        In the United States Court of Federal Claims
                                            No. 15-111C

                                (Filed Under Seal: May 18, 2015)

                           (Reissued for Publication: May 27, 2015)1

************************************** *
                                          *
NVE, INC.,                                *
                                          *
                    Plaintiff,            *
                                          *
v.                                        *              Post-Award    Bid    Protest;    Navy
                                          *              Procurement for NSA Bethesda and
THE UNITED STATES,                        *              Walter Reed Janitorial and Custodial
                                          *              Services; Time for Challenging an
                    Defendant,            *              Agency’s Corrective Action Decision;
                                          *              Discretion in Performing Best Value
and                                       *              Evaluation; Rational Basis Standard;
                                          *              Judgment on the Administrative Record.
ACE MAINTENANCE & SERVICES, INC., *
                                          *
                    Defendant-Intervenor. *
                                          *
************************************** *

Keith L. Baker, Barton, Baker, Thomas & Tolle, LLP, McLean, Virginia for Plaintiff.

Alexis J. Echols, Trial Attorney, with whom were Benjamin C. Mizer, Assistant Attorney
General, Robert E. Kirschman, Jr., Director, Claudia Burke, Assistant Director, U.S.
Department of Justice, Civil Division, Commercial Litigation Branch, Washington, D.C.,
and Ann L. Giddings, NAVFAC, Of Counsel, for Defendant.

Adam K. Lasky, Oles Morrison Rinker & Baker LLP, Seattle, Washington for Intervenor.


1
  The Court issued this opinion under seal on May 18, 2015 and gave the parties until May 26, 2015, to
submit any proposed redactions of competition-sensitive, proprietary, confidential, or other protected
information. The parties submitted their proposed redactions, which have been accepted by the Court.
Redactions are indicated by [* * *]. The Court also corrects a typographical error made on page 8 of the
opinion.
                                 OPINION AND ORDER

WHEELER, Judge.

        In this bid protest, Plaintiff NVE, Inc. (“NVE”) challenges a contract award by the
Naval Facilities Engineering Command (“NAVFAC”) to ACE Maintenance & Services,
Inc. (“ACE”) for janitorial and custodial services at the Naval Support Activity medical
facility in Bethesda, Maryland (“NSA Bethesda”). This facility includes the Walter Reed
National Military Medical Center (“Walter Reed”). NVE’s protest concerns the agency’s
third round of proposal evaluations, following two protests at the Government
Accountability Office (“GAO”) and agency corrective action decisions in response to the
protests.

       In the first round of proposal evaluations, NAVFAC determined that NVE’s
proposal offered the best value to the Government and the agency awarded a contract to
NVE on February 28, 2014. ACE and another offeror, Fresh Air Duct Cleaning, LLC
(“Fresh Air”) protested this award at the GAO on multiple grounds, including that the
agency failed to engage in meaningful discussions. Believing it had not engaged in
meaningful discussions, NAVFAC took corrective action, and the GAO dismissed both
protests as moot. The agency then reopened discussions and reevaluated the offerors’
proposals. Following the reevaluation, NAVFAC found ACE to be the apparent successful
offeror. NVE protested this award at the GAO and the agency once again decided to take
corrective action. After another round of proposal evaluations, NAVFAC again
determined ACE to be the successful offeror and awarded ACE the NSA Bethesda contract
on January 22, 2015.

       NVE protested the award to ACE at this Court on February 3, 2015. The Court
permitted ACE to intervene on the side of Defendant. The parties filed cross-motions for
judgment on the administrative record and the Court heard oral argument on May 5, 2015.

        The Court finds that NVE’s challenges to NAVFAC’s corrective action decisions
after submitting a proposal for reevaluation are waived. An offeror cannot fully participate
in a second round of proposal submissions and then later challenge the agency’s corrective
action decision. Instead, the law requires NVE to submit its challenges to an agency’s
corrective action before the due date for proposal resubmission. Blue & Gold Fleet, L.P.
v. United States, 492 F.3d 1308, 1313 (Fed. Cir. 2007). NVE’s other arguments lack merit.
The agency’s evaluation of proposals and its best value determination during the third
round of proposal evaluations were rational. Even if the agency’s evaluation was not
entirely rational, NVE suffered no prejudice. NVE’s price was significantly higher than
ACE’s, and NAVFAC was justified in selecting the lower-priced proposal if it found that
the differences in the non-price technical factors did not justify a [* * *] price premium.
                                             2
Accordingly, for the reasons explained below, Plaintiff’s motion for judgment on the
administrative record is denied. Defendant’s and Intervenor’s cross-motions for judgment
on the administrative record are granted.

                                         Factual Background2

       NAVFAC issued a solicitation requesting proposals for a firm fixed-price indefinite
delivery/indefinite quantity (“IDIQ”) contract to perform janitorial and custodial services
at NSA Bethesda on June 11, 2013. Administrative Record (“AR”) Tab 1, at 1, 6. NSA
Bethesda includes Walter Reed, the largest medical complex within the Department of
Defense, with more than 2.4 million square feet of clinical space. Walter Reed provides
care to approximately one million beneficiaries each year. NSA Bethesda’s base also
includes the President’s Hospital which provides care for members of Congress and senior
government officials. AR 11.

