        In the United States Court of Federal Claims
                                    No. 15-156C
                              (Filed: July 21, 2015)*
               *Opinion originally filed under seal on March 23, 2015

                                          )
 KWR CONSTRUCTION, INC.                   )
                                          )
                      Plaintiff,          )
                                          )      Bid Protest; Price Completeness; Price
 v.                                       )      Reasonableness; Price Realism;
                                          )      Remand to Agency
 THE UNITED STATES,                       )
                                          )
                     Defendant.           )
                                          )
                                          )

      Frances J. Haynes, Phoenix, AX, for plaintiff.

      Matthew P. Roche, Civil Division, United States Department of Justice,
Washington, DC, with whom were Benjamin C. Mizer, Acting Assistant Attorney
General, Robert E. Kirschman, Jr., Director, and Franklin E. White, Jr., Assistant
Direector. Erika L. Whelan Retta, Air Force Legal Operations Agency, Joint Base
Andrews, MD, of counsel.

                                     OPINION

FIRESTONE, Judge.

      Pending before the court are cross-motions for judgment on the administrative

record filed by plaintiff, KWR Construction, Inc. (“KWR”), and defendant the United

States (“the government”), in connection with the United States Air Force’s (“agency”)

award of Contract Nos. F4887-14-D-0002, FA4887-14-D-0003, FA4887-14-D-0004, and

FA4887-14-D-0005 to Herman Construction Group, Inc. (“Herman”), Rore, Inc.

(“Rore”), Mirack & Macro-Z Technology (“M & M”), and Premier Engineering
Corporation (“Premier”). In its complaint filed under 28 U.S.C. § 1491(b), KWR alleges,

among other things, that: (1) the Air Force’s determination that KWR’s price proposal

was unacceptable on the grounds that it was incomplete, unreasonable, and unrealistic is

not supported by the record and thus the decision to eliminate KWR from the competition

was irrational; (2) the Air Force violated procurement law by phoning KWR and

encouraging KWR to lower its prices in connection with an amendment to the solicitation

that required offerors to review their price proposals; (3) the solicitation’s price terms and

evaluation standards violated the FAR; (4) the Air Force applied more stringent standards

to KWR’s price evaluation than to the other offerors and the awardees; (5) the Air Force

engaged in bad faith tradeoffs; and (6) the Source Selection Evaluation Board’s (“SSEB”)

decision failed to provide the best value for the government by failing to consider KWR’s

past performance evaluation prior to rejecting its price proposal.

       For the reasons that follow, the court finds that KWR’s challenges to the Air

Force’s rejection of its price proposal are well-founded and that a remand to the Air

Force is necessary in order for the Air Force to properly explain its rejection of KWR’s

price proposal with a reasoned explanation or adopt a different decision with a reasoned

explanation.

I.     Background

       A.      The Procurement

       At issue in this case is a Multiple Award Construction Contract (“MACC”)

Indefinite-Delivery Indefinite-Quantity for Luke Air Force Base in Glendale, Arizona.

Administrative Record (“AR”) 1447, 1625. The MACC will be used to award multi-


                                              2
discipline construction requirements (i.e., civil, mechanical, electrical, demolition, etc.)

with additional capability to perform large-scale design build projects necessary to

support larger requirements at Luke Air Force Base. AR 1625. Under the terms of the

MACC, contractors are to furnish all plant, labor, material, equipment, transportation,

and supervision necessary to accomplish each task order in accordance with the contract,

specifications, and additional terms and conditions. Id. The Air Force anticipated

awarding three to five contracts, which represented the best value in the areas of past

performance and price, to include a base year period beginning on August 1, 2014, and

four one-year option periods. Id. at 183, 1447. The solicitation, RFQ FA4887-13-R-

0005 (solicitation or RFP), was posted to Federal Business Opportunities website on June

20, 2013 with a closing date of July 30, 2013. Id. at 118.

              1.     Relevant Solicitation Provisions

       The evaluation process was set out in Section M(C)(1) of the Solicitation which

stated that “[e]ach step of this process is codependent upon the step immediately

preceding; the government will only rate those proposals in Step 2 [Price of

Demonstration Project] that were deemed Acceptable in Step 1 [Technical Acceptability].

At the conclusion of Step 2, the government would evaluate Past Performance of the

lowest priced acceptable offerors, assign a Past Performance Confidence rating and

continue in succession based on price assigning Past Performance Confidence ratings.”

