer. Unilateral modifications are used, for
      example, to--

             (1) Make administrative changes;

             (2) Issue change orders;

             (3) Make changes authorized by clauses other than a changes
                 clause (e.g., Property clause, Options clause, or Suspension of
                 Work clause); and

             (4) Issue termination notices.

FAR 43.103 (2017).


                                              27
bidders from participating in or competing for what should be a new procurement. See
Tetra Tech, Inc. v. United States, 131 Fed. Cl. at 661; Portfolio Disposition Mgmt. Grp.
LLC v. United States, 64 Fed. Cl. 1, 12 (2005) (“This Court has recognized the well-
established principle that the ‘contract awarded must be the one for which the offerors
have competed.’” (citation omitted)); HDM Corp. v. United States, 69 Fed. Cl. at 253; see
also AT & T Commc’ns, Inc. v. Wiltel, Inc., 1 F.3d at 1205; VMC Behavioral Healthcare
Servs. v. United States, 50 Fed. Cl. 328, 332 (2001). A modification that is within the
scope of the original procurement “does not raise a viable protest under [28 U.S.C.]
§ 1491(b)(1).” See Distrib. Solutions, Inc. v. United States, 539 F.3d 1340, 1346 (Fed.
Cir. 2008); see also Ceradyne, Inc. v. United States, 103 Fed. Cl. 1, 12-13 (2012) (citing
AT & T Commc’ns, Inc. v. Wiltel, Inc., 1 F.3d at 1204-05) (“If the modification materially
departs from the scope, then a new competition may be required and jurisdiction will
stand. . . . If the modification was, however, within the scope of the solicitation, the protest
must be dismissed.”); RhinoCorps Ltd. Co. v. United States, 87 Fed. Cl. 481, 489 (2009)
(citing AT & T Commc’ns, Inc. v. Wiltel, Inc., 1 F.3d at 1205) (“[T]o sustain a bid protest
stemming from a change or modification to a contract, the protestor must allege facts that
establish that the modification falls outside the scope of the original contract, thereby
triggering the statutory competition requirement. If any change made to a procurement is
within the scope of work originally contemplated, no competition is required, and
jurisdiction is not present.”). 13

       The United States Court of Appeals for the Federal Circuit, specifically, has
recognized that modifications of an existing contract are permissible to procure products
or services, as long as the modification is “within the scope of the original competitive
procurement.” AT & T Commc’ns, Inc. v. Wiltel, Inc., 1 F.3d at 1205; see also Krygoski


13  The defendant argues that this court lacks jurisdiction over IEA’s claim because
Modification No. P00002 of Xcelerate Solutions’ Contract was within the scope of
Xcelerate Solutions’ Contract. Although a number of decisions in the United States Court
of Federal Claims indicate that this court lacks jurisdiction over a protest challenging a
modification to a contract that is within the scope of the original procurement, one judge
has argued in a footnote that these decisions “have elided the distinction between
jurisdiction and merits, on the grounds that a modification within the scope of the contract
does not involve a procurement and, therefore, does not trigger jurisdiction under [28
U.S.C. §] 1491(b)(1).” Int’l Genomics Consortium v. United States, 104 Fed. Cl. 669, 675
n.7 (2012). Given that a court’s analysis of whether a modification to a contract is within
the scope of the original procurement requires the court to consider the merits of a
protestor’s complaint, and considering the Federal Circuit’s guidance that the meaning of
“procurement” under Section 1491(b)(1) extends to “‘all stages of the process of acquiring
property or services, beginning with the process for determining a need for property or
services and ending with contract completion and closeout,’” Sys. Application & Techs.,
Inc. v. United States, 691 F.3d at 1381 (emphasis in original) (citation removed), a protest
that challenges a modification to a contract that is within the scope of the original
procurement may be more appropriately dismissed under RCFC 12(b)(6) (2017) for
failure to state a claim upon which relief may be granted, rather than under RCFC 12(b)(1)
for lack of subject matter jurisdiction.
                                              28
Constr. Co. v. United States, 94 F.3d 1537, 1543 (Fed. Cir.) (relying on AT & T
Communications, Inc. v. Wiltel, Inc. in its analysis of a necessary change to a contract’s
scope), reh’g denied, en banc suggestion declined (Fed. Cir. 1996), cert. denied, 520
U.S. 1210 (1997); Tetra Tech, Inc. v. United States, 131 Fed. Cl. at 661 (“To determine
whether a modification is within the scope of the original solicitation, the court must
compare the contract, as modified, with the scope of the competition conducted to
achieve the original contract.” (citing AT & T Commc’ns, Inc. v. Wiltel, Inc., 1 F.3d at
1205)); Aircraft Charter Sols., Inc. v. United States, 109 Fed. Cl. 398, 410-11 (2013)
(utilizing AT & T Communications, Inc. v. Wiltel, Inc. to determine whether a modification
was within the scope of a contract); Golden Mfg. Co., Inc. v. United States, 107 Fed. Cl.
264, 274 (2012) (relying on AT & T Communications, Inc. v. Wiltel, Inc. when discussing
an amendment to a contract solicitation); Solute Consulting v. United States, 103 Fed. Cl.
783, 792 (2012) (applying AT & T Communications, Inc. v. Wiltel, Inc. to the issue of the
in-scope contract modification); Ceradyne, Inc. v. United States, 103 Fed. Cl. at 12
(analyzing AT & T Communications, Inc. v. Wiltel, Inc. to determine whether the contract
modification was within the scope of the original procurement); RN Expertise, Inc. v.
United States, 97 Fed. Cl. 460, 473 (using AT & T Communications, Inc. v. Wiltel, Inc. as
a basis for the court’s analysis of the contract modification), recons. denied (2011).

       Because CICA does not define whether a modification of an existing contract is
beyond or within the scope of the original competitive procurement, the Federal Circuit
has at times analogized to the cardinal change doctrine as the test to ascertain whether
the modification is in-scope or violates the competition requirements of CICA. See AT & T
Commc’ns, Inc. v. Wiltel, Inc., 1 F.3d at 1205 (“The cardinal change doctrine asks whether
a modification exceeds the scope of the contract’s changes clause; this case asks
whether the modification is within the scope of the competition conducted to achieve the
original contract. In application, these questions overlap.”); see also Ceradyne, Inc. v.
United States, 103 Fed. Cl. at 12 n.9; Cardinal Maint. Serv., Inc. v. United States, 63 Fed.
Cl. 98, 106 (2004); GraphicData, LLC v. United States, 37 Fed. Cl. 771, 781 (1997). “‘[A]
cardinal change . . . occurs when the government effects an alteration in the work so
drastic that it effectively requires the contractor to perform duties materially different from
those originally bargained for.’” AT & T Commc’ns, Inc. v. Wiltel, Inc., 1 F.3d at 1205
(quoting Allied Materials & Equip. Co. v. United States, 215 Ct. Cl. 406, 409, 569 F.2d
562, 563-64 (1978)); see also Krygoski Constr. Co. v. United States, 94 F.3d at 1543.
“Just as the cardinal change doctrine prohibits an agency from compelling a contractor to
perform contract terms that are not within the scope of the original bargain, the CICA
prevents an agency from modifying a contract to such an extent that the modified contract
is ‘materially different’ from the contract for which a competition was held.” GraphicData,
LLC v. United States, 37 Fed. Cl. at 781 (citing AT & T Commc’ns, Inc. v. Wiltel, Inc., 1
F.3d at 1205); see also Mgmt. Solutions & Sys., Inc. v. United States, 75 Fed. Cl. 820,
830 (2007); cf. Solute Consulting v. United States 103 Fed. Cl. at 793 (discussing the
merits of the GAO’s application of the “material difference standard” to multiple-award
contracts and its conclusion that “‘[t]he analysis of whether a task order is outside the
scope of a multiple-award contract is the same as the analysis of whether a contract
modification is outside the scope of a single-award contract’” (alteration in original)
(quoting DynCorp Int’l LLC, B-402349, 2010 CPD ¶ 59 (Comp. Gen. Mar. 15, 2010))).

