     In the United States Court of Federal Claims
                                No. 12-771C
                    (Originally Filed: January 11, 2013)
                       (Reissued: January 22, 2013)1


**********************

OSC SOLUTIONS, INC.,

                     Plaintiff,

v.

THE UNITED STATES,

                     Defendant,

and

NOBLE SUPPLY & LOGISTICS,

                     Intervenor.

**********************

                                   OPINION

        This is a post-award bid protest. On April 27, 2012, the Department of
the Navy issued Solicitation No. N00604-12-T-3068 (“RFQ”) for the award
of a Blanket Purchase Agreement (“BPA”), with a base period of one year plus
four option years. On July 5, 2012, the Navy awarded the BPA to Noble
Supply & Logistics (“Noble” or “intervenor”). Plaintiff OSC Solutions, Inc.
(“OSC”) protested the award before the General Accountability Office, which
rejected the challenge on October 31, 2012. On November 13, 2012, plaintiff
filed its complaint in this court, requesting that we enjoin Noble from
performing on the BPA. We denied the motion for preliminary injunction on
November 20, 2012. The parties thereafter submitted cross-motions for


       1
        Publication was deferred pending the parties’ review for redaction of
protected materials. Those redactions are indicated by brackets.
judgment on the administrative record, and defendant has moved to dismiss for
lack of standing. We held oral argument on January 4, 2013, at which time we
announced our decision rejecting plaintiff’s protest. We explain our reasons
below.

                              BACKGROUND 2

        The Navy, through the NAVSUP3 Fleet Logistics Center Pearl Harbor,
issued the RFQ 4 in order to set up a hardware store at Joint Base Pearl Harbor-
Hickam. AR 642. The store will support the Naval Facilities Engineering
Command, Hawaii (“NAVFAC HI”), which “delivers best value planning,
engineering, public works, environmental, and acquisition services in Hawaii
to Navy, Marine Corps, DoD, and other federal agency clients.” AR 5.
NAVFAC HI’s service region includes Pearl Harbor and parts of Oahu and
Kauai islands. AR 329. Only companies with Federal Supply Schedule
(“FSS”) contracts with the General Service Administration (“GSA”) could bid
on the RFQ.5 The BPA contemplates that the contractor will operate the store
in a facility provided by the Navy, from which the Navy will then order goods
and services.

       Proposals were to consist of two volumes: a technical submission and


       2
       The facts are drawn from the Administrative Record. We allow as
supplements to the record the materials referenced in footnotes 7 and 9, as well
as the Ayers affidavit attached to defendant’s motion for judgment on the
administrative record. We cite the Ayers affidavit as it reflects agency action
taken pursuant to the solicitation. The items referenced in footnotes 7 and 9,
while not in front of the Navy, provide confirmation of the General Service
Administration’s approval of Noble’s updated price schedule.
       3
           “NAVSUP” refers to Naval Supply Systems Command.
       4
      Unless otherwise noted, “RFQ” refers to the RFQ as subsequently
amended.
       5
        The FSS contains schedules in which government contractors
participate. Federal Acquisition Regulation 38.101 (2012). Agencies use
these schedules to order services or products from contractors. John Cibinic,
Jr., Ralph C. Nash Jr., & Christoper R. Yukins, Formation of Government
Contracts 1143-44 (4th ed. 2011).

                                       2
a price submission. The award was to be made to the lowest priced,
technically acceptable proposal. AR 272. The Navy listed proposal
requirements within the form provided by Federal Acquisition Regulation
(“FAR”) 52.212-2 (2012).

       Technical submissions had to address three categories: inventory
management, the point-of-sale system, and the transition plan. AR 349-50.
This protest does not draw into question either OSC’s or Noble’s technical
submissions. The only issue concerns pricing.

        Price submissions were to be compared by bidders’ submissions of their
prices for a “Test Market Basket,” AR 272, which called for a bidder’s pricing
of a sample group of items, consisting of 146 products out of the numerous
items the Navy could order. AR 1369. Although the Navy will order other
items, it was anticipated that the Market Basket would reflect “the highest
volume and highest dollar value items from NAVFAC HI’s historical data for
the past two years.” AR 580. The Performance Work Statement of the RFQ,
at Section 3.19.2, states the following about the Market Basket:

       Pricing: The Contractor shall provide a material price list for the
       base year and each option year period of performance. Under
       this contract, the Contractor shall NOT sell any product listed in
       the [Market Basket] (Attachment V) above the corresponding
       price provided. All items in Attachment V shall be based on a
       commercial benchmark, such as GSA Schedule Pricing, a
       published price list, a catalog, or otherwise established prices as
       described in the Contractor’s proposed pricing methodology.