        The solicitation specified that the contract was a small business set-aside for a one-
year base period with four one-year option periods, not to exceed a total of five years. AR
6. The contract required the awardee to “furnish all labor, supervision, management, tools,
materials, equipment, facilities, transportation, incidental engineering, and other items
necessary” to provide the specified janitorial and custodial services. AR 10. The
solicitation also stated that the “Service Contract Act (SCA) Wage Determination and a
Collective Bargaining Agreement [(CBA)] are included in this solicitation.” AR 6.

        A.      Solicitation Requirements and Evaluation Factors

        Under the terms of the solicitation, the contract award would be made to the offeror
whose proposal offered the best value to the Government. AR 170. The following non-
price factors were evaluated as the basis for a best value tradeoff analysis: (1)
Technical/Management Approach; (2) Corporate Experience; (3) Safety; and (4) Past
Performance on Recent, Relevant Projects. Past Performance was the most important non-
price factor. AR 170, 181. The technical factors and the Past Performance factor, when
combined, were equal in importance to price. AR 170, 181. The solicitation also stated
that “[t]he importance of price [would] increase if the Offerors’ non-cost/price proposals
are considered essentially equal in terms of overall quality, or if price is so high as to
significantly diminish the value of a non-cost/price proposal’s superiority to the
Government.” AR 181.


2
  The facts in this decision are taken from the administrative record. The pages in the administrative record
are numbered in sequence, and the documents are divided by tabs. The Court’s citations to the
administrative record generally are to the page numbers, except that large documents are referenced by the
tab number.
                                                     3
       For Factor 1, Technical/Management Approach, the agency assigned each offeror
an adjectival rating of “Outstanding, Good, Acceptable, Marginal, or Unacceptable.” AR
171. A rating of “Outstanding” meant the proposal met the solicitation requirements and
demonstrated an “exceptional approach and understanding of the requirements” with very
low risk of unsuccessful performance. A rating of “Good” meant the proposal met the
requirements and demonstrated “a thorough approach and understanding of the
requirements” with low risk of unsuccessful performance. Id. The solicitation called for
a transition plan that would accomplish phase-in within 60 days.3 AR 182.

        For Factor 2, Corporate Experience, the solicitation required that each offeror
submit three projects showing “Recent, Relevant corporate experience.” “Recent, Relevant
corporate experience” is defined as “[e]xperience of the team with respect to the proposed
responsibility regarding hospital/healthcare and commercial janitorial services of similar
size, scope, and complexity to this requirement performed within the last five years
preceding the release date of the solicitation.” AR Tab 2, at 208. Similar size meant the
project was for “$10 [million] or greater during any one contract period under one
contract.” AR Tab 3, at 213. Each offeror would then be assigned a relevancy rating:
“Very Relevant, Relevant, Somewhat Relevant, or Not Relevant” based upon the breadth
and depth of experience in projects of similar size, scope and complexity submitted. AR
Tab 1, at 172. A rating of “Very Relevant” meant the “[p]resent/past performance effort
involved essentially the same scope and magnitude of effort and complexities th[e]
solicitation required.” A rating of “Relevant” meant the “present/past performance effort
involved similar scope and magnitude of effort.” An offeror received a rating of
“Somewhat Relevant” if the “present/past performance effort involved some of the scope
and magnitude of effort.” Id.

       Factor 3, Safety, was comprised of three elements: Experience Modification Rate
(“EMR”); Occupational Safety and Health Association (“OSHA”) Days Away from Work,
Job Restriction, or Transfer (“DART”) rate; and Technical Approach to Safety. AR 173.
The solicitation directed the evaluators to consider the three elements collectively when
assigning the overall adjectival rating. It also provided the following guidelines to the
evaluators of what EMR and DART rates corresponded to one of the following risk ratings:
“Very Low Risk, Low Risk, Moderate Risk, High Risk, or Extremely High Risk.” Id.




3
 The Agency later amended the transition period to 30 days and offerors submitted revised transition plans.
AR Tab 11, at 302.
                                                    4
                     Risk                                              EMR Rate
                Very Low Risk                                         Less than 0.6
                   Low Risk                                      From 0.6 to less than 0.8
                 Moderate Risk                                       From 0.8 to 1.0
                   High Risk                                      Greater than 1.0 to 1.1
              Extremely High Risk                                   Greater than 1.1

                     Risk                                               DART Rate
                Very Low Risk                                          Less than 1.0
                   Low Risk                                           From 1.0 to 1.99
                 Moderate Risk                                        From 2.0 to 2.99
                   High Risk                                          From 3.0 to 4.0
              Extremely High Risk                                     Greater than 4.0

       Id. Like the Corporate Experience evaluation, the first aspect of the Past
Performance evaluation was based upon relevancy considering the size, scope and
complexity of the projects submitted. AR 173-74 (offerors would receive an adjectival
rating of “Very Relevant, Relevant, Somewhat Relevant, or Not Relevant”). This factor,
however, also included a performance confidence assessment to determine how well the
contractor performed on previous projects. Each offeror was then assigned one of the
following adjectival ratings: “Substantial Confidence, Satisfactory Confidence, Limited
Confidence, No Confidence, or Unknown Confidence.” A rating of “Substantial
Confidence” meant the Government had a “high expectation that the offeror [would]
successfully perform the required effort.” A rating of “Satisfactory Confidence” meant the
“Government has a reasonable expectation that the offeror will successfully perform the
required effort.” AR 174-75.