                                              29
         When determining whether a modification “materially departs” from the scope of
the original procurement, a court should consider: “(1) whether the modification is of a
nature which potential offerors would reasonably have anticipated; and (2) whether the
modification substantially changes the type of work, performance period, and costs as
between the original contract and the modified contract.” Portfolio Disposition Mgmt. Grp.
LLC v. United States, 64 Fed. Cl. at 12 (citation omitted); see RN Expertise, Inc. v. United
States, 97 Fed. Cl. at 473-74 (citing AT & T Commc’ns, Inc. v. Wiltel, Inc., 1 F.3d at 1205,
1207); see also Aircraft Charter Sols., Inc. v. United States, 109 Fed. Cl. at 411 (citation
omitted). The analysis of whether a contract modification “materially departs” from the
scope of the original procurement “focuses on the scope of the entire original procurement
in comparison to the scope of the contract as modified.” AT & T Commc’ns, Inc. v. Wiltel,
Inc., 1 F.3d at 1205. “Thus a broad original competition may validate a broader range of
later modifications without further bid procedures.” Id.; see also Cal. Indus. Facilities Res.,
Inc. v. United States, 104 Fed. Cl. 589, 598 (2012). To determine whether a modification
is within the scope of the original procurement, a court should consider whether the
modification “substantially changes ‘the type of work, performance period, and costs as
between the original contract and the modified contract.’” CESC Plaza Ltd. P’ship v.
United States, 52 Fed. Cl. at 93 (quoting CCL, Inc. v. United States, 39 Fed. Cl. 780, 791
(1997)); see also Portfolio Disposition Mgmt. Grp. LLC v. United States, 64 Fed. Cl. at 12
(citing Cardinal Maint. Serv., Inc. v. United States, 63 Fed. Cl. at 106); Cardinal Maint.
Serv., Inc. v. United States, 63 Fed. Cl. at 106 (noting that the question of whether “the
contract, as modified, is materially different from the contract that was originally competed
. . . turns on whether the original contract, as modified, calls for ‘essentially the same
performance’” (quoting Exec. Bus. Media, Inc. v. United States Dep’t of Defense, 3 F.3d
759, 763 n.3 (4th Cir. 1993))); Northrop Grumman Corp. v. United States, 50 Fed. Cl.
443, 466 (2001) (describing factors that courts have considered under the cardinal
change doctrine, including “[c]hanges in the type of product or service that were not
anticipated due to their lack of resemblance to the original procurement,” “[s]ignificant
addition or subtraction of the quantity of work,” and “[a]dditional time spent on
performance of a contract . . . when such time is extended in order to add significantly
more quantity or new requirements to the contract”).

        “Because every situation in which parties enter into a contractual relationship is
unique, there is no definitive test for determining whether a change is beyond the scope
of a particular contract.” Keeter Trading Co. v. United States, 79 Fed. Cl. 243, 260 (2007)
(citation omitted); see also Rumsfeld v. Freedom NY, Inc., 329 F.3d 1320, 1332 (Fed.
Cir.), reh’g and reh’g en banc denied, 346 F.3d 1359 (Fed. Cir. 2003), cert. denied, 541
U.S. 987 (2004) (“The finding of a cardinal change is ‘principally a question of fact’”
(quoting Allied Materials & Equip. Co. v. United States, 215 Ct. Cl. at 411, 569 F.2d at
565)); Golden Mfg. Co., Inc. v. United States, 107 Fed. Cl. at 274 (“In emphasizing that
there is no mechanical or arithmetical answer, we have repeated that (t)he number of
changes is not, in and of itself, the test[.]” (alterations in original) (quoting Air-A-Plane
Corp. v. United States, 187 Ct. Cl. 269, 276, 408 F.2d 1030, 1033 (1969))); ThermoCor,
Inc. v. United States, 35 Fed. Cl. 480, 490 (1996) (“‘Each case must be analyzed on its
own facts and in light of its own circumstances, giving just consideration to the magnitude
and quality of the changes ordered and their cumulative effect upon the project as a

                                              30
whole.’” (quoting Wunderlich Contracting Co. v. United States, 173 Ct. Cl. 180, 194, 351
F.2d 956, 966 (1965))).

        In addition, as indicated by the United States Court of Appeals for the Federal
Circuit, a factor to consider when determining the scope of the original competition is
“‘whether the solicitation for the original contract adequately advised offerors of the
potential for the type of changes during the course of the contract that in fact occurred, or
whether the modification is of a nature which potential offerors would reasonably have
anticipated.’” AT & T Commc’ns, Inc. v. Wiltel, Inc., 1 F.3d at 1207 (quoting Neil R. Gross
& Co., Inc., B-237434, 90-1 CPD ¶ 212 (Comp. Gen. Feb. 23, 1990) (citation omitted));
see also Tetra Tech, Inc. v. United States, 131 Fed. Cl. at 661; RN Expertise, Inc. v.
United States, 97 Fed. Cl. at 474; Chapman Law Firm Co. v. United States, 81 Fed. Cl.
323, 327 (2008). “A modification generally falls within the scope of the original
procurement if potential bidders would have expected it to fall within the contract’s
changes clause.” AT & T Commc’ns, Inc. v. Wiltel, Inc., 1 F.3d at 1205; see also Aircraft
Charter Sols., Inc. v. United States, 109 Fed. Cl. at 410 (quoting AT & T Commc’ns, Inc.
v. Wiltel, Inc., 1 F.3d at 1205). Whether potential bidders would have anticipated a
particular modification is judged under an objective standard, see Global Computer
Enters., Inc. v. United States, 88 Fed. Cl. 52, 56 (2009); CESC Plaza Ltd. P’ship v. United
States, 52 Fed. Cl. at 93 (citing CCL, Inc. v. United States, 39 Fed. Cl. at 791), and
“depends heavily on the language of the solicitation.” See Northrop Grumman Corp. v.
United States, 50 Fed. Cl. at 466 (citing JOHN CIBINIC, JR. & RALPH C. NASH, JR.,
ADMINISTRATION OF GOVERNMENT CONTRACTS 389 (3d ed. 1995)). If a court ultimately finds
a modification “to be outside the reasonable expectations of the bidders, the government
must show that it adequately advised the bidders that such a change might occur.”
Northrop Grumman Corp. v. United States, 50 Fed. Cl. at 465 (citation omitted).

        In the above-captioned bid protest, IEA “agree[s]” that the “DoD can reorganize
and transfer responsibility for the Continuous Evaluation program to DSS. The parties
also agree that DoD is not obligated to extend IEA’s contract.” IEA, however, challenges
the aspect of Modification No. P00002 “that includes the Validation Cell work, and which
is referred to in the modification documents as ‘Continuous Evaluation services.’” 14 During
oral argument on January 18, 2018 and the hearing on January 19, 2018, IEA identified
the portion of Modification No. P00002 of Xcelerate Solutions’ Contract that IEA was
challenging as the work contained in Contract Line Item Numbers 2005, 3005, and 4005
in Modification No. P00002. IEA asserts that the terms of the Solicitation and Xcelerate
Solutions’ Contract are not broad enough to include Modification No. P00002 because
“[i]t does not include any language about validating the flagged records once they are
received, or providing any other analytical or policy support to the Continuous Evaluation
program.” IEA also alleges that “no offeror could have anticipated that the PSMO-I
contract would be required to provide support in the form of validation and analytical and
policy support.” According to IEA, that no offeror could have anticipated such a change is
confirmed by the fact that none of the proposals submitted to the DSS in response to the

14The court notes that the documents for Modification No. P00002 do not include the
words “Continuous Evaluation services.”

                                             31
Solicitation “discussed validating flags, providing feedback to DoD on potential
efficiencies, or advising DoD on policies for the Continuous Evaluation program . . . .”
Additionally, IEA contends that the increase in the dollar value of Xcelerate Solutions’
Contract and the number of full-time equivalents Xcelerate Solutions needed to provide
under Xcelerate Solutions’ Modified Contract demonstrates that Modification No. P00002
of Xcelerate Solutions’ Contract is an out-of-scope modification. IEA alleges that
Modification No. P00002 “nearly doubles the price of the contract as awarded,” caused
Xcelerate Solutions to add “almost four times the amount of staff to support the work,”
and that the CE-related work “under the PSMO-I contract takes only four minutes per
record, while the Validation Cell work takes more than twenty minutes per record.”
(emphasis in original). Moreover, IEA asserts that the terms of the Solicitation and
Xcelerate Solutions’ Contract are clear, and, to the extent the word “support” in the
Solicitation and Xcelerate Solutions’ Contract is ambiguous, that “the principle of noscitur
a sociis confirms that the support sought is the specific support tasks elucidated in the
same PWS task,” which IEA contends only involves categorizing and distributing flagged
CE records. 15 (emphasis in original).

