              In the United States Court of Federal Claims
                                        No. 13-361 C

                                    (Filed July 24, 2013)1

 * * * * * * * * * * * * * * *                  *
EXCEL MANUFACTURING, LTD.,                      *
                                                *
                  Plaintiff,                    *
                                                *
             v.                                 *   Post-Award Bid Protest;
                                                *   Standing; Limitations on
THE UNITED STATES,                              *   Subcontracting Clause, 48
                                                *   C.F.R. § 52.219-14 (2012).
                  Defendant,                    *
                                                *
TENNIER INDUSTRIES, INC.,                       *
                                                *
                   Intervenor-Defendant.
                                                *
* * * * * * * * * * * * * * *

       Marc Lamer, Philadelphia, PA, for plaintiff.

      Seth W. Greene, United States Department of Justice, with whom were
Stuart F. Delery, Acting Assistant Attorney General, Jeanne E. Davidson,
Director, Donald E. Kinner, Assistant Director, Washington, DC, for defendant.
Allison Colsey Eck, Defense Logistics Agency-Troop Support, Philadelphia, PA, of
counsel.

       Ruth E. Ganister, West Chester, PA, for intervenor-defendant.



   1
    / This opinion was issued under seal on July 12, 2013. Pursuant to ¶ 5 of the ordering
language, the parties were invited to identify source selection, proprietary or confidential
material subject to deletion on the basis that the material was protected/privileged. No
redactions were proposed by the parties. Thus, the sealed and public versions of this opinion are
identical, except for the publication date and this footnote.
                          ______________________________

                               OPINION AND ORDER
                          ______________________________

Bush, Judge.

       Plaintiff Excel Manufacturing, Ltd. (Excel) filed its bid protest complaint on
May 29, 2013. Excel challenges a contract award by the Defense Logistics
Agency-Troop Support (DLATS) to Tennier Industries, Inc. (Tennier) under
Solicitation No. SPM1C1-09-R-0010. The contract is for the supply of cold
weather parkas and trousers to the United States military. In this protest, Excel
seeks a permanent injunction and declaratory relief, on the grounds that Tennier’s
proposal clearly showed on its face that Tennier would not conform to the
limitations on subcontracting clause included in the contract.

      The administrative record (AR) of this procurement was filed on June 4,
2013. Briefing was filed according to an expedited schedule. Oral argument was
neither requested by the parties nor deemed necessary by the court. As discussed
below, the award to Tennier has not been shown to be arbitrary, capricious or
contrary to law. Defendant’s and intervenor-defendant’s motions for judgment on
the administrative record are therefore granted,2 and plaintiff’s motion for
judgment on the administrative record is denied.

                                      BACKGROUND

       I.      Contract Award

       Although the parties present the facts of this procurement in various
narratives, there is no serious dispute as to the circumstances of the agency’s award
decision. The solicitation, issued on June 16, 2009, sought parkas and trousers
through “an indefinite delivery indefinite quantity, firm fixed-priced contract for a
one-year base period, followed by two one-year option periods.” Def.’s Mot. at 2.

   2
   / Tennier included with its motion for judgment on the administrative record a motion to
dismiss the complaint for lack of standing; as explained below, the motion to dismiss is denied.

                                                2
Thirteen offers were received, although nine of those offers were rejected based, at
least in part, on unsatisfactory product samples. AR at 423, 452. Of the remaining
four proposals, Tennier’s proposal offered the lowest price, and Excel’s price was
the next lowest. Id. at 442. The specific evaluation ratings of proposals and the
reasoning underlying the agency’s best value award decision are not challenged in
this bid protest. The contract was awarded to Tennier on March 5, 2013.

      II.    Relevant Solicitation Clauses

      Plaintiff’s challenge to the award addresses a particular contract clause
referenced in the solicitation, titled “Limitations on Subcontracting.” AR at 40.
The relevant text of Federal Aquisition Regulation (FAR) 52.219-14, 48 C.F.R.
§ 52.219-14 (2012) provides as follows:

             Supplies (other than procurement from a
             nonmanufacturer of such supplies). The concern shall
             perform work for at least 50 percent of the cost of
             manufacturing the supplies, not including the cost of
             materials.

 48 C.F.R. § 52.219-14(c)(2) (formerly found at 48 C.F.R. § 52.219-14(b)(2)). An
alleged conflict between the terms of Tennier’s proposal and the limitations on
subcontracting clause is the sole protest ground raised by plaintiff.