       For the price proposal, NAVFAC requested that the offerors provide: (a) “a
narrative description of the price proposal and any underlying assumptions that influenced
its preparation”; (b)“a narrative detailing the linkage of the proposed price with the
proposed level of effort proposed in Factor 1 – Technical/Management Approach”; (c) “a
narrative of the rationale for the inflation rates applied to each of the option years pricing”;
and (d) an Excel spreadsheet providing the detailed basis for the prices listed in the Exhibit
Line Item Numbers (“ELINs”) so that the Government “may gain insight into unit prices
in order to validate them.”4 The solicitation also specified that the Government would
“evaluate the consistency of the linkage of the proposed price with the proposed level of
effort proposed in Factor 1 – Technical/Management Approach.” AR 182. NAVFAC
would then evaluate the total price to ensure that it was fair and reasonable. Id.
4
 The solicitation also requested offerors, as part of their price proposal, to complete Section B, Contract
Line item Numbers (CLINs) 7000 through 9004 and to complete Section J, ELIN Pricing, Attachment J-
0200000-06 ELINS.xls. AR Tab 1, at 182.
                                                    5
      B.     First Round of Proposal Evaluations

       Offerors submitted their initial proposals in August 2013. See, e.g., AR Tabs 13-14
(ACE’s and NVE’s initial proposal submissions). NAVFAC received timely proposals
from seven offerors, including NVE and ACE. AR Tab 17, at 977. On February 28, 2014,
the Source Selection Authority (“SSA”) concluded that NVE’s proposal offered the best
value to the Government and made an award to NVE. AR Tabs 30-31A (“NVE’s proposal
clearly demonstrates superior experience through its successful management and execution
of all projects submitted . . . . Additionally, NVE’s proposal provides a vastly superior
technical approach and management plan”). ACE and Fresh Air protested the award at the
GAO, alleging that NAVFAC made errors in its proposal evaluations, failed to conduct
meaningful discussions, and its short 30-day transition plan was unduly restrictive of
competition in favor of the incumbent, NVE. AR Tabs 49, 53.

       NAVFAC voluntarily took corrective action, believing that it had not engaged in
meaningful discussions. AR Tabs 50, 54. The agency also revised the solicitation to amend
the transition period from 30 days back to 60 days. See AR Tab 1, at 182; AR Tab 12, at
303-05. Accordingly, the GAO dismissed the ACE and Fresh Air protests as moot. AR
Tabs 52, 57. On March 13, 2014, the agency issued a stop work order to NVE requiring
NVE to cease all work under the contract awarded on February 28, 2014, “until further
notice.” AR Tab 60. On April 2, 2014, NAVFAC de-obligated funds under NVE’s
contract. AR Tabs 61-63.

      C.     Second Round of Proposal Evaluations

        Following GAO’s dismissal of the ACE and Fresh Air protests, NAVFAC reopened
discussions with the four offerors in the competitive range: ACE, NVE, Fresh Air and Zero
Waste Solutions, Inc. AR Tabs 32-33, 39. During the discussions, NAVFAC addressed
weaknesses in ACE’s initial proposal, including its transition plan and corporate
experience. AR Tab 33a. Offerors submitted final proposal revisions on June 23, 2014.
AR Tab 35, at 1592 (ACE); AR Tab 36, at 1904 (NVE). ACE included a transition plan
showing that phase-in would be completed within 60 days as required by the solicitation.
AR Tab 35, at 1603. In its initial proposal, ACE had proposed [* * *] days, with transition
for a significant portion of the buildings to be completed within [* * *] days. AR Tab 13,
at 317. This transition plan resulted in the agency assigning a significant weakness to ACE
on Factor 1 because the agency considered the phase-in period to be unrealistically
expeditious. AR Tab 21, at 1319.

       The Technical Evaluation Team (“TET”) continued to assign ACE a weakness for
its phase-in plan, however, due to a clerical error in ACE’s transition plan, showing that
                                            6
ACE planned for a [* * *]-day transition period, instead of the required 60 days. AR Tab
37 at 2059 (stating that “[o]fferor[] acknowledges the 60 day phase in period, but their
transition plan shows that it will take [* * *] days to fully assume all locations listed in the
[solicitation]”). After ACE clarified in writing that its phase-in start date was July 3, 2014
and not August 1, 2014 as listed in its transition plan chart, the Source Selection Evaluation
Board (“SSEB”) removed the weakness the TET had assigned to ACE, and changed its
rating on Factor 1 from Acceptable to Good. AR Tab 39, at 2079. This change lifted
ACE’s overall technical rating from Acceptable to Good. Id. In its final proposal revision,
ACE also provided additional information on its example projects for the Corporate
Experience evaluation factor. The additional information demonstrated that ACE’s
example projects met the solicitation’s $10 million size-relevancy standard. ACE also
substituted one of its example projects for another that more clearly met the solicitation’s
size standard. AR Tab 33a, at 1585-87. This change removed the significant weakness
assigned in the first round of proposal evaluations and ACE received a rating of “Very
Relevant/Good” for the Corporate Experience Factor. AR Tab 37, at 2060-61.

       In reevaluating NVE’s proposal, the agency eliminated two of the four strengths on
Factor 1 that NVE had received in the first round of the proposal evaluations, which
lowered its rating on Factor 1 from “Outstanding” to “Good.” Compare AR Tab 30, at
1550-1551 with AR Tab 37, at 2047. However, the Overall Technical Rating of NVE’s
proposal remained “Good.” AR 2046.