        Conversely, the defendant asserts that offerors to the Solicitation could have
anticipated the issuance of Modification No. P00002 to Xcelerate Solutions’ Contract
because “the solicitation’s background advised offerors that ‘[p]rocessing information
pertaining to cleared Industry from CE and DITMAC will be a new mission for DSS and
PSMO-I effective FY 15,’” and “[a]ny reasonable offeror would expect that a ‘new mission’
has more variability . . . .” (emphasis and alterations in original). The defendant also
argues that the “Objectives” section, “Scope” section, and the performance work
statement of the Solicitation contemplated a broad array of tasks to be performed under
the resulting contract. According to the defendant, Advanced Onion’s proposal, which
listed IEA as a potential subcontractor, demonstrates that offerors could have anticipated
the issuance of Modification No. P00002 because Advanced Onion’s proposal “described
the entire Continuous Evaluation process . . . .” (emphasis in original). Moreover, the
defendant alleges that Modification No. P00002 does not materially depart from the
Xcelerate Solutions’ Contract because Xcelerate Solutions’ Contract’s period of
performance is unchanged, the type of services being provided under Xcelerate
Solutions’ Modified Contract are akin to those performed under Xcelerate Solutions’
Contract, the quantity of the service being provided is not materially changed, and the
cost of performance has not substantially changed. Similarly, defendant-intervenor
asserts that Modification No. P00002 did not materially change Xcelerate Solutions’
Contract because “the Modification has not changed the nature of the services provided
under the PSMO-I Contract,” as, under Xcelerate Solutions’ Contract, Xcelerate Solutions
“has been reviewing flagged reports, validating the reports and incidents, and sending the
reports to DoD for adjudication.”



15 In its motion for judgment on the Administrative Record, IEA states that the “‘doctrine
of noscitur a sociis permits the Court to ascertain the meaning of ambiguous terms by
reference to the terms with which they are associated.’ Auto-Ordnance Corp. v. United
States, 822 F.2d 1566, 1571 (Fed. Cir. 1987).” (emphasis in original).
                                            32
       Both the Recommendation to Modify and the Memorandum for Record noted that,
when the Xcelerate Solutions’ Contract was awarded to Xcelerate Solutions by DSS, the
full CE program had not yet been moved to the DSS, and that the WHS was managing
part of the CE program. The Recommendation to Modify and the Memorandum for
Record also both state that, at the time of contract award, “the vendor’s role was
anticipated to be primarily flagging and categorizing the records for industry personnel,”
which, as stated in the Memorandum for Record, did not “encompass the end-to-end
processing of the CE alerts for the entire DoD enterprise population.” The Memorandum
for Record also states that “[p]er the Under Secretary of Defense for Intelligence’s memo
signed 16 December 2016, these efforts needed to come together and be unified under
one contract and the full CE mission materialized in the HS002-16-C-0006 PWS.”
According to the Recommendation to Modify, as well as the Memorandum for Record,
transferring the work under the “WHS contract” to Xcelerate Solutions’ Contract would be
within the scope of Xcelerate Solutions’ Contract because Section 5.16 of the Xcelerate
Solutions’ Contract provides that “Vendor personnel will support the DoD CE mission.”
Both government documents concluded that assigning the responsibility of administering
the DoD CE program to Xcelerate Solutions, as stated in the Memorandum for Record,
was not “an ‘addition of different work’ to the current PWS but clarification of activities that
are in support of an existing task area and increase in resources of the same nature
already under contract . . . .” The Memorandum for Record also noted that “[t]ransferring
the work from the WHS contract to the PSMO-I contract will provide efficiencies through
consolidation of previously separately-managed pieces of a singular effort.” The
Recommendation to Modify reached a substantially similar conclusion.

       The court reviews Modification No. P00002 to Xcelerate Solutions’ Contract in the
context of the Solicitation as a whole. See Aircraft Charter Sols., Inc. v. United States,
109 Fed. Cl. at 415 (“It is the Solicitation as a whole, and especially the comparison of
the context of the Solicitation with the contract modification challenged here, that must be
weighed by the court.” (citing AT & T Commc’ns v. Wiltel, Inc., 1 F.3d at 1207)). Section
1.2 of the Solicitation, as did Section 1.2 of Xcelerate Solutions’ Contract, stated that
“[p]rocessing information pertaining to cleared Industry from CE and DITMAC [Defense
Insider Threat Management and Analysis Center] will be a new mission for DSS and
PSMO-I effective FY15.” According to Section 1.3 of the Solicitation and Section 1.3 of
Xcelerate Solutions’ Contract, titled “Objectives,” the performance work statement
indicates that the contractor “provides continuous Personnel Security Operational
Support to review and process personnel security documentation as it relates to the
NISP.” Additionally, Section 1.4 of the Solicitation and also Section 1.4 of Xcelerate
Solutions’ Contract, titled “Scope,” provided that the “Vendor shall be responsible for
providing operational support to assist in the personnel clearance oversight and
management . . . .” Section 5.1, titled “Basic Services,” which was located in the
performance work statement of the Solicitation as well as in Section 5.1 of Xcelerate
Solutions’ Contract, stated that the “Vendor shall support duties and processing requests
to include . . . other evolving initiatives as related to Continuous Evaluation and the
Defense Insider Threat Management Analysis Center.” Section 5.16, titled “Continuous
Evaluation (CE),” which was also located in the performance work statement, stated that
“Vendor personnel will support the DoD CE mission. The records flagged by CE will be

                                              33
reviewed, analyzed, and distributed into Low, Medium, High risk categories. Low, Medium
and High Risk Reports will be forwarded to appropriate government office(s) for action
and recorded in the system(s) of record.” (emphasis added). Section 7.3 of the
Solicitation, titled “Technical Exhibit 3: Estimated Workload Data,” 16 estimated that the
awardee would be required to process 225,000 CE reports per year, with each report
taking approximately four minutes to process. 17

        As noted in the Recommendation to Modify and Memorandum for Record,
Xcelerate Solutions’ Contract required Xcelerate Solutions to “support the DoD CE
mission.” Immediately following that sentence, however, was the requirement that
“records flagged by CE will be reviewed, analyzed, and distributed into Low, Medium,
High risk categories,” which were to be “forwarded to appropriate government office(s)
for action and recorded in the system(s) of record.” Read in the context of the Solicitation
and Xcelerate Solutions’ Contract as a whole, including the objectives stated in Section
1.3 of the Solicitation and Section 1.3 of Xcelerate Solutions’ Contract, which were to
provide “continuous Personnel Security Operational Support to review and process
personnel security documentation as it relates to the NISP,” and the scope articulated in
Section 1.4 of the Solicitation and Section 1.4 of Xcelerate Solutions’ Contract, which was
to provide “operational support to assist in the personnel clearance oversight and

16 Although the parties state in their Joint Stipulation of Facts that Xcelerate Solutions’
“contract included the same background, objectives, scope, tasks, applicable
publications, technical exhibits, and deliverables as were provided for in the Solicitation,”
the technical exhibit in Section 7.3 of the Solicitation does not appear to be in Xcelerate
Solutions’ Contract.
17  The defendant-intervenor asserts that the “Solicitation also included deliverables
directly related to CE, such as task status/progress reports and trend analyses.” To
support its assertion, the defendant-intervenor cites to Section 7.2 of the Solicitation, titled
“Technical Exhibit 2: Deliverables Schedule,” which states that the awardee will provide
a “Task Status/Progress Report in accordance with Section 5.16.6 of the PWS” and
“Trend Analysis in accordance with Section 5.16.6 of the PWS” on a weekly basis. Section
7.2 of Xcelerate Solutions’ Contract contains identical language to Section 7.2 of the
Solicitation. Neither the Solicitation nor Xcelerate Solutions’ Contract contain a “Section
5.16.6.” In Xcelerate Solutions’ Modified Contract, however, Section 7.3, titled “Technical
Exhibit 3: Deliverables Schedule,” stated that Xcelerate Solutions was to provide a task
status/progress report and trend analysis on a weekly basis in accordance with Section
5.14, titled “Reports” of the Xcelerate Solutions’ Modified Contract, which provides “[t]he
Vendor shall complete Government provided performance tracking on a weekly basis for
each full time contracting employee and provide the required reports in accordance with
the deliverables schedule located in Technical Exhibit 2 and 3.” The Solicitation and
Xcelerate Solutions’ Contract also contained a section titled “Reports,” which provides
“[t]he Vendor shall provide the required reports in accordance with the deliverables
schedule located in Technical Exhibit 2.” Thus, it is unclear whether the “task
status/progress report and trend analyses” required under Section 7.2 of the Solicitation
were “directly related to CE . . . .”