Id. at 189. Accordingly, a technical proposal that was “Unacceptable” in Step 1 would

not be evaluated in Step 2; in turn, a price proposal that was not complete, reasonable,

and realistic in Step 2 would not be evaluated for past performance in Step 3. Id.


                                              3
       With respect to the price evaluation performed in Step 2, the Solicitation provided

that proposals would be evaluated in three ways. First, the Air Force would determine

whether the price submission was complete, providing “[a]ll information/data required by

the solicitation” and that all information received was free of omissions or errors. Id. at

186, 189. Second, prices would be evaluated for reasonableness; that is, the total price

“represents an amount that a prudent person would pay in a competitive business

environment.” Id. at 186. Third, the agency would determine whether the price proposal

was realistic. Section M(B)(1)(b)(i) and Section M(B)(3)(d) of the Solicitation provide

that “[r]ealism is based on the items of the demonstration project price proposal to

determine whether prices are realistic for the work to be performed, reflect a clear

understanding of the requirements, and are consistent with the various elements of the

offeror’s technical proposal.” Id. The Solicitation provided that “[u]nrealistically low or

high prices may be grounds for eliminating a proposal from competition on the basis that

the offeror does not understand the requirement.” Id.

       The Solicitation also stated that the “Government intends to evaluate proposals

without discussions with offerors. Therefore, it is imperative that each offeror submit

their best terms with their initial proposal . . . . Offerors will not assume that they will be

contacted or afforded an opportunity to qualify, discuss or revise their proposals.” Id. at

173-74.

              2.      Amendments to the Solicitation




                                               4
       Eight amendments were issued before initial proposals were due. See generally

Id. at 194-248. The RFP’s closing date was extended from July 30, 2013 to August 5,

2013 to account for these changes. Id. at 118, 238.

       B.     Initially, the Source Selection Board Approved KWR’s Proposal

       On August 5, 2013, the Air Force received twenty-five proposals; it anticipated

issuing awards within 120 days of receipt. Id. at 1447, 118, 233. The SSEB conducted

an initial evaluation of the 25 proposals received. Id. at 1633. The SSEB found 13 of the

proposals received, including KWR’s, to be technically acceptable during Step 1 of the

evaluation. Id. In Step 2, the Air Force evaluated the price proposals of the 13

technically acceptable offerors, of which 11 were found to be “complete, reasonable, and

realistic” in accordance with the solicitation, including KWR’s. Id. at 1633-34. KWR’s

price proposal was then evaluated for past performance during Step 3, which resulted in a

performance confidence rating of “Substantial Confidence.” Id. at 1953 n. 4.

       C.     Prior to Award, the Air Force Amended Its Solicitation Again to
              Require Offerors to Provide Updated Resumes and Verify Pricing

       Although the evaluation process was concluded in a timely manner, various

events—including the sequestration and furloughs of Government personnel—resulted in

significant delays to the award of the contracts. Id. at 1947. Accordingly, the Air Force

issued Amendment 0009 on April 23, 2014, requesting that offerors verify that the prices

in the proposal were still current (or provide updated pricing with a detailed explanation




                                             5
underlying the changes) and resubmit resumes of key personnel to account for any

changes in employment.1 Id. at 242-43. Amendment 0009 stated:

       The purpose of this amendment is to obtain current resumes (Factor 1,
       Subfactor 3 – Management Plan) of key personnel in accordance with
       Section L(B)(1)(c)(2) and any unit price changes (Factor 2 – Price
       Proposal) in accordance with Section L(B)(2)(a), due to the duration of
       elapsed time since receipt of proposals, Offerors are urged to submit in
       strict compliance with both the Section L references above and the table
       found at Section M(B)(1)(d)(iii). It should be further noted that any unit
       price changes in response to Factor 2 – Price Proposal shall include detailed
       explanations for any resultant unit price changes to the price proposal
       submission.

Id. at 1150. Offerors were also asked to extend the proposal acceptance period and

instructed to respond to Amendment 0009 by April 30, 2014. Id.