       After evaluating the final revised proposals, NAVFAC determined that ACE’s
proposal offered the best value. See AR Tab 40, at 2085. The agency notified NVE on
July 23, 2014 that ACE was the apparent successful offeror. AR Tab 40a. NVE protested
the award to the GAO alleging that the agency did not identify additional strengths in
NVE’s technical proposal which would have resulted in a technical rating of
“Outstanding”, did not validate unit prices, or evaluate the linkage between the offerors’
proposed prices with the level of effort proposed in Factor 1 as required by the solicitation.
AR Tab 41, at 2088. Following the protest, NAVFAC determined that a reevaluation of
the final revised proposals was necessary, and informed GAO that it again intended to take
corrective action. Accordingly, on September 9, 2014, the GAO dismissed NVE’s protest.
AR Tab 43. NVE also protested the award to ACE at the U.S. Small Business
Administration (“SBA”), challenging ACE’s size status due to its use of a non-small
business subcontractor, J&J Maintenance, Inc. The SBA denied NVE’s size protest and
the SBA Office of Hearing and Appeals affirmed (“OHA”). Notice of SBA OHA Decision
No. 5638, Dkt. No. 21.




                                               7
         D.   Third Round of Proposal Evaluations

       In reevaluating the offerors’ final revised proposals, the SSEB reviewed the reports
of the TET and the price evaluator. AR Tab 46, at 2147. The Board then summarized the
findings of the TET and the price evaluator as follows:

                                              NVE                          ACE
 Factor 1:
 Technical/Management                         Good                         Good
 Approach
 Factor 2: Corporate                        Very
                                                                   Very Relevant/Good
 Experience                          Relevant/Outstanding

 Factor 3: Safety                          Acceptable                      Good


 Overall Technical Rating                     Good                         Good

                                                                          Very
                                   Very Relevant/Substantial
 Factor 4: Past Performance                                        Relevant/Satisfactory
                                         Confidence
                                                                       Confidence

 Price                                       [* * *]                   $69,698,540


        AR 2147-48. The SSEB considered the technical ratings of each offeror along with
the prices submitted and conducted a comparative analysis to arrive at its recommendation.
AR 2148. In considering the offerors’ proposals, the SSEB concluded that ACE’s and
NVE’s proposals were superior to the other offerors under the technical factors. It found
ACE’s and NVE’s proposals “somewhat comparable” under the past performance factors.
The SSEB recommended award to ACE because it would “save the government more than
[* * *] million dollars over the life of the contract,” and there was “no technical advantage
of NVE’s proposal that [was] significant enough to outweigh the considerable price
premium associated with its proposal.” AR 2150. The SSA agreed, finding that although
NVE’s non-price proposal rated higher than ACE’s, the benefits did not outweigh the [* *
*] price differential. Further, it cited concerns with NVE’s proposal on the Safety factor,
as NVE received [* * *] ratings in both the EMR and DART rates. AR Tab 47, at 2154-
55.


                                             8
       NAVFAC awarded ACE the contract on January 22, 2015. AR Tab 48. NVE filed
this protest at the Court on February 3, 2015. NVE filed its motion for judgment on the
administrative record on March 30, 2015. Dkt. No. 53 (corrected). Defendant and
Defendant-Intervenor filed their cross-motions for judgment on the administrative record
on April 13, 2015. The Court heard oral argument on May 5, 2015.

                                        Discussion

   I.     Jurisdiction and Standard of Review

        Under the Tucker Act, the Court has jurisdiction over an action by an interested
party objecting to “the award of a contract or any alleged violation of statute or regulation
in connection with a procurement or a proposed procurement.” 28 U.S.C. § 1491(b)(1).
The Court reviews bid protests in accordance with the standards of the Administrative
Procedures Act (“APA”). Impresa Construzionoi Geom. Domenico Garufi v. United
States, 238 F.3d 1324, 1332 (Fed. Cir. 2001). Under the APA, agency action shall be set
aside if it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance
with law.” 5 U.S.C. § 706; see also Impresa Construzioni, 238 F.3d at 1332 (procurement
decision may be set aside if (1) “the procurement official’s decision lacked a rational
basis”; or (2) “the procurement procedure involved a violation of regulation or procedure”).
To prevail, a protestor must not only show a significant error in the procurement process,
but also that the error prejudiced the protestor. See, e.g., HomeSource Real Estate Asset
Servs., Inc. v. United States, 94 Fed. Cl. 466, 478 (2010). In a post-award bid protest such
as this one, the standard requires the plaintiff to demonstrate that there was a “substantial
chance it would have received the contract award, but for the alleged error in the
procurement process.” Info. Tech. & Applications Corp. v. United States, 316 F.3d 1312,
1319 (Fed. Cir. 2003).

       In a best value procurement, the agency has even greater discretion than if the
contract were awarded based upon price alone. E.W. Bliss Co. v. United States, 77 F.3d
445, 449 (Fed. Cir. 1996). For example, in determining the proposal that offers the best
value to the Government, the “agency has the discretion to select a lower-priced, lower-
technically-rated proposal if it decides that the higher price of a higher-technically-rated
proposal is not justified.” Blackwater Lodge & Training Ctr., Inc. v United States, 86 Fed.
Cl. 488, 514 (2009). The agency will be able to demonstrate proper discretion if “it
documents its final award decision and includes the rationale for any business judgments
and tradeoffs made.” Id.