                                              34
management,” Xcelerate Solutions was to support the DoD CE program by reviewing,
analyzing, and distributing records flagged by the DoD CE program into Low, Medium,
and High risk categories, and forwarding reports of the flagged records to the appropriate
government offices.

        Modification No. P00002 modified Xcelerate Solutions’ Contract in several ways.
First, as reflected in Contract Line Item Numbers 2001, 2002, and 2003, Modification No.
P00002 exercised the second one-year option period of Xcelerate Solutions’ Contract
with the DSS. As reflected in Contract Line Item Number 2004, Modification No. P00002
“[i]ncreased Personnel Security Operational support in accordance with the updated
Performance Work Statement Part 5, executed in P00002.” Modification No. P00002 also
created Contract Line Item Numbers 3004 and 4004, which were two consecutive one-
year option periods for “[i]ncreased Personnel Security Operational support . . . .”18
Additionally, Modification No. P00002 of Xcelerate Solutions’ Contract provided for “DoD
Continuous Evaluation Mission support increase/further definition in accordance with the
updated Performance Work Statement Part 5, executed in P00002” during the second
option period of Xcelerate Solutions’ Contract. Modification No. P00002 of Xcelerate
Solutions’ Contract also created two consecutive one-year option periods under the
Contract for “DoD Continuous Evaluation Mission support increase/further definition,” as
reflected in Contract Line Item Numbers 3005 and 4005.

       Modification No. P00002 of Xcelerate Solutions’ Contract also altered the
objectives and scope sections in Xcelerate Solutions’ Contract. Modification No. P00002
added language to Section 1.3 of Xcelerate Solutions’ Modified Contract, titled
“Objectives,” that indicated the objective of the Xcelerate Solutions’ Modified Contract
now included obtaining

      a knowledge-based analytic capability to validate alerts generated by the
      DoD Continuous Evaluation (CE) Program. The validation cell will use
      supporting systems to receive and determine the CE results meet
      established reporting criteria before forwarding adjudicative-relevant and
      actionable information to the DoD Consolidated Adjudication Facility (DoD
      CAF) and DoD Component security officials, as appropriate.

The following sentences were also added to Section 1.4, titled “Scope,” of Xcelerate
Solutions’ Modified Contract:

      DoD is evolving its CE program as directed by the Secretary of Defense’s
      February 21, 2014 memorandum and in accordance with the Office of
      Management and Budget, “Report to the President, Suitability and Security
      Processes Review.” To support DoD CE Program implementation, the
      Contractor shall provide the personnel necessary to support the accurate
      and timely validation CE flags as the program scales. Efforts include, but


18As noted, IEA is not challenging the modifications contained in Contract Line Item
Numbers 2001, 2002, 2003, 2004, 3004, and 4004.
                                           35
      are not limited to, developing processes and procedures, assessing and
      validating flags generated by the DoD CE capability, developing business
      rules, drafting research reports, collecting metrics, and developing future
      CE requirements.

       Additionally, Modification No. P00002 expanded the specific tasks prescribed by
Section 5.16 of Xcelerate Solutions’ Contract, titled “Continuous Evaluation (CE),” which
was renumbered to become Section 5.12 of Xcelerate Solutions’ Modified Contract.
Section 5.12 of Xcelerate Solutions’ Modified Contract, also titled “Continuous Evaluation
(CE),” provided that Xcelerate Solutions:

      [W]ill receive, evaluate, and disseminate flags from the DoD CE capability
      in accordance with DoD established policy, guidelines, and procedures.
      Assess and validate CE flags using available data sources to attribute the
      information to a specific subject and determine if the information is relevant
      and actionable, in accordance with DoD established guidelines and
      procedures. Disseminate CE results and related correspondence to
      personnel security specialists, CI, insider threat (InT), and/or law
      enforcement (LE) personnel, as applicable, and within DoD established
      guidelines. Develop tracking tools, matrices, and templates to efficiently
      analyze data and produce metrics which identify trends, referral status, and
      business rules efficiency. Support the DoD CE Program as required,
      including policy development, comment adjudication, formal coordination,
      and resource assessments. Provide logistical, data gathering, and
      presentation support to meet DoD CE Program requirements. Continually
      monitor and review CE processes and procedures to inform the government
      where efficiencies can be realized. Provide feedback to the DoD CE
      Program regarding the relevance and validity of the business rules for flags.
      Policies, procedures and strategies will be planned and integrated into the
      CE program as needed. Support the development and delivery of CE-
      related reports, briefings, and training as needed. Assist with the agenda
      setting and facilitation of DoD CE Working Groups, and other CE-related
      forums as required. Provide administrative support as necessary, to include
      planning meetings, tracking action items, and preparing read-ahead briefing
      material, meeting minutes, formal correspondence packages, activity
      reports, senior leadership reports, and travel/training/personnel documents.

        Although “receiv[ing], evaluat[ing], and disseminat[ing] flags from the DoD CE
capability” and providing “administrative support” may have been within the scope of the
Solicitation and Xcelerate Solutions’ Contract, the additional requirements related to CE
in Modification No. P00002 exceeded the scope of the CE work contemplated in the
Solicitation and Xcelerate Solutions’ Contract. The Solicitation and Xcelerate Solutions’
Contract did not contemplate that Xcelerate Solutions would be providing “a knowledge-
based analytic capability” for assessing and validating records flagged by the DoD’s
automated system. Rather, under Xcelerate Solutions’ Contract with the DSS, Xcelerate
Solutions was to review the records flagged by CE, which had been validated by “a

                                           36
knowledge-based analytic capability” prior to being sent to Xcelerate Solutions, and
distribute the flagged CE records into risk categories. Contrary to defendant’s arguments,
using available data sources to determine whether specific information is attributable to
a specific clearance holder and determining whether the information is relevant and
actionable differs from the review and distribution of flagged, validated CE records
because, under the unmodified Xcelerate Solutions’ Contract, Xcelerate Solutions’ role
was limited to the review and distribution of flagged, validated CE records into risk
categories before forwarding the records to the relevant government officials.

        The Solicitation and Xcelerate Solutions’ Contract also were silent as to the
development of “tracking tools, matrices, and templates to efficiently analyze data and
produce metrics which identify trends, referral status, and business rules efficiency” and
the provision of “logistical, data gathering, and presentation support to meet DoD CE
Program requirements.” Xcelerate Solutions’ role in reviewing, analyzing, distributing, and
forwarding flagged, validated CE records did not include developing tools to capture and
analyze data in an effort to identify trends related to the efficiency of the entire DoD CE
program or determining the efficiency of the DoD’s CE program’s business rules. Nor was
Xcelerate Solutions’ original role in the CE program under the unmodified Xcelerate
Solutions’ Contract with the DSS broad enough to encompass the following: “monitor[ing]
and review[ing] CE processes and procedures to inform the government where
efficiencies can be realized. Provide feedback to the DoD CE Program regarding the
relevance and validity of the business rules for flags. Policies, procedures and strategies
will be planned and integrated into the CE program as needed.” Monitoring the DoD’s CE
program’s processes, procedures, and business rules and informing DSS how the DoD
CE program can realize efficiencies cannot be squared with Xcelerate Solutions’ more
limited role in the CE program under the unmodified Xcelerate Solutions’ Contract
because the analysis under Xcelerate Solutions’ Modified Contract entails tracking and
examining the DoD CE program as a whole and differs in substance from the analysis
Xcelerate Solutions provided when reviewing, analyzing, and distributing a flagged record
into a risk category.

        Furthermore, supporting the DoD CE program with “policy development, comment
adjudication, formal coordination, and resource assessments,” “the development and
delivery of CE-related reports, briefings, and training,” and “agenda setting and facilitation
of DoD CE Working Groups, and other CE-related forums” is outside of the scope of the
Solicitation and the unmodified Xcelerate Solutions’ Contract with DSS. Xcelerate
Solutions’ limited role in the DoD CE program under the unmodified Xcelerate Solutions’
Contract did not include developing the policy and agenda, formal coordination, or
assessing the resources of the entire DoD CE program. The work required in designing
and implementing training programs for the DoD CE program and facilitating DoD CE
working groups and other related forums also substantively differs from the work
Xcelerate Solutions was undertaking pursuant to the unmodified Xcelerate Solutions’
Contract, as Xcelerate Solutions was not responsible for creating and assisting with DoD
CE program-wide activities unrelated to reviewing, analyzing, distributing, and forwarding
flagged records. Moreover, the objective of the Solicitation and the unmodified Xcelerate
Solutions’ Contract was “to review and process personnel security documentation” and

                                             37
the scope of the Solicitation and the unmodified Xcelerate Solutions’ Contract was to
provide “operational support to assist in the personnel clearance oversight and
management . . . .” The additional tasks Modification No. P00002 assigned to Xcelerate
Solutions were far more policy driven and were much broader, with additional focus on
the DoD CE program in its entirety, than the more limited review and processing of
personnel security documentation and provision of operational support which were
contemplated in the objectives sections and scope sections in the Solicitation and
unmodified Xcelerate Solutions’ Contract. Indeed, both the objectives section and scope
section in Xcelerate Solutions’ Modified Contract were altered to include the new CE-
related requirements prescribed by Contract Line Item Number 2005 in Modification No.
P00002.