       The only other issue in dispute in this case, raised by intervenor-defendant,
is the question of plaintiff’s standing to bring this protest. Tennier’s challenge to
Excel’s standing addresses a different clause included in the solicitation, Defense
Logistics Agency Directive (DLAD) 52.209-9005, titled “Identification of Sources
for All Components for Clothing/Textile Items.” AR at 61. The relevant text of
DLAD 52.209-9005 is reproduced here:

             (a) The offeror shall indicate below the names and
             addresses of those suppliers from whom each component
             will be obtained for use in the performance of any
             resultant contract. In addition, for each component, the
             offeror shall also identify the name of the item’s

                                          3
             manufacturer and the address of the manufacturing
             location. Failure to furnish this information with the
             offer may result in rejection of the offer.

             (b) No change in the supplier(s) or manufacturer(s) listed
             below shall be permitted between the opening/closing
             date of the offer and the award, except where time
             permits and then only upon receipt of the contracting
             officer’s written approval.

             (c) Any change in the supplier(s) or manufacturer(s)
             listed below, and in any resultant contract, is
             prohibited unless it is specifically approved in
             advance by the contracting officer.

AR at 61. Below this clause in the solicitation are column headings where the
offeror, for each component, would identify the quantity of that item to be
obtained, along with the name and address of the supplier, and the address of the
manufacturer. It is undisputed that Tennier provided this information in its
proposal and that Excel did not. Id. at 180-82, 233.

III.   Protest History

        Excel protested the award to Tennier at the Government Accountability
Office (GAO) on March 18, 2013. After briefing had begun on the GAO protest,
Excel filed its protest in this court on May 29, 2013. On the same day, Excel
withdrew its GAO protest and the GAO closed the protest file with no further
action. The protest before this court was expedited with the agreement of the
parties so that the agency would suffer no needless interruption in the delivery of
parkas and trousers to the military.

                                  DISCUSSION

I.     Bid Protest Jurisdiction

       This court “shall have jurisdiction to render judgment on an action by an

                                          4
interested party objecting to a solicitation by a Federal agency for bids or proposals
for a proposed contract or to a proposed award or the award of a contract or any
alleged violation of statute or regulation in connection with a procurement or a
proposed procurement.” 28 U.S.C. § 1491(b)(1) (2006). The jurisdictional grant is
“without regard to whether suit is instituted before or after the contract is
awarded.” Id. As a threshold jurisdictional matter, however, the plaintiff in a bid
protest must show that it has standing to bring the suit. Info. Tech. & Applications
Corp. v. United States, 316 F.3d 1312, 1319 (Fed. Cir. 2003) (ITAC); Myers
Investigative & Sec. Servs., Inc. v. United States, 275 F.3d 1366, 1369 (Fed. Cir.
2002) (citation omitted).

II.    Standard of Review for Judgment on the Administrative Record

       Rule 52.1(c) of the Rules of the United States Court of Federal Claims
(RCFC) provides for judgment on the administrative record. To review a motion,
or cross-motions, under RCFC 52.1(c), the court asks whether, given all the
disputed and undisputed facts, a party has met its burden of proof based on the
evidence in the record. Bannum, Inc. v. United States, 404 F.3d 1346, 1356-57
(Fed. Cir. 2005). The court must make factual findings where necessary. Id. The
resolution of RCFC 52.1(c) cross-motions is akin to an expedited trial on the paper
record. Id.

III.   Bid Protest Review

       First, the plaintiff in a bid protest must show that it has standing to bring the
suit. ITAC, 316 F.3d at 1319. This may be accomplished by demonstrating that
the plaintiff was an actual bidder and that it was prejudiced by the award to the
successful offeror. Id. (citing Am. Fed’n of Gov’t Employees v. United States, 258
F.3d 1294, 1302 (Fed. Cir. 2001)). Prejudice is proven by establishing that the
plaintiff had a substantial chance of receiving the contract, but for the alleged
procurement error. Id. (citing Alfa Laval Separation, Inc. v. United States, 175
F.3d 1365, 1367 (Fed. Cir. 1999)).

      As the United States Court of Appeals for the Federal Circuit has stated, “the
proper standard to be applied [to the merits of] bid protest cases is provided by 5
U.S.C. § 706(2)(A) [(2012)]: a reviewing court shall set aside the agency action if

                                           5
it is ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance
with law.’” Banknote Corp. of Am. v. United States, 365 F.3d 1345, 1350-51 (Fed.
Cir. 2004) (citing Advanced Data Concepts, Inc. v. United States, 216 F.3d 1054,
1057-58 (Fed. Cir. 2000)). Under this standard, a procurement decision may be set
aside if it lacked a rational basis or if the agency’s decision-making involved a
clear and prejudicial violation of statute, regulation or procedure. Emery
Worldwide Airlines, Inc. v. United States, 264 F.3d 1071, 1085-86 (Fed. Cir. 2001)
(citing Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d
1324, 1332-33 (Fed. Cir. 2001)). “The arbitrary and capricious standard applicable
[in bid protests] is highly deferential.” Advanced Data Concepts, 216 F.3d at
1058.