       D.      After KWR Revised Its Offer, the Source Selection Evaluation Board
               Found KWR’s Price Proposal Unacceptable

       After receiving the responses to Amendment 0009, the SSEB performed new

evaluations of proposals that had been revised. See id. at 1948 n.1. KWR’s offer was re-

evaluated because it had submitted a revised price proposal. Compare id. at 677-78, with

id. at 781-82. In its submission following Amendment 0009, KWR stated: “KWR

Construction Inc. appreciates the opportunity to update our Price Proposal to reflect

current commodity conditions and labor hour estimates. Our overhead factors have




1
  Prior to the issuance of Amendment 0009, the contracting officer called offerors to inform them
that the amendment was being issued and its requirements—that is, updated resumes and
verification that prices were still current. See AR 1146-48. Because calls are not included in the
record, it is not known whether the CO called all offerors. He then emailed the amendment and
accompanying memorandum to each of the 25 offerors. Id.


                                                6
recently changed due to current volume of work in progress. We have lowered our profit

margin in order to be as competitive as possible.” AR 780.

        In evaluating KWR’s revised price proposal, the SSEB noted several deficiencies

in KWR’s Construction Cost Estimate Breakdown (AF Form 3052). Id. 1416, 5264-

5267. The summary sheet taken from the evaluators also states that KWR’s proposal was

also unreasonable and unrealistic based on its pricing. Id. In particular, the evaluation

summary states:

 DESCRIPTION                              YES NO      NOTES
                                                      The offeror failed to include
 Completeness: Did the offeror                        pricing for roof work, the
 provide all information/data                         Netshelter SX enclosure, test &
 required to render the price as                      balance (air or CFMs), and training
 complete?                                       X    and asbuilts
 Price Reasonableness:
 Reasonableness is based on the
 total evaluated price compared to
 historical prices for similar efforts,
 comparison to the Independent
 Government Estimate (IGE), and
 price competition obtained by the                    The offeror’s price was [. . .]%
 other offerors’ proposals submitted                  lower than IGE and [. . . ]% lower
 in response to this RFP. Did the                     than the average of the proposed
 offeror provide a reasonable price                   Technically Acceptable offeror’s
 that a prudent person would pay in                   [sic]. This price is unreasonably
 a competitive business                               low based on the offeror’s technical
 environment?                                    X    approach.
 Price Realism: Did the offeror
 provide a Realistic price based on
 the items of the demonstration                       The offeror’s material and labor
 project for the work to be                           cost alone is [. . . ]% less than the
 performed, reflect a clear                           IGE. The offeror’s average labor
 understanding of the requirements,                   rate is $[. . .] less than IGE and
 and are [sic] consistent with the                    other offers. Based on the TEP, it
 various elements of the offeror’s                    is unrealistic that KWR can
 technical proposal?                                  accomplish the demonstration
 (Unrealistically low or high prices             X    project.


                                             7
 may be grounds for eliminating a
 proposal from competition on the
 basis that the offeror does not
 understand the requirement.)

Id. at 1416. Based on this evaluation, the Air Force determined that KWR’s price

proposal was incomplete, unreasonable and unrealistic, and its proposal was not further

considered. Id. at 1415-16.

       Ten offerors were determined to have complete, reasonable, and realistic prices.

AR 1634. Those offerors’ total evaluated prices were ranked from lowest to highest, and

their proposals were evaluated for past performance in Step 3. Id. at 1635-36. On July

28, 2014, at the conclusion of the past performance evaluation, the Air Force made

awards to Herman, Rore, M&M, and Premier, the four offerors with the lowest total

evaluated prices that also received a Substantial Confidence Past Performance rating. Id.

at 1636-37. KWR was notified accordingly and received the requested debriefing. Id. at

1818-19, 1882-1903.

       The reasons for rejecting KWR’s proposal at the debriefing, however, differed

from those identified in the SSEB summary, noted above. The debriefing materials stated

as follows:

 DESCRIPTION                              YES NO     NOTES
                                                     The offeror failed to include labor
 Completeness: Did the offeror                       pricing for HVAC installation,
 provide all information/data                        Server Rack installation, and
 required to render the price as                     incorrectly inputted Elec load
 complete?                                      X    study in material
 Price Reasonableness:                               The offeror’s price was [. . .]%
 Reasonableness is based on the total                lower than IGE and [. . .]% lower
 evaluated price compared to                         than the average of the proposed
 historical prices for similar efforts,         X    Technically Acceptable offeror’s