        IEA also asserts that “the magnitude of the modification” is reflected in the
increased amount of time and number of full-time equivalents the DSS anticipates that it
will take Xcelerate Solutions to process CE reports under the Xcelerate Solutions’
Modified Contract. The defendant contends that, as a result of the DSS’ issuance of
Modification No. P00002 to Xcelerate Solutions’ Contract, the “actual change in the
quantity of service is about 51.5 percent for option year two.” The defendant calculates
its “actual change in the quantity of service” by dividing the “[i]ncreased Continuous
Evaluation minutes in modification P00002 ((2,880,000-900,000)” by the “Original PSMO-
I Solicitation minutes (3,844,300)) . . . .” After acknowledging that an increase of 51.5
percent is “non-trivial,” the defendant asserts that such an increase is not substantial
enough to demonstrate an out-of-scope modification without a corresponding change in
the nature and purpose of Xcelerate Solutions’ Contract. The increase, however, in the
“quantity of service” related to the DoD CE program being provided under Xcelerate
Solutions’ Modified Contract is much greater than approximately 51.5 percent when
compared to the “quantity of service” related to the DoD CE program under the Solicitation
and the unmodified Xcelerate Solutions’ Contract. Section 7.3 of the Solicitation estimated
that the awardee would “COMPLETE” 225,000 CE reports annually at an estimated rate of
four minutes per CE report, which produces a total estimate of 900,000 minutes per year
dedicated to completing CE reports. (capitalization in original). Under the unmodified
Xcelerate Solutions’ Contract, Xcelerate Solutions was providing “[redacted] FTEs [full-
time equivalents], with [redacted] providing CE support.” Xcelerate Solutions’ Modified
Contract, however, estimated that Xcelerate Solutions would “COMPLETE” 80,000 CE
reports annually at an average rate of thirty-six minutes per CE report, which produces a
total estimate of 2,880,000 minutes per year dedicated to completing CE reports.
(capitalization in original). Despite the DSS decreasing the estimated number of CE
reports per year by 155,000 CE reports, to meet the requirements of its Modified Contract,
Xcelerate Solutions would be required to increase its existing staffing with [redacted] full-
time equivalents to support the increase in CE-related work. Thus, under Xcelerate
Solutions’ Modified Contract, the DSS estimated that it would take Xcelerate Solutions
approximately nine times longer to complete a single CE report, and Xcelerate Solutions
needed to provide more than [redacted] times the amount of full-time equivalents
dedicated to performing CE-related work to complete approximately 155,000 fewer CE
reports per year. Such a significant increase in time per CE report and personnel indicates
that the CE-related work Xcelerate Solutions was to provide pursuant to the Xcelerate

                                             38
Solutions’ Modified Contract was much more extensive than the CE work Xcelerate
Solutions had performed under the unmodified Xcelerate Solutions’ Contract.

        Additionally, IEA argues that Modification No. P00002 “nearly doubles the price of
the contract as awarded, which is strong evidence that the work is outside the scope of
the original contract.” Taking a concept from the principles applicable to evaluating
cardinal changes, although a court “‘must look beyond simple arithmetic when assessing
a cardinal change claim,’” Golden Mfg. Co. v. United States, 107 Fed. Cl. at 279 (quoting
PCL Const. Servs., Inc. v. United States, 47 Fed. Cl. 745, 806 (2000)), “[a]nother factor
is whether the modification substantially changes . . . ‘costs as between the original
contract and modified contract.’” CESC Plaza Ltd. P’ship v. United States, 52 Fed. Cl. at
93 (quoting CCL, Inc. v. United States, 39 Fed. Cl. at 792 (citations omitted); see also
Cardinal Maint. Serv., Inc. v. United States, 63 Fed. Cl. at 109 (“Where, as here, the
amount of additional work nearly doubles the price of the contract that was awarded, and
the nature of the work was so substantially increased that the change provision of the
contract had to be deleted to accomplish the modifications, the originally awarded
contract has been materially changed.” (citation omitted)). The total potential value of the
unmodified Xcelerate Solutions’ Contract as awarded was $15,322,211.20. Under the
second option period of Xcelerate Solutions’ Contract, the DSS was to pay Xcelerate
Solutions $3,152,544.00. Modification No. P00002 increased the amount the DSS was to
compensate Xcelerate Solutions during the second option period by $3,947,827.20 to
$7,100,371.20. The increase of $3,947,827.20 was comprised of [redacted] in Contract
Line Item Number 2004 for “[i]ncreased Personnel Security Operational support,” which
IEA is not challenging as being out-of-scope, and [redacted] in Contract Line Item Number
2005 for “DoD Continuous Evaluation Mission support increase/further definition,” which
IEA is challenging as being out-of-scope. 19 Therefore, the total increase in price that is
attributable to the alleged out-of-scope CE work prescribed by Modification No. P00002
during second option period of Xcelerate Solutions’ Contract was [redacted]. An increase
of [redacted] attributable to the alleged out-of-scope work added by Modification No.
P00002 during the second option period of Xcelerate Solutions’ Contract, which, as
awarded, had a value of $3,152,544.00, represents a price increase of approximately
[redacted] percent in the amount the DSS was to compensate Xcelerate Solutions during
the second option period of Xcelerate Solutions’ Contract. 20 Although the price increase


19   Modification No. P00002 also included individually-priced option periods for
“[i]ncreased Personnel Security Operational support” and “DoD Continuous Evaluation
Mission support increase/further definition . . . .” Under Xcelerate Solutions’ Modified
Contract, the DSS could exercise an option period for “[i]ncreased Personnel Security
Operational support” during the third option period in Contract Line Item Number 3004 for
[redacted] and during the fourth option period in Contract Line Item Number 4004 for
[redacted]. The DSS could exercise an option in Contract Line Item Number 3005 for
“DoD Continuous Evaluation Mission support increase/further definition” during the third
option period for [redacted], as well as an option in Contract Line Item Number 4005
during the fourth option period for [redacted].
20   The increase of [redacted] percent represents the value of the alleged out-of-scope
                                            39
of [redacted] percent alone may not be sufficient to demonstrate an out-of-scope
modification, in this case, when considered in conjunction with the difference in the type
of services Xcelerate Solutions was providing under the Xcelerate Solutions’ Modified
Contract, the [redacted] percent increase in the price of the second option period is a
significant indication that Modification No. P00002 was outside of the scope of Xcelerate
Solutions’ Contract. See Cardinal Maint. Serv., Inc. v. United States, 63 Fed. Cl. at 109.

        Moreover, potential offerors could not have anticipated from the terms of the
Solicitation that the resulting contract would be modified to include the administration of
the DoD CE program. The Memorandum for Record provides that

       [t]his change would not have effected [sic] Contractors at time of quote
       because the work is not different from what was initially solicited but now
       better defined or just increased. Contractors could have anticipated that as
       we gained a better understanding of this new CE mission that we might
       need to further define our requirement in order to support the greatest
       performance and success of the winning Contractor.

Section 5.1, titled “Basic Services,” in the performance work statement in Part 5 of the
Solicitation and Xcelerate Solutions’ Contract, stated that the “Vendor shall support duties
and processing requests to include . . . other evolving initiatives as related to Continuous
Evaluation and the Defense Insider Threat Management Analysis Center.” From the
language in the Memorandum for Record, however, it is by no means clear, reading the
terms of the Solicitation, that an offeror could have anticipated a modification requiring
the awardee to assess and validate flagged records, develop the policies, agenda,
procedures, strategies, and training programs of the DoD CE program, and develop
tracking tools to capture and analyze data related to the efficiency of the DoD CE program
as a whole.