       Review of an agency’s procurement decision is generally limited to the
administrative record. See Axiom Res. Mgmt., Inc. v. United States, 564 F.3d 1374, 1379
(Fed. Cir. 2009) (“[T]he focal point for judicial review should be the administrative record
                                             9
already in existence”). Unlike a Rule 56 summary judgment motion, the existence of
genuine issues of material fact does not preclude judgment on the administrative record
under Rule 52.1. Tech. Sys., Inc. v. United States, 98 Fed. Cl. 228, 242 (2011). Rather,
the Court’s inquiry is whether, “given all the disputed and undisputed facts, a party has met
its burden of proof based on the evidence in the record.” A&D Fire Prot., Inc. v. United
States, 72 Fed. Cl. 126, 131 (2006).

        Under its bid protest jurisdiction, the Court is “empowered to award any relief [it]
considers proper, including declaratory and injunctive relief.” 28 U.S.C. § 1491(b)(2); see
also Centech Grp., Inc. v. United States, 554 F.3d 1029, 1037 (Fed. Cir. 2009). For a
permanent injunction to issue, the Court considers the following four factors: (1) whether
plaintiff succeeded on the merits; (2) whether plaintiff will suffer irreparable harm in the
absence of injunctive relief; (3) whether the balance of hardships to the parties favors
granting injunctive relief; and (4) whether it is in the public interest to grant injunctive
relief. PGBA, LLC v. United States, 389 F.3d 1219, 1228-29 (Fed. Cir. 2004). While no
single factor is dispositive, “the absence of an adequate showing with regard to any one
factor may be sufficient, given the weight or lack of it assigned the other factors, to justify
the denial of injunctive relief.” Linc Gov’t Servs., LLC v. United States, 96 Fed. Cl. 672,
701 (2010). Plaintiff must show entitlement to injunctive relief by clear and convincing
evidence. CSE Constr. Co. v. United States, 58 Fed. Cl. 230, 261 (2003).

   II.        Analysis

       NVE’s challenges to NAVFAC’s award of the NSA Bethesda contract to ACE can
be summarized in three broad categories: (1) the agency’s decision to reopen discussions
with offerors in the competitive range after it already had awarded the contract to NVE;
(2) the propriety of the agency’s third evaluation of the offerors’ proposals; and (3) the
SSA’s final best value determination. For the reasons explained below, none of Plaintiff’s
challenges has merit.

         A.      NVE Waived its Right to Challenge the Agency’s Corrective Action
                 Decision.

      As an initial matter, the Court finds that NVE waived its right to challenge the
agency’s decision to take corrective action and to reopen discussions and reevaluate
proposals with offerors in the competitive range after NAVFAC already awarded NVE the
NSA Bethesda contract. A party who participates in a second round of proposal
submissions rather than protesting cannot subsequently challenge an agency’s decision to
reopen discussions or reevaluate proposals. See Sheridan Corp. v. United States, 95 Fed.
Cl. 141, 149-150 (2010) (“were the Court to dismiss Sheridan’s claims as not ripe for
review, the current protest grounds later could be challenged as untimely if Sheridan does
                                              10
not prevail during the resolicitation process”); see also Cubic Def. Sys. v. United States,
45 Fed. Cl. 450, 461 (1999) (“Cubic failed to complain of this alleged error at the
appropriate time – when the Air Force continued to allow Metric to compete, or at least
prior to submitting its final offer”). Vendors cannot “sit on their rights to challenge what
they believe is an unfair solicitation, roll the dice and see if they receive award and then, if
unsuccessful, claim the solicitation was infirm.” Blue & Gold Fleet, 492 F.3d at 1313.

        Here, once NAVFAC notified NVE that it would reopen discussions with offerors
in the competitive range, the agency’s proposed corrective action became ripe for protest.
See AR Tab 50. Thus, if NVE had concerns with the agency’s proposed corrective action,
the time to protest was before the revised proposals were due. See Cubic Def. Sys., 94
Fed. Cl. at 461. NVE was not permitted to wait for the agency to complete the corrective
action to see if it received the award. Blue & Gold Fleet, 492 F.3d at 1313. Plaintiff fully
participated in the second round of proposal evaluations instead of protesting the agency’s
actions. See AR Tab 36, at 1904. Accordingly, NVE’s challenges regarding NAVFAC’s
decision to take corrective action are waived.

       B.        The Agency’s Third Evaluation of Proposals Was Rational and Did Not
                 Prejudice NVE.

        The Court next examines NVE’s arguments regarding the agency’s third round of
proposal evaluations. Specifically, NVE contends that NAVFAC’s reevaluation of the
proposals was flawed because: (1) the agency did not “evaluate the consistency of the
linkage of ACE’s proposed price with the level of effort proposed in Factor [1] –
Technical/Management Approach” as required by the solicitation; (2) the agency did not
validate the unit prices as required by the solicitation or it would have determined that ACE
did not price its proposal in accordance with the CBA wage rates; and (3) the agency
irrationally, and without explanation, eliminated two strengths from NVE’s proposal on
Factor 1, Technical/Management Approach and eliminated evaluated weaknesses of
ACE’s proposal, which raised ACE’s technical ratings. See Pl.’s Mot. for J. on the Admin.
R. (“Pl.’s MJAR”) at 4, 25-34, Dkt. No. 53.

            1.      The Agency Properly Evaluated the Consistency of the Linkage Between
                    ACE’s Proposed Price with its Proposed Level of Effort and Was Not
                    Required to Conduct a Price Realism Analysis.