                                            8
 comparison to the Independent                         [sic]. The offeror’s material and
 Government Estimate (IGE), and                        labor cost alone is [. . . ]% less
 price competition obtained by the                     than the IGE. A prudent person
 other offerors’ proposals submitted                   would not pay this price knowing
 in response to this RFP. Did the                      it has missing items.
 offeror provide a reasonable price
 that a prudent person would pay in a
 competitive business environment?
 Price Realism: Did the offeror
 provide a Realistic price based on
 the items of the demonstration
 project for the work to be
 performed, reflect a clear
 understanding of the requirements,
 and are [sic] consistent with the
 various elements of the offeror’s
 technical proposal? (Unrealistically                  The offeror failed to price test &
 low or high prices may be grounds                     balance (air or CFMs), training,
 for eliminating a proposal from                       and asbuilts in accordance with
 competition on the basis that the                     their technical approach. The
 offeror does not understand the                       offeror did not reflect a clear
 requirement.)                                    X    understanding of the requirements.

       There is no explanation in the record for these differences.

       D.     The Air Force Denies KWR’s Agency Level Protest

       KWR filed a protest with the agency on August 8, 2014, followed by an amended

protest on August 15, 2014. Id. at 5614-99. In its agency-level protest, KWR alleged

that its proposal was reasonable and realistic, id. at 5614-15, 5620-21; that its proposal

was complete, id. at 5616, 5622; that the SSEB neglected to appropriately consider and

apply its own overarching evaluation criteria, id. at 5617, 5623; and that its submission of

AF Form 3052 was in compliance with the instructions to offerors, id. at 5625. On

November 7, 2014, the agency denied KWR’s agency protest. Id. at 5645.

       E.     The GAO Dismisses KWR’s Protest



                                              9
       On November 17, 2014, KWR filed a protest at the Government Accountability

Office (GAO) and submitted a supplemental protest on December 29, 2014. Id. at 1904,

5279. In its protest, KWR alleged that the Air Force made an improper “Best Value”

determination; failed to make tradeoffs that considered KWR’s past performance; failed

to adequately document and support its evaluation and award decision; and failed to

account for publicly available suspect information regarding the awardees. Id. at 1905,

1907, 1914. Additionally, KWR alleged that is price was complete, reasonable and

realistic. Id. at 1908, 1911.

       In its supplemental protest, KWR alleged that the Air Force lacked necessary

evaluation documentation, did not meaningfully consider KWR’s proposal or compare

KWR’s “superior positioning” to that of other offerors or otherwise follow its own

evaluation criteria; and based its decision on a flawed competitive range determination.

Id. at 5791-92.

       Additionally, KWR alleged that the Air Force failed to consider its pre-

Amendment 0009 evaluation of KWR’s past performance; failed to adequately document

and support its decisions regarding KWR’s labor rates; and circumvented the Small

Business Act. Id. Finally, KWR alleged that the Air Force acted in bad faith by using

tradeoffs but then telling KWR that it did not use tradeoffs. Id. at 5792.

       On January 28, 2015, GAO dismissed KWR’s protests. Id. at 5964. The GAO

explained that because Equa Solutions, Inc. v. United States, No. 14-1214C (Fed. Cl.)—

which involved the same procurement—was pending before the United States Court of

Federal Claims, the case had to be dismissed.


                                             10
        On February 18, 2015, KWR timely filed the pending complaint in this Court.

Briefing was completed on an expedited basis and oral argument was held on March 20,

2015.

II.     STANDARD OF REVIEW

        The standard of review in bid protest cases is well-established. The court will

uphold a procurement decision unless it is found to be “arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law.” Banknote Corp. of Am., Inc. v.

United States, 365 F.3d 1345, 1350 (Fed. Cir. 2004). To prevail, the protester must

demonstrate that either (1) the agency’s decision was irrational, id. at 1351, or (2) the

agency violated a regulation or procedure in a manner that significantly prejudiced the

protester, Weeks Marine, Inc. v. United States, 575 F.3d 1352, 1358 (Fed. Cir. 2009).

Where a protester seeks to demonstrate that the procurement decision was irrational, it

must demonstrate that the agency’s exercise of discretion lacked any “coherent and

reasonable explanation.” Banknote, 365 F.3d at 1351. This standard is “highly

deferential,” Weeks Marine, 575 F.3d at 1368-69, and a plaintiff “bears a heavy burden

of showing that the award decision had no rational basis,” Banknote, 365 F.3d at 1351.