AR 260.

        For each item in the Market Basket, the Navy provides the item number,
the name of the item, and the historical quantity. AR 661. The offeror is to fill
in the remaining information, including a GSA Schedule unit price, offeror’s
discount percentage, discounted unit price, and total evaluated line item price.
AR 661. For the base period and each option year, a total evaluated price is
provided by the offeror. AR 661, 672, 678, 684, 690.

       As to information sought, the RFQ includes the following direction,
based on FAR 52.212-2:



                                       3
       The contractor shall complete the Test Market Basket Items
       Price Schedule for the base period and each option period as
       they would be offered for sale to customers at the storefront
       location. . . . The vendor shall include in [the Market Basket]
       the benchmark GSA catalog price of each item listed and the
       quoted percentage discount rate that will be applied to all
       materials for the anticipated base performance period and each
       option performance period. The discount percentage is the
       overall discount rate (same rate for all items) that will be applied
       to each item for each order. All quoted prices must be
       substantiated by the GSA catalog commercial benchmarks.

AR 350. The “benchmark GSA catalog price” and the “percentage discount
rate” reference the Market Basket columns to be filled in by the bidder. See
AR 661. A “benchmark GSA catalog price” refers to a price from a GSA
Schedule contract.

      The RFQ then directs the contracting entity to evaluate each price
submission:

       in accordance with FAR 15.404-1. The [Procuring Contracting
       Officer] will evaluate the Test Market Basket Items Price
       Schedule by comparing the prices with other contractor’s Test
       Market Basket Items Price Schedule. The result of multiplying
       the historical quantity for each item by the discounted period
       unit price for the base period and all option periods will be used
       to determine the total evaluated price to support the selection of
       the lowest priced technically acceptable quote.

AR 351.

       In reference to the Market Basket, OSC emailed a question to the
contracting officer. AR 1154. This question became part of the solicitation
through Amendment 0002 and appears in the Questions and Answers
(“Q&A”) document: “Do products offered in Attachment V (Sample Price
Schedule) [Market Basket] in response to the RFQ have to be on GSA
schedule contract by the time the offer is submitted or on GSA contract by the
time the Navy makes an award?” See AR 61, 245, 621, 1154.

       The initial answer was: “At the time the offer is submitted.” AR 621.

                                        4
A subsequent answer, incorporated into the Q&A as item 32 by Amendment
0005, is different: “The products offered in Attachment V must be on schedule
at the prices proposed by performance of the contract in accordance with the
30 day transistion [sic] period under PWS Paragraph 3.10.” AR 245, 622.6
OSC made no further inquiries about Q&A item 32.

       Four companies with GSA Schedule contracts–Noble, OSC, [ ], and
W.W. Grainger–submitted bids by the due date of May 29, 2012. AR 299,
577. In its initial price proposals, OSC offered a total evaluated price for the
base year of [ ]. AR 582. Adding in the option years yields a total price of
[ ]. AR 582. [ ] offered [ ], while Grainger submitted a price of [ ].
AR 582.

       Noble offered a total evaluated price of [ ], with a total price of
[   ]. AR 582. Noble used its then-existing GSA Schedule prices.7

        The Navy judged all the technical submissions as unacceptable. AR
578. In addition, while OSC and [       ] submitted conforming price quotes,
Noble and Grainger did not. AR 581-82. Noble’s price quote was not
conforming because the items in its Market Basket list were subject to varying
discount rates, contrary to the RFQ, which called for a single discount rate for
all items. On June 5, 2012, the Navy sent letters telling each offeror how to
make corrections. AR 1370.

       Revisions were due by June 7, 2012, creating a two-day window. See
AR 873. Noble submitted its revisions on June 7, applying a [         ] percent
discount rate to all of the items in the Market Basket. AR 905-37. Its total
evaluated price and overall price remained the same, [ ] and [ ]. AR 612-
13, 910. OSC asserts and we think it undisputable that Noble adjusted its
“base,” i.e., undiscounted item prices, to ensure that application of a fixed
discount rate produced the same net price as reflected in its original bid.