       First, NVE argues that NAVFAC did not evaluate the “consistency of the linkage
of ACE’s proposed price with the level of effort proposed in Factor [1] –
Technical/Management approach.” See Pl.’s MJAR at 13. As support for its argument,
NVE cites a discussion question from the agency to ACE which states “[y]our proposed
price appears significantly low in relation to your estimated level of effort . . . . Please
                                              11
review your proposal and explain your execution and pricing strategy.” Pl.’s MJAR at 15;
AR Tab 23, at 1347. According to Plaintiff, this discussion question demonstrates that the
agency was aware of ACE’s price being too low compared to its proposed number of Full
Time Equivalent (“FTE”) personnel. Despite this awareness, NVE asserts that the agency
did not evaluate the consistency of the linkage between ACE’s proposed price and its
proposed level of effort. Pl.’s MJAR at 15-17. Further, NVE argues that it was irrational
for the agency to ignore the risk associated with ACE’s proposal since ACE adjusted the
required labor hours per position by the use of a “Productive Factor” that was based on
ACE’s experiences and efficiencies. Id. at 16-17.

       The Government and ACE claim NVE is arguing that NAVFAC should have
conducted a price realism analysis to determine if ACE’s price was unreasonably low. See
Def.’s Cross-Mot. for J. on the Admin. R. (“Def.’s MJAR”) at 19-23, Dkt. No. 57;
Intervenor’s Cross-Mot. for J. on the Admin. R. (“Intervenor’s MJAR”) at 29-33, Dkt. No.
58. They claim only a price reasonableness analysis was required by the solicitation as this
was a fixed-price contract and under the terms of the solicitation, a proposal could not be
rejected for offering a low price. Def.’s MJAR at 19; Intervenor’s MJAR at 30-33; AR
Tab 1, at 182 (price will be evaluated to determine if it is “fair and reasonable”).

        An agency is required to evaluate proposals only in accordance with the terms of
the solicitation. See Banknote Corp. of America v. United States, 56 Fed. Cl. 377, 386
(2003). The Government cannot “rely upon undisclosed evaluation criteria in evaluating
proposals.” Id. Where an award of a fixed-price contract is contemplated, “a proposal’s
price realism is not ordinarily considered, since a fixed-price contract places the risk” of
loss on the contractor. See Acad. Facilities Mgmt. v. United States, 87 Fed. Cl. 441, 466
(2009) (citing FAR 15.404-1). Thus, for a price realism analysis to apply in a fixed-price
contract, the solicitation must expressly or implicitly require a price realism analysis for a
proposal to be rejected for an unrealistically low price. Ceres Envtl. Serv., Inc. v. United
States, 97 Fed. Cl. 277, 306 (2011).

        The administrative record suggests that NAVFAC evaluated the linkage between
ACE’s proposed price and proposed level of effort in its Technical/Management approach.
Both NVE and ACE provided a detailed narrative and an Excel spreadsheet with specific
bases for the prices listed in the ELINs. See AR Tab 1, at 7; AR Tab 35.5, at 1657 (ACE
states they used a productive hour rate to determine the number of FTEs needed to perform
the required services), AR Tab 35.9 (ACE’s Excel Spreadsheet); AR Tab 36, at 1922 (NVE
explains how they calculated the number of FTEs for the required hours of service), AR
Tab 36.2, at 1929 (NVE’s Excel spreadsheet). The agency also provided a review and
evaluation of the offerors’ prices in the October 29, 2013 Price Analysis. AR Tab 17, at
1047 (chart compares offerors’ firm-fixed-price with the number of FTEs proposed).
Moreover, the discussion question that the agency submitted to ACE regarding its number
                                             12
of FTEs suggests that the agency at least contemplated the connection between the offerors’
total price with their proposed number of FTEs. See AR Tab 23, at 1347. Finally, nothing
in the record demonstrates that ACE’s price became inherently risky because it used a
“Productive Factor” to calculate the required number of FTEs as NVE suggests. The
Productive Factor was based upon reasonable sources – ACE’s own contract experience
and the International Sanitary Supply Association (“ISSA”) standards. See AR Tab 1, at
108 (ISSA provides the “cleaning industry time standards used for estimating/bidding
projects/jobs/contracts”); AR Tab 13a, at 340-41. NAVFAC reasonably accepted ACE’s
use of a “Productive Factor” in its price proposal.

        However, even if the agency did not evaluate the “consistency of the linkage”
between ACE’s proposed price and proposed level of effort, NVE was not prejudiced
because ACE’s proposal could not be eliminated for an unrealistically low price. The
solicitation did not expressly or impliedly state that a price realism analysis would be
conducted. See, e.g., Ceres Envtl., 97 Fed. Cl. at 306. Indeed, had the agency conducted
a price realism analysis, an offeror could have challenged the analysis as “arbitrary,
capricious, or an abuse of discretion” because the agency would be relying upon
undisclosed evaluation criteria in making its award. See Banknote Corp., 56 Fed. Cl. at
386. If ACE proposed an unreasonably low price, the risk of loss is on the contractor. It
would be irrational for the agency to reject ACE’s proposed price simply because it was
the lowest when all of the offerors, including NVE, proposed significantly lower prices
than the Independent Government Estimate by approximately [* * *] percent to [* * *]
percent. AR Tab 44, at 2114 (noting “all four offerors[’] total prices [were] within 8% of
the average”).