Where a rational basis exists, the court shall not substitute its judgment for that of the

agency, “even though it might, as an original proposition, have reached a different

conclusion as to the proper administration and application of the procurement

regulations.” Honeywell, Inc. v. United States, 870 F.2d 644, 648 (Fed. Cir. 1989)

(citing M. Steinthal & Co. v. Seamans, 455 F.2d 1289, 1301 (D.C. Cir. 1971)).




                                              11
       Pursuant to this standard, an agency’s procurement decisions are entitled to a

“presumption of regularity,” and “the agency’s action must be upheld as long as a

rational basis is articulated and relevant factors are considered.” Emery Worldwide

Airlines, Inc. v. United States, 264 F.3d 1071, 1085 (Fed. Cir. 2001) (citations omitted);

Orion Tech., Inc. v. United States, 704 F.3d 1344, 1351 (Fed. Cir. 2013) (“Agencies are

entitled to a high degree of deference when faced with challenges to procurement

decisions. A protestor . . . may only prevail when it is clear that the agency’s

determinations are irrational and unreasonable.” (citations omitted)) (citing R & W

Flammann GmbH v. United States, 339 F.3d 1320, 1322 (Fed. Cir. 2003); Impresa

Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324, 1332-33 (Fed.

Cir. 2001)).

       In reviewing a motion for judgment upon the administrative record pursuant to

Rule 52.1 of the Rules of the United States Court of Federal Claims, the court must

decide whether, given all the disputed and undisputed facts, a party is entitled to

judgment based upon that evidence. A&D Fire Protection, Inc. v. United States, 72 Fed.

Cl. 126, 131 (2006) (citing Bannum, Inc. v. United States, 404 F.3d 1346, 1356 (Fed. Cir.

2005)). In sum, in order to set aside a procurement decision, the protestor has the heavy

burden of establishing that: (1) the procurement official’s decision “had no rational

basis;” or (2) there has been a “clear and prejudicial violation of applicable statutes or

regulations.” Centech Group v. United States, 554 F.3d 1029, 1037 (Fed. Cir. 2009)

(quoting Impresa, 238 F.3d at 1333).

III.   DISCUSSION


                                             12
       A.     The Agency’s Decision Rejecting KWR’s Price Proposal Is Not
              Supported by the Administrative Record

       The court finds that the dispute in this case turns on whether the Air Force’s

decision that KWR’s price proposal was incomplete, unreasonable, and unrealistic is

rationally supported. After reviewing the record and considering the parties’ arguments,

the court finds that the Air Force’s decision is wrong in several respects and conflicting

in others. As such, it is impossible for the court to determine the basis of the Air Force’s

decision to reject KWR’s price proposal.

       First, as noted above, the record demonstrates that the Air Force provided a

different rationale for rejecting the price proposal before the SSEB than at the debriefing.

During the evaluation, the SSEB created the following summary:

 DESCRIPTION                              YES NO      NOTES
                                                      The offeror failed to include
 Completeness: Did the offeror                        pricing for roof work, the
 provide all information/data                         Netshelter SX enclosure, test &
 required to render the price as                      balance (air or CFMs), and training
 complete?                                     X      and asbuilts
 Price Reasonableness:
 Reasonableness is based on the
 total evaluated price compared to
 historical prices for similar efforts,
 comparison to the Independent
 Government Estimate (IGE), and
 price competition obtained by the                    The offeror’s price was [. . . ]%
 other offerors’ proposals submitted                  lower than IGE and [. . . ]% lower
 in response to this RFP. Did the                     than the average of the proposed
 offeror provide a reasonable price                   Technically Acceptable offeror’s
 that a prudent person would pay in                   [sic]. This price is unreasonably
 a competitive business                               low based on the offeror’s technical
 environment?                                  X      approach.
 Price Realism: Did the offeror                       The offeror’s material and labor
 provide a Realistic price based on                   cost alone is [. . .]% less than the
 the items of the demonstration                X      IGE. The offeror’s average labor


                                             13
 project for the work to be                          rate is $[. . .] less than IGE and
 performed, reflect a clear                          other offers. Based on the TEP, it
 understanding of the requirements,                  is unrealistic that KWR can
 and are [sic] consistent with the                   accomplish the demonstration
 various elements of the offeror’s                   project.
 technical proposal?
 (Unrealistically low or high prices
 may be grounds for eliminating a
 proposal from competition on the
 basis that the offeror does not
 understand the requirement.)