       De minimis errors in the procurement process do not justify relief.
Grumman Data Sys. Corp. v. Dalton, 88 F.3d 990, 1000 (Fed. Cir. 1996) (citing
Andersen Consulting v. United States, 959 F.2d 929, 932-33, 935 (Fed. Cir. 1992)).
The bid protest plaintiff bears the burden of proving that a significant error marred
the procurement in question. Id. (citing CACI Field Servs., Inc. v. United States,
854 F.2d 464, 466 (Fed. Cir. 1988)). Examples of arbitrary and capricious agency
action include “when the agency ‘entirely failed to consider an important aspect of
the problem, offered an explanation for its decision that runs counter to the
evidence before the agency, or [the decision] is so implausible that it could not be
ascribed to a difference in view or the product of agency expertise.’” Ala. Aircraft
Indus., Inc.-Birmingham v. United States, 586 F.3d 1372, 1375 (Fed. Cir. 2009)
(quoting Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29,
43 (1983)) (alteration in original). The court will, however, “uphold a decision of
less than ideal clarity if the agency’s path may reasonably be discerned.” Bowman
Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 286 (1974)
(citation omitted).

       “‘If the court finds a reasonable basis for the agency’s action, the court
should stay its hand even though it might, as an original proposition, have reached
a different conclusion as to the proper administration and application of the
procurement regulations.’” Honeywell, Inc. v. United States, 870 F.2d 644, 648
(Fed. Cir. 1989) (quoting M. Steinthal & Co. v. Seamans, 455 F.2d 1289, 1301
(D.C. Cir. 1971)). If, on the other hand, “the trial court determines [that] the
government acted without rational basis or contrary to law when evaluating the


                                         6
bids and awarding the contract[,] . . . it proceeds to determine, as a factual matter, if
the bid protester was prejudiced by that conduct.” Bannum, 404 F.3d at 1351.
Plaintiff again bears the burden of proof. Id. at 1358. “Prejudice is a question of
fact.” Id. at 1353 (citing Advanced Data Concepts, 216 F.3d at 1057).

IV.   Standing

        Before addressing any aspect of plaintiff Excel’s bid protest, the court must
first examine intervenor-defendant Tennier’s assertion that Excel lacks standing to
bring a protest in the first instance. In that regard, Tennier argues that Excel’s bid
was non-responsive to the solicitation because sources for clothing components
were not identified. Tennier Mot. at 11 (“Plaintiff’s offer was clearly non-
responsive to the terms of the Solicitation.”). In essence, intervenor-defendant
argues that Excel’s failure to furnish the information required by DLAD 52.209-
9005 rendered Excel’s proposal ineligible for award, and also denies Excel the
interested party status which provides standing to bring a bid protest before this
court. The court notes, at the outset, that the administrative record is devoid of any
indication that the agency considered Excel’s proposal ineligible for award. Both
the government and Excel disagree with Tennier’s standing argument.

      As a threshold issue, the parties dispute whether “non-responsiveness” is a
concept applicable to negotiated procurements such as the one at issue in this case.
Defendant contends, for example, that “‘[t]he FAR confines the concept of
responsiveness to sealed bidding’ under Part 14.” Def.’s Reply at 4 (quoting
Dyonyx, L.P. v. United States, 83 Fed. Cl. 460, 468 (2008)). Perhaps in
recognition of this authority, intervenor-defendant frames its challenge more
broadly in its reply brief:

             We submit that it matters not whether one considers the
             failure of an offeror under a negotiated procurement to
             comply with mandatory requirements of a solicitation to
             be labeled as non-responsive or as a failure to comply
             with such material terms, the fact remains that if an
             offeror simply refuses to comply with mandatory
             provisions of a solicitation and if the agency chooses not
             to engage in discussions or negotiations to permit the


                                           7
               offeror to complete its offer, the offer is incomplete,
               non-compliant and should not be eligible for award.

Tennier Reply at 6 (citing Dismas Charities, Inc. v. United States, 75 Fed. Cl. 59
(2007)). The court need not try to resolve any inconsistencies in the precedent
discussing “responsiveness” cited by the parties – it is clear that Tennier challenges
Excel’s standing on the basis that Excel’s proposal was ineligible for award, an
argument which is not foreclosed by precedent or the FAR.3 See, e.g., Int’l Mgmt.
Servs., Inc. v. United States, 80 Fed. Cl. 1, 6-7 (2007) (dismissing a bid protest for
lack of standing because the plaintiff was not eligible to compete for the small
business set-aside contract at issue in that case).