       IEA further argues that offerors could not have anticipated the issuance of
Modification No. P00002 because, at the time the Solicitation was issued, the DSS was
not responsible for “the Validation Cell efforts,” and there was already a contractor
performing “that exact work” under the supervision of another DoD component. The
defendant contends that offerors could “have reasonably expected the issuance of
Modification P00002” because the Solicitation “advised offerors” that CE was a new
mission for the DSS, and Section 5.1 of the Solicitation provided that the awardee would
“‘support duties and processing requests to include . . . other evolving initiatives as related
to Continuous Evaluation and the Defense Insider Threat Management Analysis
Center . . . .’” (emphasis in original). As the DoD CE program scaled and more
government and contractor personnel were enrolled in the DoD CE program, offerors
could have anticipated an increase in the number of records flagged by the DoD CE
program on an annual basis, which would need to be reviewed and distributed into a risk
category. The Solicitation, however, did not indicate to offerors that the awardee’s role in


work added in Contract Line Item Number 2005 under Modification No. P00002 divided
by the value of the second option period as awarded under Xcelerate Solutions’ Contract.
                                              40
the CE program of reviewing, analyzing, distributing, and forwarding flagged records
could expand into providing a “knowledge-based analytic capability” for assessing and
validating flagged records, the development of the DoD CE program’s tracking tools,
policies, agendas, procedures, strategies, and training programs, or the gathering and
analysis of data related to the efficiency of the entire DoD CE program. Moreover, nothing
in the Administrative Record indicates that offerors could have reasonably anticipated that
the DoD would realign its CE program, that the work IEA was providing under its Task
Order with the WHS would be reassigned to the DSS, and that the work IEA had been
providing under IEA’s Task Order would be inserted by modification into the contract
awarded under the Solicitation. See CW Gov’t Travel, Inc. v. United States, 61 Fed. Cl.
559, 574 (2004) (concluding that it was “especially true” that potential bidders would not
have anticipated a contract modification involving “traditional travel services” when “at the
time of contract formation there were already contracts in place for traditional travel
services”), recons. denied, 63 Fed. Cl. 459, aff’d, 163 F. App’x 853 (Fed. Cir. 2005).

       Although whether potential bidders could have anticipated a modification is judged
under an objective standard, see Global Computer Enters., Inc. v. United States, 88 Fed.
Cl. at 56, the court notes that, contrary to the defendant’s and defendant-intervenor’s
arguments, the four offerors who responded to the Solicitation did not include in their
proposals proposed methods for the “end-to-end processing of the CE alerts for the entire
DoD enterprise population.” In this regard, defendant argues that Advanced Onion’s
proposal described “the entire Continuous Evaluation mission . . . .” (emphasis in original).
In the paragraphs preceding that description, however, Advanced Onion stated:

       [redacted]

(emphasis in original). When responding to the terms of the Solicitation which resulted in
the unmodified Xcelerate Solutions’ Contract, Advanced Onion appears to have
discussed IEA’s experience with the entire DoD CE program to support its assertion that
IEA’s “relevant work experience” would permit Advanced Onion to rapidly execute and
sort “CE alerts,” as required by Section 5.16 of the Solicitation. In the past performance
section of its proposal, Advanced Onion also included IEA’s Task Order to support its
position that it had a capable subcontractor lined up and that it was capable of performing
the specific tasks in sections 5.2, 5.3, 5.4, 5.8, 5.10, 5.11, 5.13, 5.14, 5.16, and 5.17 of
the Solicitation. Advanced Onion’s description of IEA’s performance under IEA’s Task
Order with the WHS, however, does not indicate that Advanced Onion anticipated that
the contract awarded under the Solicitation would or could be modified to entail
performing end-to-end processing of DoD’s CE program, as was contemplated in
Modification No. P00002.

       Additionally, the proposals of Xcelerate Solutions, Sayres and Associates
Corporation, and ANASEC, Inc. did not address “end-to-end processing of CE Alerts for
entire DoD enterprise population.” Xcelerate Solutions’ proposal primarily addressed the
[redacted]. Sayres and Associates Corporation’s proposal discussed its performance
under [redacted], although it did not include a proposed plan addressing how Sayres and
Associates Corporation might administer the entire DoD CE program under Section 5.16

                                             41
of the Solicitation. ANASEC, Inc.’s proposal did note that the DoD CE program was
evolving, but its proposal only stated that it [redacted]. (emphasis added). Additionally,
none of the four proposals mentioned developing tracking tools to analyze data, policies,
agenda, procedures, strategies, and training programs of the DoD CE program. The
court, therefore, disagrees with the defendant’s position that the offerors’ proposals
indicated that the offerors anticipated that the contract awarded under the Solicitation
could or would be modified to include the end-to-end operation of the DoD CE program.

        Thus, by issuing an out-of-scope modification to Xcelerate Solutions’ Contract, the
DSS violated CICA’s requirement of “full and open competition through the use of
competitive procedures . . . .” 10 U.S.C. § 2304(a)(1)(A); see, e.g., AT& T Commc’ns, Inc.
v. Wiltel, Inc., 1 F.3d at 1205; CCL, Inc. v. United States, 39 Fed. Cl. at 791. Accordingly,
the DSS’ actions were not in accordance with the law. See 5 U.S.C. § 706(2)(A); see also
Cardinal Maint. Serv., Inc. v. United States, 63 Fed. Cl. at 110; CCL, Inc. v. United States,
39 Fed. Cl. at 791. Having found that the DSS violated CICA, the court considers whether
IEA is entitled to the relief that it seeks.

       Initially, IEA requested that this court enter preliminary and permanent injunctions
“enjoining Defendant from procuring analytical and policy development support services
for the DoD CE Program under Xcelerate’s PMSO-I contract, or any other non-
competitively-awarded task order or contract . . . until such time as an appropriate
competitive procurement is conducted under applicable federal law and regulation and
an award made pursuant thereto . . . .” After denying the temporary restraining order on
January 3, 2018, the court turns to protestor’s request for a permanent injunction.

       As discussed above, this court has jurisdiction to award injunctive relief pursuant
to 28 U.S.C. § 1491(b)(2). In Centech Group, Inc. v. United States, the Federal Circuit set
out the test for a permanent injunction, stating:

          To determine if a permanent injunction is warranted, the court must
          consider whether (1) the plaintiff has succeeded on the merits of the
          case; (2) the plaintiff will suffer irreparable harm if the court withholds
          injunctive relief; (3) the balance of hardships to the respective parties
          favors the grant of injunctive relief; and (4) the public interest is served
          by a grant of injunctive relief.

Centech Grp., Inc. v. United States, 554 F.3d at 1037 (citing PGBA, LLC v. United States,
389 F.3d 1219, 1228-29 (Fed. Cir. 2004) (citing Amoco Prod. Co. v. Vill. of Gambell,
Alaska, 480 U.S. 531, 546 n.12 (1987))); see also Nat’l Steel Car, Ltd. v. Canadian Pacific
Ry., Ltd., 357 F.3d 1319, 1325 (Fed. Cir.) (finding that a plaintiff who cannot demonstrate
actual success on the merits cannot prevail on its motion for permanent injunctive relief),
reh’g and reh’g en banc denied (Fed. Cir. 2004); Iron Bow Techs., LLC v. United States,
132 Fed. Cl. 346, 355 (2017); Remington Arms Co., LLC v. United States, 126 Fed. Cl.
218, 232 (2016); MVS USA, Inc. v. United States, 111 Fed. Cl. 639, 649 (2013); CW Gov’t
Travel, Inc. v. United States, 110 Fed. Cl. at 494; Contracting, Consulting, Eng’g LLC v.
United States, 104 Fed. Cl. at 34 (citing Centech Grp., Inc. v. United States, 554 F.3d at

                                             42
1037) (citation omitted). Success on the merits has been said to be “the most important
factor for a court to consider when deciding whether to issue injunctive relief.” Dellew
Corp. v. United States, 108 Fed. Cl. 357, 369 (2012) (citing Blue & Gold Fleet, L.P. v.
United States, 492 F.3d at 1312). While success on the merits is necessary, it is not
sufficient for plaintiff to establish that it is entitled to injunctive relief. See Limco Airepair,
Inc. v. United States, 130 Fed. Cl. at 550-51 (“However, while success upon the merits is
necessary, it is not sufficient alone for a plaintiff to establish that it is entitled to injunctive
relief.” (citation omitted)); Contracting, Consulting, Eng’g LLC v. United States, 104 Fed.
Cl. at 353 (“Although plaintiff’s entitlement to injunctive relief depends on its succeeding
on the merits, it is not determinative because the three equitable factors must be
considered, as well.”) (citing PGBA, LLC v. United States, 389 F.3d at 1228-29). The four
factors are to be considered collectively, rather than individually, such that

       “[n]o one factor, taken individually, is necessarily dispositive. . . . [T]he
       weakness of the showing regarding one factor may be overborne by the
       strength of the others.” FMC Corp. [v. United States], 3 F.3d [424] at 427
       [(Fed. Cir. 1993)]. Conversely, “the absence of an adequate showing with
       regard to any one factor may be sufficient” to deny injunctive relief. Id.