          2.     In a Fixed-Price Contract, the Contractor Bears the Risk of Loss for
                 Below CBA Wage Rates and Offerors Were Not Permitted to Escalate
                 CBA Wage Rates in the Option Years.

       Next, NVE argues that NAVFAC did not “validate the unit prices” of ACE’s
proposal or it would have “determined that ACE priced the base year of the contract using
wage rates in effect for October 1, 2013 to September 30, 2014, not wage rates in effect for
the base year of the contract” and did not escalate wage prices for the option years. See
Pl.’s MJAR at 20, 22-25. The differences between ACE’s and NVE’s proposal on the
wage rates used for the base year plus option years of the contract make up approximately
$2,600,000 of the more than [* * *] price difference between NVE’s proposal and ACE’s
proposal. See Report of Jimmy J. Jackson, at 9, Dkt. No. 53-1 (ACE’s price would increase
by [* * *]).

       Even though ACE and NVE used different CBA wage rates for the base year and
option years of the contract, it has no effect on the outcome of this protest. First, even if
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ACE did not use the correct CBA wage rates in pricing the base year of its contract, this
fact would only result in a [* * *] price increase to ACE’s contract for the base year. See
id. at 11. There would still be a significant gap between ACE’s proposed price and NVE’s
proposed price. Such a small increase to ACE’s proposed price likely would not have
affected the best value determination. In a fixed price contract, the offeror bears the risk
of using the wrong CBA wage rates, unless it shows an intent not to be bound by the Service
Contract Act. See K-Mar Indus., Inc. v. United States, 91 Fed. Cl. 20, 22-23 (2010). Here,
nothing in the administrative record demonstrates that ACE took an exception to the
solicitation’s CBA wage requirements that would render its bid nonresponsive.

       Further, under the terms of the solicitation, NVE was not permitted to escalate wage
rates for the option years. See AR Tab 7, at 263 (stating that “[a]pplicable wage
adjustments will be made in accordance with FAR 52.222-43, Fair Labor Standards Act
and Service Contract Act – Price Adjustment (Multiple Year and Option Contracts)”); FAR
52.222-43 (the clause mandates that offerors “not include any allowance for any
contingency to cover increased costs” for any option year). Even if the escalation was
permitted, or if the agency had evaluated NVE’s price and ACE’s price using identical
CBA wage rates for the base year and all of the option years, NVE could not show prejudice
because there would still be a significant difference between ACE’s proposed price and
NVE’s proposed price. Def.’s MJAR at 22-23 (approximately [* * *] difference). Thus,
NAVFAC would be acting well within its discretion if it determined that a [* * *] price
difference did not warrant acceptance of an equal or slightly superior technical proposal.
See Blackwater Lodge, 86 Fed. Cl. at 514.

          3.      NAVFAC Had a Rational Basis for Changing its Evaluation of NVE’s
                  and ACE’s Proposals on the Non-Price Factors.

        Plaintiff also argues that it was irrational for the agency to eliminate two of its
strengths on Factor 1 while raising ACE’s technical ratings without a documented
explanation during the reevaluation of the proposals. See Pl.’s MJAR at 25-34.
Specifically, NVE contends that the agency: (1) should not have removed the weakness
assessed by the TET for ACE’s phase-in plan; (2) did not provide a rational explanation
for raising ACE’s relevancy rating on the Corporate Experience factor from “Relevant” to
“Very Relevant” and raising its Corporate Experience rating from “Marginal” to “Good”;
(3) did not provide a rational explanation for raising ACE’s Safety rating from
“Acceptable” to “Good” or explain why NVE’s weakness on the Safety factor became a
significant aspect of the source selection decision; (4) did not provide a rational explanation
for raising ACE’s relevancy rating on Factor 4 from “Relevant” to “Very Relevant”; and
(5) did not provide a rational explanation for raising ACE’s overall technical rating from
“Satisfactory” to “Good.” Pl.’s MJAR at 30-34.

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       When an agency requests offerors to submit revised proposals, it may reevaluate
those proposals and modify an offeror’s strengths and weaknesses. See Atlantic Driving
Supply, Inc. v. United States, 107 Fed. Cl. 244, 261 (2012) (“[C]hanges in opinion between
the initial evaluation and the reevaluation, and between the individual reviews and the
consensus, are not unusual and do not indicate any ‘illegitimate’ action on the part of the
Agency”). Thus, the mere fact that an offeror’s scores changed upon reevaluation does not
mean an offeror was treated unfairly. See id.

        Here, the agency had a rational basis for improving ACE’s technical scores. The
discussion questions and responses from ACE resulted in an improved technical proposal
in the round three proposal evaluations. See, e.g., AR Tab 106, at 3261 (clarifying
qualifications for key personnel); AR Tab 33a, at 1585-87 (showing that ACE replaced one
of its projects to meet the $10 million size standard). For example, in the first round of the
proposal evaluations, the TET assigned ACE a rating of “Somewhat
Relevant/Unacceptable” on the Corporate Experience factor because it only evaluated one
project that was worth $5 million as ACE’s proposal exceeded the solicitation’s 125 page
limit. See AR Tab 17, at 1011. In round three, however, the TET evaluated three projects,
all of which exceeded $10 million in size. See AR Tab 45, at 2136-37. Similarly, the
agency rationally changed ACE’s rating on the Safety factor by adhering more closely to
the definitions in the solicitation. See AR Tab 49, at 2207. Simply because NAVFAC did
not provide a detailed written explanation comparing the differences between ACE’s round
one proposal and its round three proposal does not mean it was irrational for NAVFAC to
improve ACE’s rating on the non-price factors when ACE submitted a superior proposal.