       For its part, OSC submitted a corrected technical revision on June 6,


       6
        The transition period begins after the contracting officer provides a
notice to proceed. AR 254.
       7
       There were a small number of items in the Market Basket list that did
not appear on Noble’s existing GSA Schedule contract. The same was true for
OSC.

                                       5
which did not affect its pricing. AR 775-801. The total prices of [         ] and
Grainger remained the same for the final evaluation. AR 614-15.

        In her price narrative, the contracting officer determined that all of the
prices were “fair and reasonable.” AR 616. She noted that the proposals
“included pricing from their GSA Schedule . . . to complete Attachment V.”
AR 612-15. With respect to Noble, she stated that it included “pricing from
their GSA Schedule, GS-06F-0032K.” AR 612. She also found that the
submissions from Noble, OSC, and [ ] “fully addressed the requirements of
FAR 52.212-2, paragraph 2 of the RFQ in Section Vol. II of their proposal.”
AR 612-15. Although Grainger failed to provide a discount rate for all option
years, its submission “addressed all of the requirements.” AR 615.

        If the contracting officer’s summary with respect to Noble’s bid was an
assertion that Noble’s prices were based on its then-existing GSA approved
schedule, her summary was incorrect. As we mention above, Noble’s original
bid was based directly on the then-current GSA Schedule price list, but its
amended bid was not. We find it highly unlikely, however, that the contracting
officer was unaware of that fact. In the two days allotted, it would have been
impossible for a bidder to submit a new price list to GSA and have it approved
in time. For that reason, we also count it highly unlikely that the contracting
officer “substantiated” Noble’s price list against the GSA Schedule. Whether
any of that matters we leave to discussion below.

       The Source Selection Authority awarded the BPA to Noble, finding that
it “provided the lowest priced technically acceptable quotation to the
Government.” AR 623-24. On July 2, 2012, the Navy issued an order form
that would create a BPA between the government and Noble. AR 966.

        On July 11, 2012, Grainger filed a protest of the award with the
Government Accountability Office (“GAO”). AR 1295. It alleged that “over
50 percent” of Noble’s Market Basket contained items that are “not currently
on Noble’s GSA Schedule.” AR 1301. For that reason, Grainger alleged that
the Navy did not give a reasonable technical evaluation of Noble’s offer. AR
1301-02. Grainger also asserted that the Navy failed to make a proper price
evaluation, asserting that Noble showed “size and quantity variations” that
affected pricing. AR 1304. According to Grainger, the Navy failed to account
for the effects of Noble’s nonconforming price submission. AR 1304. Noble
received a stop work notice on July 17, 2012. AR 1075. The Navy told Noble
that, until resolution of the protest, the Navy would suspend orders under the

                                        6
BPA. AR 1075.

        On July 22, Grainger supplemented its protest, alleging that the Navy
failed to verify that Noble’s “prices were ‘substantiated’ by Noble’s GSA
Schedule catalog pricing.” AR 1318. The protest asserted that the evaluation
of prices was flawed because the Navy did “not know the true impact of the
offered discounts or actual price differences between and among offerors.”
AR 1318.

        OSC filed its own GAO protest on July 24, 2012. In a fashion similar
to Grainger, it argued that the Navy performed a flawed price evaluation. AR
1331. OSC contended that the Navy failed to check each item in Noble’s
Market Basket to ensure that the item listed conformed to RFQ requirements.
AR 1331. According to OSC, Noble gained unfair price advantages as a result
of this nonconformity. AR 1332.

       Grainger withdrew its GAO protest on August 20, 2012. AR 1433. On
October 31, 2012, the GAO denied the protest, despite finding that the award
lacked an evaluation of item prices. AR 1473, 1477. The decision recites that
the Navy “did not verify whether the individual item prices included in
Noble’s Test Market Basket Items Price Schedule were Noble’s current FSS
prices or were based on Noble’s current published or established prices.” AR
1477. The Navy also failed to compare the item prices provided by each
offeror in the Market Baskets. AR 1477. It “only compared the vendor’s total
evaluated prices.” AR 1477.