Sheridan Corp. v. United States, 94 Fed. Cl. 663, 668 (2010); see also Wallace Asset
Mgmt., LLC v. United States, 125 Fed. Cl. 718, 727 (2016); Amidon, Inc. v. United States,
124 Fed. Cl. 517, 522 (2015).

        In the above-captioned bid protest, IEA has established success on the merits by
demonstrating that the DSS acted contrary to law when the DSS issued an out-of-scope
modification to Xcelerate Solutions’ Contract. Regarding the second factor, whether or
not the protestor will suffer irreparable harm if injunctive relief is not granted, “[w]hen
assessing irreparable injury, ‘[t]he relevant inquiry in weighing this factor is whether
plaintiff has an adequate remedy in the absence of an injunction.’” Insight Sys. Corp. v.
United States, 110 Fed. Cl. 564, 582 (2013) (quoting Magellan Corp. v. United States, 27
Fed. Cl. 446, 447 (1993)); see also Iron Bow Techs., LLC v. United States, 132 Fed. Cl.
at 358 (citing Heritage of Am., LLC v. United States, 77 Fed. Cl. 66, 78, recons. denied,
77 Fed. Cl. 81 (2007); Rush Constr., Inc. v. United States, 117 Fed. Cl. 85, 101 (2014);
CW Gov’t Travel, Inc. v. United States, 110 Fed. Cl. at 494; Overstreet Elec. Co. v. United
States, 47 Fed. Cl. 728, 743 (2000). “The Court of Federal Claims has repeatedly held
that a protester suffers irreparable harm if it is deprived of the opportunity to compete
fairly for a contract.” CW Gov’t Travel, Inc. v. United States, 110 Fed. Cl. at 494 (citing
CRAssociates, Inc. v. United States, 95 Fed. Cl. 357, 390-91 (2010); Serco, Inc. v. United
States, 81 Fed. Cl. at 501-02; and Impresa Construzioni Geom. Domenico Garufi v.
United States, 52 Fed. Cl. 826, 828 (2002)); see also Veterans Contracting Grp., Inc. v.
United States, 133 Fed. Cl. 613, 623 (2017) (“The ‘[d]enial of the opportunity to compete
for a contract can constitute irreparable harm.’” (alteration in original) (quoting Miles
Constr., LLC v. United States, 108 Fed. Cl. 792, 806 (2013) (citing Elec. On–Ramp, Inc.
v. United States, 104 Fed. Cl. 151, 169 (2012); NetStar–1 Gov’t Consulting, Inc. v. United
States, 101 Fed. Cl. 511, 530 (2011), aff’d, 473 F. App’x 902 (Fed. Cir. 2012)));
Remington Arms Co., LLC v. United States, 126 Fed. Cl. at 232 (explaining that the loss

                                                43
of potential work and profits from a government contract constitutes irreparable harm);
BINL, Inc. v. United States, 106 Fed. Cl. 26, 48 (2012) (“Irreparable harm is established
by a lost opportunity to fairly compete.”); HP Enter. Servs., LLC v. United States, 104 Fed.
Cl. at 245 (citing several cases); Magnum Opus Techs., Inc. v. United States, 94 Fed. Cl.
512, 544 (2010) (“‘A lost opportunity to compete in a fair competitive bidding process for
a contract is sufficient to demonstrate irreparable harm.’” (citations omitted)), motion to
amend denied, 94 Fed. Cl. 553 (2010). The loss of a valuable business opportunity
“deriving from a lost opportunity to compete in a fair competitive bidding process for a
contract,” can be sufficient to constitute irreparable harm. See Overstreet Elec. Co. v.
United States, 47 Fed. Cl. at 744 (citing United Int’l Investigative Servs., Inc. v. United
States, 41 Fed. Cl. 312, 323 (1998) (“[T]he opportunity to compete for a contract and
secure any resulting profits has been recognized to constitute significant harm.”)); see
also KWR Constr., Inc. v. United States, 124 Fed. Cl. 345, 363 (2015) (agreeing with
protestor that the lost opportunity to compete for a future contract will cause irreparable
harm); Impresa Construzioni Geom. Domenico Garufi v. United States, 52 Fed. Cl. at
828. According to a judge of this court, “[t]he court has repeatedly held that ‘the loss of
potential profits’ from a government contract constitutes irreparable harm.” BINL, Inc. v.
United States, 106 Fed. Cl. at 49 (quoting Furniture by Thurston v. United States, 103
Fed. Cl. 505, 520 (2012) (citing BayFirst Sols., LLC v. United States, 102 Fed. Cl. 677,
696 (2012))); see also MORI Assocs., Inc. v. United States, 102 Fed. Cl. 503, 552-53
(2011).

        IEA argues that its lost opportunity to compete and continued loss of its “existing
team of experienced Personnel Security Analysts” constitutes irreparable harm. The
defendant, however, contends that IEA’s loss of employees is not irreparable because
IEA does not assert its lost employees are “irreplaceable,” but only that the lost employees
cannot be replaced within a reasonable period of time. The defendant also asserts that
IEA’s loss “is purely monetary and thereby not irreparable.” (emphasis in original).
Nevertheless, if performance of Contract Line Item Numbers 2005, 3005, and 4005 in
Modification No. P00002 of Xcelerate Solutions’ Modified Contract is not enjoined, IEA
will suffer irreparable harm because IEA will have lost an opportunity to compete for the
DoD CE program work contained in Contract Item Line Numbers 2005, 3005, and 4005
in Modification No. P00002. See Cardinal Maint. Serv., Inc. v. United States, 63 Fed. Cl.
at 110 (“In this case, Cardinal lost the opportunity to compete on a level playing field for
the contracts awarded to Navales and Choe. In addition, it was excluded from this bidding
process because of the government’s violation of CICA. As a consequence, Cardinal has
shown irreparable injury sufficient to satisfy the requirement for a permanent injunction.”).

       According to IEA, the balance of hardships weighs in its favor because “there
would be no hardship to the Agency if it were unable to authorize (and/or continue)
performance” of Contract Line Item Numbers 2005, 3005, and 4005 in Modification No.
P00002 of Xcelerate Solutions’ Modified Contract because “the Government could
continue obtaining the services under IEA’s existing task order at approximately the same
price” and “the Government could compete the work,” which “would result in the best
value for the Government.” The defendant contends that “[e]ven assuming DSS could
purchase the services” under IEA’s Task Order with the WHS, which is a “point we [the

                                             44
defendant] do not concede,” the “DSS should not have to move backwards by using a
contract vehicle (the WHS Contract) that DSS [a different organization within the DoD]
contract personnel cannot administer.” The defendant also asserts that obtaining the DoD
CE program services under IEA’s Task Order would “defy” the DoD’s realignment of its
CE program. Therefore, if enjoined, the defendant alleges that the government will have
to either “(1) go without certain Continuous Evaluation services (while an expedited ‘final’
procurement is performed), or (2) execute an expedited short-term procurement.”
According to the defendant, the “DSS’s first option (forego services) is an obvious national
security issue—failure to perform Continuous Evaluation tasks could result in personnel
maintaining their clearance despite derogatory information having been identified.” The
defendant also claims its second option of conducting “an expedited competition for a
short-term ‘bridge’ contract would result in some gap in Continuous Evaluation
services . . . .”

       The declaration which the defendant relies upon to support its claim that forgoing
CE services for any period of time would be an “obvious national security issue” is a
declaration signed by Ashley D. Maddox, who states in her declaration that she is
employed by the DSS “as a Supervisory Contract Specialist, serving as a Contracting
Officer.” 21 In her declaration, Ms. Maddox states:

       DSS’s first option (forego services) would be a tremendous hardship
       because it would cause a national security issue in that the failure to timely
       complete Continuous Evaluation tasks could result in personnel maintaining
       their clearance despite derogatory information having been identified.