Id. at 1416. However, the rationale provided as part of the debriefing included the

following summary:

 DESCRIPTION                              YES NO      NOTES
                                                      The offeror failed to include labor
 Completeness: Did the offeror                        pricing for HVAC installation,
 provide all information/data                         Server Rack installation, and
 required to render the price as                      incorrectly inputted Elec load
 complete?                                       X    study in material
 Price Reasonableness:
 Reasonableness is based on the total
 evaluated price compared to
 historical prices for similar efforts,               The offeror’s price was [. . . ]%
 comparison to the Independent                        lower than IGE and [. . . ]% lower
 Government Estimate (IGE), and                       than the average of the proposed
 price competition obtained by the                    Technically Acceptable offeror’s
 other offerors’ proposals submitted                  [sic]. The offeror’s material and
 in response to this RFP. Did the                     labor cost alone is [. . .]% less than
 offeror provide a reasonable price                   the IGE. A prudent person would
 that a prudent person would pay in a                 not pay this price knowing it has
 competitive business environment?               X    missing items.
 Price Realism: Did the offeror
 provide a Realistic price based on
 the items of the demonstration
 project for the work to be                           The offeror failed to price test &
 performed, reflect a clear                           balance (air or CFMs), training,
 understanding of the requirements,                   and asbuilts in accordance with
 and are [sic] consistent with the                    their technical approach. The
 various elements of the offeror’s                    offeror did not reflect a clear
 technical proposal? (Unrealistically            X    understanding of the requirements.

                                            14
    low or high prices may be grounds
    for eliminating a proposal from
    competition on the basis that the
    offeror does not understand the
    requirement.)

Id. at 1899.

         Based on the evidence in the record, it is not possible to determine whether the Air

Force’s rationale included all of the stated reasons or whether it was changed after the

fact. For example, the items that the Air Force found to be missing are different in each

version of the summary, with no explanation as to why the agency chose to focus on

different items. This is especially important where one of the original items (roof work)

has now been conceded by the government to not be missing and another (Netshelter SX

enclosure) was not required to be its own line item and was not priced separately in the

proposals of successful offerors.

         Second, it is not clear how the price evaluation completed by the evaluators

became the rationale stated in the decision, as the single sheet provided in the record

includes check marks under both “YES” and “NO” for some items, positive and negative

comments, and appears to have been filled in or supplemented at a later date.2 Id. at

5264-66.




2
 It is not clear from the record why KWR’s price proposal was apparently re-evaluated on June
18, 2014 and again on June 20, 2014, as the evaluation sheet indicates. AR 5264-5267. This
may have been part of the post-amendment re-evaluation, or may have been a separate re-
evaluation unique to KWR.


                                              15
       Third, there is nothing in the record to suggest that the Air Force considered

KWR’s explanation of the post-amendment reductions in its price. When it submitted its

post-amendment price reductions, KWR explained its reasoning and methods in a letter

to the CO, stating: “KWR Construction Inc. appreciates the opportunity to update our

Price Proposal to reflect current commodity conditions and labor hour estimates. Our

overhead factors have recently changed due to current volume of work in progress. We

have lowered our profit margin in order to be as competitive as possible.” AR 780.

There is no indication that the Air Force considered the provided reasoning when making

its reasonableness determination. This is especially important considering that, prior to

the amendment, the Air Force had determined the proposal to be reasonable. An

examination of the changed costs reveals that, while many prices were altered somewhat,

the major changes occurred in KWR’s profit and overhead and labor rates for supervisory

positions, as well as prices for HVAC equipment and electrical load studies. As the

agency’s analysis focused almost exclusively on a gross percentage difference between

KWR’s proposal and the IGE, it is not clear to the court what aspects of the proposal

caused it to be deemed unreasonable.3

       Fourth, it is unclear how the Air Force performed the math to arrive at the

percentages used to determine reasonability. The agency found that KWR’s materials

and labor “alone” were [. . .]% less than the IGE. However, the price proposal provided a


3
  At oral argument, the government argued that the initial finding of reasonableness was an error
by the agency. While this may be true, there is no evidence in the record to support such a
finding.


                                               16
material cost of $[. . .] and a labor cost of $[. . .], for a total material and labor cost of $[. .