        The GAO upheld the Navy’s evaluation for several reasons. It pointed
out that FAR 15.404-1 “does not indicate that prices must be evaluated by the
agency under a fixed-priced contract to ensure that they are consistent with
FSS or catalog prices.” AR 1477. The decision further noted that the
regulation does not require the Navy to compare the item prices in the Market
Baskets of each offeror. AR 1477. GAO emphasized that, in any case, Noble
would have to provide the “items at the prices quoted.” AR 1478. Stating that
the RFQ “expressly encouraged” price decreases from current FSS or catalog
prices, the GAO noted that “it could reasonably be anticipated that vendors[’]
prices would not match existing FSS or catalog prices.” AR 1478. The GAO
found, furthermore, that OSC did not show that “it was prejudiced” because
Noble’s overall price did not change from the initial quote to the revision. AR
1478.



                                      7
       In a footnote, GAO remarked that the GSA Schedule unit prices in
Noble’s Market Basket “are now included in Noble’s FSS contract at the
quoted benchmark prices.” AR 1478. This is confirmed by a declaration of
Noble’s chief operating officer,8 an email from Noble to NAVSUP dated
August 23, 2012,9 and representations made during oral argument.10 It is
evident that Noble’s GSA Schedule prices were changed by August 17, 2012,
to conform to the prices proposed in its June 6, 2012 submission.

        On October 31, 2012, the Navy received notice that OSC’s GAO protest
was denied. Def.’s Brief App. A, “Second Statement of Bruce Ayres” ¶ 15.11
The Navy then issued Noble a notice to proceed on November 2, 2012, under
which Noble would begin to set up the hardware store “in accordance with the
thirty (30) day transition period set forth in the award.” Id. App. A ¶ 16. The
store opened on December 13, 2012, providing goods and services ordered by
the Navy. Id.

      Plaintiff filed its complaint here on November 13, 2012. Its principal
argument is that Noble’s Market Basket did not comply with what it contends


       8
         According to Thomas W. Noble III, “on August 17, 2012, GSA
approved a Modification to Noble’s GSA Contract No. GS-06F-0032K, and
as of that date, all 146 Market Basket items are on Noble’s GSA Contract . .
. at the prices proposed by Noble in its Revised Market Basket.” Intervenor
Notice of Aff. Attach. 1, “Declaration of Thomas W. Noble III” ¶ 10.
Intervenor submitted this affidavit on November 30, 2012, in response to our
request during argument on the motion for preliminary injunction.
       9
       On August 23, 2012, Thomas Noble sent an email to NAVSUP with
information about Noble’s “GSA Contract Modification.” AR 1081. He
provided a link to “the exact excel spreadsheet which was approved by our
GSA Contracting Officer on August 17th.” AR 1081.
       10
         At oral argument, intervenor’s counsel submitted Standard Form PS-
0058 to the court, which shows an update to Noble’s GSA Contract No. GS-
06F-0032K. The form makes price adjustments and reductions to that contract
and has an effective date of August 17, 2012.
       11
        “Def.’s Brief” refers to Defendant’s Motion to Dismiss, Cross Motion
for Judgment Upon the Administrative Record, and Response to Plaintiff’s
Motion for Judgment on the Administrative Record.

                                      8
is a requirement in the solicitation. It asserts that the GSA Schedule unit prices
in Noble’s Market Basket had to match the then-existing prices on Noble’s
GSA Schedule contract. OSC contends that the Navy should have rejected
Noble’s Market Basket and forced it to apply a [ ] percent discount against
the GSA Schedule prices in existence at the time of the bid submission. It
contends that if that had happened, Noble’s price would have been higher than
OSC’s price.

       Defendant has moved to dismiss, contending that OSC’s failure to
enquire as to the agency’s intent in answering OSC’s pre-award question about
the GSA Schedule bars plaintiff from asserting its own interpretation now.
Both defendant and intervenor also cross-move for judgment on the
administrative record.