       NAVFAC also acted within its discretion in deciding that two of NVE’s “strengths”
on Factor 1 no longer qualified as strengths. See Atlantic Driving, 107 Fed. Cl. at 261.
Moreover, NVE’s argument overlooks that it is the third round of proposal evaluations
which is at issue here. Its arguments concerning the second round of proposal evaluations
were waived. See supra, at II.A. During the third round of proposal evaluations, the TET
assigned NVE a new strength that it was lacking during the round two proposal evaluations.
Compare AR Tab 37, at 2047 with AR Tab 45, at 2122. The changes in the number of
strengths assigned to NVE on Factor 1 simply reflect the agency’s change of opinion from
one evaluation to another. Further, nothing in the record demonstrates that the agency
improperly based its decision on NVE’s Safety rating. Rather, price appeared to be the
determinative factor for the agency considering that both offerors submitted sound
technical proposals. Finally, the agency’s evaluation did not prejudice NVE. NVE’s
overall technical rating remained “Good” throughout all of the rounds of the evaluations
even when it received a rating of “Outstanding” on Factor 1. Compare AR Tab 30, at 1549
with AR Tab 46, at 2147-48. Accordingly, a rating of “Outstanding” on Factor 1 could not
have improved NVE’s overall technical proposal to make a meaningful difference in the

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best value determination and thereby have given NVE a substantial chance of receiving the
contract award.

       C.     The Agency’s Best Value Determination Was Rational and Did Not
              Prejudice NVE.

        NVE contends that the agency placed too much importance on price in making its
best value determination while deemphasizing the importance of past performance.
Specifically, NVE points to the SSA’s decision, which stated “[w]ith price being the
overwhelmingly important aspect of the solicitation (approximately equal to ALL non-
price factors combined), ACE’s proposal clearly demonstrates a better overall value to the
Government.” AR Tab 47, at 2154. NVE asserts that price was only equal to the non-price
factors and therefore, could not have been “the overwhelmingly important aspect” of the
solicitation. See Pl.’s MJAR at 36-37. NVE also takes issue with the agency’s evaluation
of past performance. First, NVE says the SSEB’s conclusion that ACE and NVE were
“somewhat comparable” on the Past Performance factor was erroneous as NVE received
the highest possible Acceptable rating while ACE received the lowest. Pl.’s MJAR at 35-
36; AR Tab 46, at 2150. Second, the SSA did not mention any of the “excellent” and
“exceptional” evaluations in its tradeoff analysis for NVE’s past performance and
irrationally adopted the SSEB’s analysis that the two offerors were “somewhat
comparable” on the Past Performance factor. See Pl.’s MJAR at 35-36.

        The Court finds that there was nothing irrational about the SSA’s best value
determination. NVE misreads the SSA’s analysis regarding price. The SSA recognized
that price was “approximately equal” to all non-price factors as specified in the solicitation.
AR Tab 47, at 2154. While the agency might not have chosen the best adjectives to
describe the importance of price in the tradeoff analysis, this word choice did not mean the
agency’s best value determination was irrational. The SSA appeared to apply the
appropriate weights to the price and non-price factors in making the best value
determination. See AR Tab 47, at 2154 (“NVE’s higher rating in corporate experience . .
. and its substantial confidence rating in past performance does not warrant paying [* * *]
[million] more when ACE has a solid technical proposal at a significantly lower price”).
Further, the solicitation specified that price would become “increasingly important” if the
offerors were relatively equal on the non-price factors. Unlike in the first round of proposal
evaluations, ACE’s overall technical rating improved from “Marginal” to “Good,” the
same overall technical rating that NVE received. Compare AR Tab 30 with AR Tab 47.
ACE’s non-price proposal became more comparable to NVE’s non-price proposal even
though NVE remained superior on the most important non-price factor, Past Performance.
Thus, NAVFAC acted well within its discretion to choose ACE’s lower-priced proposal
despite NVE’s slightly superior technical proposal. See Blackwater Lodge, 86 Fed. Cl. at
514.
                                              16
        Finally, there was no prejudice to NVE even if the agency erred by not recognizing
significant differences between ACE’s proposal and NVE’s proposal on the Past
Performance confidence assessment. There is no indication that had NAVFAC not deemed
the two offerors “somewhat comparable” on past performance, the agency would have
recommended award to NVE, particularly given the stark difference in price between the
two offerors. NVE cannot overcome its heavy burden to show that the agency acted
irrationally or that it was prejudiced in this case.

                                         Conclusion

       For the foregoing reasons, Plaintiff’s motion for judgment on the administrative
record and request for a permanent injunction are DENIED. The Government’s and
Intervenor’s cross-motions for judgment on the administrative record are GRANTED.

        On or before May 26, 2015 the parties shall carefully review this opinion for
competition-sensitive, proprietary, confidential or other protected information, and submit
to the Court proposed redactions to this opinion, if any, before it is released for publication.
The parties are requested to minimize their requested redactions so that the Court may
publish as much of the decision as possible.

       IT IS SO ORDERED.

                                                           s/ Thomas C. Wheeler
                                                           THOMAS C. WHEELER
                                                           Judge




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