21 In its motion for judgment on the Administrative Record and in its reply, the defendant
did not cite to the Administrative Record when discussing the “obvious national security
issue” the DSS would be presented with if this court were to enjoin performance of
Contract Line Item Numbers 2005, 3005, and 4005 in Modification No. P00002 of
Xcelerate Solutions’ Contract. Although APA review is to be applied to an agency’s
decision based on the record the agency presents to the court, the court may supplement
the administrative record when omission of the supplemental material precludes effective
judicial review. See AugustaWestland N. Am., Inc. v. United States, 880 F.3d 1326, 1331-
32 (Fed. Cir. 2018); see also Axiom Res. Mgmt., Inc. v. United States, 564 F.3d at 1380.
In this case, the defendant submitted the declaration signed by Ms. Maddox to the court
as an attachment to its reply to its motion for judgment on the Administrative Record. The
declaration signed by Ms. Maddox is the only document presented by the defendant
which suggests that enjoining the DoD CE program for any period of time could be a
national security issue. Because the Administrative Record did not contain any
information regarding the impact an injunction would have on national security, omission
of the declaration signed by Ms. Maddox would have precluded the court from effectively
considering whether a permanent injunction is warranted in the above-captioned protest.
Therefore, the court permitted the declaration signed by Ms. Maddox to be considered by
the parties and the court.
                                            45
       DSS’s second option (conduct a short-term procurement, or “bridge”
       contract) would be a tremendous hardship because it would also cause a
       gap (albeit, likely shorter) in Continuous Evaluation tasks that could result
       in personnel maintaining their clearance despite derogatory information
       having been identified. DSS’s second option has the additional negative
       result that DSS will have to perform three contract actions for one set of
       services (modification P00002, interim contract, final contract).

The declaration signed by Ms. Maddox states only that the first option would be a
tremendous hardship, and without much by the way of specifics, not a national security
impact, and that if the second option of a bridge contract or a short-term procurement is
to be used would be a tremendous hardship and “could result in personnel maintaining
their clearance despite derogatory information having been identified,” again with not
much by way of specifics. In this instance, the defendant, although expressing concern,
did not invoke a national security claim or argue very forcefully that dire consequences
would occur if an injunction was issued or as to a national security impact. IEA’s counsel
of record, however, indicated at the January 18, 2018 oral argument, IEA would be willing
to perform a bridge contract while the DSS competed the out-of-scope work contained in
Modification No. P00002 of Xcelerate Solutions’ Contract with the DSS. Consequently,
the balance of the hardships incurred if Contract Line Item Number 2005, 3005, and 4005
in Modification No. P00002 of Xcelerate Solutions’ Contract were enjoined weighs in favor
of IEA.

        Regarding the public interest factor, “‘[t]he public interest in honest, open, and fair
competition in the procurement process is compromised whenever an agency abuses its
discretion.’” CW Gov’t Travel, Inc. v. United States, 110 Fed. Cl. at 495 (quoting PGBA,
LLC v. United States, 57 Fed. Cl. 655, 663 (2003)); see also Torres Advanced Enter.
Sols., LLC v. United States, 133 Fed. Cl. 496, 534 (2017); Cohen Fin. Servs., Inc. v.
United States, 110 Fed. Cl. 267, 289 (2013); United Int’l Investigative Servs., Inc. v. United
States, 41 Fed. Cl. at 323 (“[T]he public has a strong interest in preserving the integrity of
the procurement process.”) (citing Parcel 49C Ltd. P’ship v. United States, 31 F.3d 1147,
1153 (Fed. Cir. 1994)); Am. Safety Council, Inc. v. United States, 122 Fed. Cl. 426, 444
(2015) (holding that “the public interest will be served by an injunction by preserving the
integrity of the procurement process”); Applied Bus. Mgmt. Sol., Inc., LLC v. United
States, 117 Fed. Cl. 589, 608 (2014); BINL, Inc. v. United States, 106 Fed. Cl. at 49 (“With
regard to the public interest, it is well-settled that there is a public interest in remedying
violations of law.”). An important public interest is served through conducting “honest,
open, and fair competition” under the FAR, because such competition improves the
overall value delivered to the government in the long term. See CW Gov’t Travel, Inc. v.
United States, 110 Fed. Cl. at 495. “[T]he public interest is served by injunctive relief
where the court has concluded that the government violated an applicable regulation and
related provisions in the solicitation, and ‘maintenance of the integrity of the procurement
process weighs heavily in favor of granting a permanent injunction.’” Q Integrated Cos.
LLC v. United States, 126 Fed. Cl. 124, 147 (quoting Springfield Parcel C, LLC v. United
States, 124 Fed. Cl. 163, 193 (2015)), appeal dismissed, 691 F. App’x 906 (Fed. Cir.
2016).

                                              46
        IEA contends that awarding a permanent injunction serves the public interest
because the integrity of the federal procurement process will be preserved if the DSS is
not permitted to continue obtaining work related to the DoD CE program under
Modification No. P00002. Additionally, according to IEA, “an injunction that requires re-
solicitation may result in a lower cost to taxpayers for the work.” Conversely, the
defendant asserts that the public interest would be furthered if the court did not issue an
injunction because even temporarily halting the DoD CE program would allow reported
derogatory information to go unaddressed. Even though Advanced Onion was not
awarded the contract issued under the Solicitation, the defendant also alleges that the
integrity of the procurement process would not be harmed because “IEA, through the
prime contractor Advanced Onion, had the opportunity to compete for the PSMO-I
Contract that DSS later modified.”

        In this protest, the integrity of the federal procurement process is served by
enjoining the DSS’ out-of-scope modification. Enjoining Contract Line Item Numbers
2005, 3005, and 4005 in Modification No. P00002 requires the DSS to satisfy CICA’s full
and open requirements, as the DSS should have and could have done when it originally
sought to obtain the out-of-scope work prescribed by Contract Line Item Numbers 2005,
3005, and 4005 from Xcelerate Solutions. In this instance, an injunction will promote the
integrity of the procurement process by holding the government accountable when it takes
actions that are contrary to law and may result in cost-savings for the government. As
discussed above, Ms. Maddox’s declaration is insufficient in the case of this modification
to outweigh the public’s interest in favor of a fair and open competition. Consequently, the
four factors for injunctive relief weigh in favor of granting a permanent injunction enjoining
the performance of Contract Line Item Numbers 2005, 3005, and 4005 in Modification
No. P00002 to the Xcelerate Solutions’ Contract.

        Finally, IEA requested in its complaint that this court “enter an order directing
Defendant to acquire analytical and policy development support for the DoD CE Program
through the previously competed and competitively awarded task order held by IEA until
such time as Defendant makes another competitive award of a contract for such services
as required under applicable federal law and regulation . . . .” IEA does not address its
request in its motion for judgment on the Administrative Record. Defendant argues that,
while the court may enjoin Modification No. P00002, the court may not “enjoin the agency
from taking lawful actions in the future.” Although the court has enjoined performance of
the out-of-scope work in Modification No. P00002, the court does not instruct DSS to
extend IEA’s Task Order. See ManTech Telecomms. & Info. Sys. Corp. v. United States,
49 Fed. Cl. at 79; CW Gov’t Travel, Inc. v. United States, 46 Fed. Cl. 554, 559 (2000)
(citing Parcel 49C Ltd. P’ship v. United States, 31 F.3d at 1153; and Scanwell Lab., Inc.
v. Shaffer, 424 F.2d at 869).

                                      CONCLUSION

      Accordingly, because IEA has demonstrated success on the merits and the
balance of the equitable factors weigh in IEA’s favor, the DSS is permanently enjoined

                                             47
from obtaining “DoD Continuous Evaluation Mission support increase/further definition in
accordance with the updated Performance Work Statement Part 5, executed in P00002”
under Contract Line Item Numbers 2005, 3005, and 4005 in Modification No. P00002 to
Xcelerate Solutions’ Contract, Contract No. HS0021-16-C-0006. Protestor’s motion for
judgment on the Administrative Record is GRANTED. Defendant’s motion to dismiss is
DENIED. Defendant’s motion for judgment on the Administrative Record is DENIED.
Defendant-intervenor’s motion for judgment on the Administrative Record is DENIED. The
Clerk of the Court shall enter JUDGMENT consistent with this opinion.

      IT IS SO ORDERED.

                                                       s/Marian Blank Horn
                                                       MARIAN BLANK HORN
                                                                Judge




                                          48