                                 DISCUSSION

        According to plaintiff, the Navy’s procurement strategy, the
Performance Work Statement, the language in FAR 52.212-2, and the Q&A
show that Market Basket prices had to match then-existing GSA Schedule
prices. One requirement upon which plaintiff relies is that “quoted prices must
be substantiated by the GSA catalog commercial benchmarks.” OSC points
out that, according to the Navy’s Market Research Memorandum, this
requirement ensured the Navy that base prices would be reasonable, because
they had been approved by GSA. It matters, therefore, according to plaintiff,
that Noble’s Market Basket was based on prices that were only later placed on
the GSA Schedule. Because proposals that violate material requirements of
a solicitation should be rated unacceptable, Allied Technology Group, Inc. v.
United States, 94 Fed Cl. 16, 40 (Fed. Cl. 2010), plaintiff asserts that the award
to Noble was irrational and a violation of the Competition in Contracting Act.
41 U.S.C. § 3301 (Supp. V 2011).

        We need not resolve whether the original solicitation should be read as
plaintiff proposes.12 The solicitation was amended by the Q&A, in a way that

       12
         We note, however, that the Navy, and thus the public, was not harmed
by Noble’s lateness in conforming its GSA Schedule prices to its bid prices.
In fact the Navy will pay less for the same products, and there is no question
that Noble will furnish products which fully comply with the solicitation. The
only potential deviation is with respect to how Noble came up with its final
                                                                  (continued...)

                                        9
obviated the lack of current GSA Schedule prices in Noble’s Market Basket.
OSC asked whether “products offered in Attachment V. . . have to be on GSA
schedule contract by the time the offer is submitted.” AR 621. As shown in
Q&A item 32, the ultimate answer was, “The products offered in Attachment
V [the Market Basket price list] must be on schedule at the prices proposed by
performance of the contract in accordance with the 30 day transistion [sic]
period under PWS Paragraph 3.10.” AR 622.

        During oral argument, counsel for OSC indicated that OSC was not
concerned, in posing its question, with the circumstances Noble faced, namely,
an out of date GSA Schedule price list. Instead, OSC was concerned about the
fact that a few of the items listed by the Navy in the Market Basket did not
appear on OSC’s GSA Schedule contract. In other words, it would have to
make relatively minor adjustments to the GSA Schedule in order to conform
to its bid, but only by adding products, not by adjusting prices to previously
listed products. The question and the answers to it, however, became part of
the solicitation, and the question posed to the court becomes whether the
agency was reasonable in allowing Noble to match the prices of its GSA
Schedule contract to the Market Basket after the bid was submitted.

        We hold that the Navy was reasonable in doing so. As Noble points
out, the answer appears to go beyond the question. The answer allows
conformance of the GSA Schedule prices to those actually bid so long as all
products offered are “on schedule at the prices proposed” within the thirty-day
transition period. There is no question that GSA approved Noble’s updated
price list within that period of time. We think a literal and natural reading of
the answer warranted Noble’s assumption; i.e., that it could bid on the
understanding that it had time to revise its GSA Schedule to conform to the
prices included in its Market Basket. For the same reason, we conclude that
the Navy did not err in accepting Noble’s bid. While OSC’s assumption as to
what was permitted may have been reasonable as well, we view that not to be
controlling.13 What matters is that the agency’s construction of its own


       12
         (...continued)
prices. Even with respect to potential prejudice to OSC, moreover, OSC has
not alleged that it would have offered lower prices if it had known it could do
what Noble did.
       13
            This does mean, however, that there is no basis to grant defendant’s
                                                                    (continued...)

                                         10
solicitation was not unreasonable.

       We further hold that the Navy’s treatment of the proposals did not
violate applicable regulations. FAR 15.404-1(b)(2)(i) provides that,

       (2) The Government may use various price analysis techniques
       and procedures to ensure a fair and reasonable price. Examples
       of such techniques include, but are not limited to, the following:

       (i) Comparison of proposed prices received in response to the
       solicitation. Normally, adequate price competition establishes
       a fair and reasonable price . . . .

48 C.F.R. § 15.404-1(b)(2)(i) (2012). The agency adhered to this requirement.

                               CONCLUSION

        Defendant’s motion to dismiss is denied.14 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. The
clerk is directed to enter judgment accordingly. No costs.


                                           s/Eric G. Bruggink
                                           ERIC G. BRUGGINK
                                           Judge




       13
         (...continued)
motion to dismiss for lack of standing. See Blue & Gold Fleet L.P., v. United
States, 492 F.3d 1308, 1313 (Fed. Cir. 2007) (requiring that offerors challenge
“a patent error” in a solicitation before the proposal due date).
       14
            See footnote 10.

                                      11