.]. AR 781. The IGE provided a material cost of $[. . .] and a labor cost of $[. . .], for a

total material and labor cost of $[. . .]. Id. at 2. It is undisputed that KWR’s material and

labor cost “alone” is therefore not [. . .]% lower than the IGE’s material and labor cost,

but rather [. . .]% higher.4

       In this connection, the Air Force’s method for analyzing KWR’s price proposal to

the IGE is not clear. It appears that the major deviation in costs from the IGE was the

APC UPS Upgrade: the IGE priced it at $[. . .] in direct costs alone, id. at 7, while KWR

priced it at $[. . .] in material costs alone, id. at 781. Especially considering that this

element’s price provided a significant portion of the agency’s reasoning for finding the

proposal unreasonable, the lack of a clear explanation of whether KWR’s proposed price

for the item was reasonable makes it difficult to determine whether the overall

determination of reasonableness was rational. Further, these missing explanations are

made more important by the fact that the agency found another offeror’s price proposal to

be complete, reasonable, and realistic when it was [. . .]% higher than the IGE, [. . .]%

higher than the average of technically-acceptable offerors, had a material cost that was [. .

. ]% higher than the IGE, and had a labor cost that was [. . .]% higher than the IGE. Id. at




4
  The government argues that the percentage can be explained by adding in the direct costs, as
identified on the front page of the evaluation sheet. AR 5264. However, the back page of the
sheet indicates that there was a difference in “materials costs” that is not supported. Id. at 1187.
Moreover, the final summary refers to material and labor costs. Id. at 1416. Accordingly, it is
unclear which one of these three possibilities the Air Force was applying when it made its
decision to reject KWR’s price proposal.


                                                 17
1421-22. There is no explanation as to why prices significantly higher than the IGE were

acceptable, whereas those lower than the IGE were not.

       Finally, the Air Force may have failed to consider all of the factors required for

price evaluation in the solicitation. The Air Force was required to consider historical

prices, the IGE and comparative prices in making its price reasonableness determination.

Id. at 186. It is unclear whether the agency considered historical prices at all in

determining the reasonableness of the pricing, as required by the solicitation. While the

government argued that historical prices were incorporated by reference in the IGE,

which was based on previous projects and their prices, see id. at 1, historical prices were

included as a separate evaluation factor and thus should have been separately evaluated

even if they were used in creating the IGE.

IV.    CONCLUSION

       Based on the facts of this case, the court finds that it must vacate the Air Force’s

rejection of KWR’s proposal for award consideration, and therefore a remand to the Air

Force is necessary. Florida Power & Light Co. v. Lorion, 470 U.S. 729, 744 (1985). The

Tucker Act provides this court with “the power to remand appropriate matters to any

administrative or executive body or official with such direction as it may deem proper

and just.” 28 U.S.C. § 1491(a)(2).

       Accordingly, plaintiff’s motion for judgment on the administrative record is

GRANTED-IN-PART and the government’s cross-motion for judgment on the




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administrative record is DENIED.5 The agency’s decision to reject KWR based on its

price proposal is hereby VACATED and REMANDED to the Air Force for a period of

14 days, until Monday, April 6, 2015.6 On remand, the Air Force must explain its

rejection of KWR’s price proposal with a reasoned explanation or adopt a different

decision with a reasoned explanation. Under either approach, the agency should address

the issues identified above. Pursuant to RCFC 52.2(b), the government shall submit a

status report on or before the conclusion of the remand period informing the court of the

status of the remand proceedings.

       IT IS SO ORDERED.


                                                                 s/Nancy B. Firestone
                                                                 NANCY B. FIRESTONE
                                                                 Judge




5
  The court need not reach the other arguments raised by plaintiff in its motion for judgment on
the administrative record because of this decision. Plaintiff additionally filed two motions to
supplement the administrative record, a motion to strike, a renewed motion for preliminary and
permanent injunctions, a motion for leave to file a brief on available remedies, and moved for
discovery in the alternative to its motion for judgment on the administrative record. Based on
the court’s remand of the agency decision, those motions are DENIED as MOOT.
6
  As the government has represented that no action will be taken on the pending issuance of task
orders under this contract until some time after April 9, 2015, the court finds that it is possible to
fully resolve these issues before that date. Accordingly, the court need not consider the propriety
of injunctive relief.


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