       In the court’s view, however, intervenor-defendant’s argument that the
component sources list was a mandatory or material solicitation requirement, so
that failure to provide this list rendered Excel’s proposal ineligible for award, is not
persuasive. The court has found no authority, and Tennier has cited none, which
states that failure to provide the information requested in DLAD 52.209-9005
renders a bid ineligible for award. Tennier relies heavily on a GAO decision,
Dubicki & Clarke, Inc., B-190540, 78-1 CPD ¶ 132, 1978 WL 10239 (Comp. Gen.
Feb. 15, 1978), for its standing argument. Tennier Mot. at 12-13; Tennier Reply at
7. In intervenor-defendant’s view, Dubicki provides a test for determining whether
a solicitation clause is mandatory to the extent that failure to provide the requested
information renders a proposal ineligible for award. Tennier Mot. at 12-13.

       As defendant notes, Tennier “incorrectly relies” on Dubicki. Def.’s Reply at

   3
    / The court notes that while “responsiveness” and “non-responsiveness” are terms used by
the FAR with respect to sealed bids, and non-responsive bids are subject to rejection pursuant to
FAR 14.301, 48 C.F.R. § 14.301 (2012), and FAR 14.404-2, 48 C.F.R. § 14.404-2 (2012), the
elimination of proposals which fail to conform to material requirements of a solicitation is
likewise sanctioned by the FAR in negotiated procurements. See, e.g., FAR 15.503(a)(1), 48
C.F.R. § 15.503(a)(1) (2012); E.W. Bliss Co. v. United States, 77 F.3d 445, 448 (Fed. Cir. 1996)
(“‘In negotiated procurements, a proposal that fails to conform to the material terms and
conditions of the solicitation should be considered unacceptable and a contract award based on
such an unacceptable proposal violates the procurement statutes and regulations.’”) (citations
omitted); Tin Mills Props., LLC v. United States, 82 Fed. Cl. 584, 591 (2008) (noting, in that bid
protest, that the protestor’s “offer could be excluded from the competitive range because it
materially departed from the solicitation requirements”).

                                                8
5. The “test” cited by intervenor-defendant is actually a series of contentions by
the protestor that the Dubicki decision largely rejected in denying the protest. See
Dubicki, 1978 WL 10239, at *3 (reviewing the citations and multi-part test
proffered by the protestor, and stating that those prior protests were largely
sustained, instead, because the solicitation clauses in question explicitly stated that
“failure to properly complete the requirement would result in rejection of the bid as
nonresponsive”). Here, the solicitation clause relied upon by intervenor-defendant
indicated that failure to supply a component sources list “may” result in the
proposal’s rejection. AR at 61. The court finds Dubicki, to the extent it provides
any persuasive analysis,4 to be more supportive of plaintiff’s standing than of
Tennier’s challenge to Excel’s standing. See 1978 WL 10239, at *5 (finding the
solicitation clause at issue in that protest, which did not compel automatic rejection
of the bid as non-responsive if the information requested was not supplied, to
address responsibility, not eligibility); see also Bilfinger Berger AG Sede
Secondaria Italiana v. United States, 97 Fed. Cl. 96, 144 n.71 (2010) (noting that
“[u]se of the permissive term ‘may’ connotes discretion [and indicated, in that
case, that the] solicitation did not require that the [government] reject an offeror’s
proposal based upon a failure to submit [a particular] certificate”) (citation
omitted).

       Aside from Dubicki, intervenor-defendant offers no authority for its
contention that failure to include the information required by DLAD 52.209-9005
rendered Excel’s bid ineligible for award. The government persuasively argues
that DLAD 52.209-9005 addresses contractor qualifications and responsibility, and
that missing component source information, rather than rendering Excel’s proposal
ineligible, could “be provided to the agency at any time before contract award.”
Def.’s Reply at 5. Defendant references DLAD Part 9 and FAR Part 9, and
contends that these authorities show that DLAD “52.209-9005 . . . relates to the
responsibility of proposed suppliers and subcontractors.” Id. It is well-established
that responsibility criteria are not criteria which would render a proposal ineligible
for award in a negotiated procurement. See, e.g., Centech Group, Inc. v. United


   4
    / Dubicki concerns a different proposal listing requirement than the one set forth in DLAD
52.209-9005, cites to FAR provisions that are no longer current, and itself has not been cited for
over twenty years. For these reasons, even Dubicki’s persuasive authority in this bid protest is
limited.

                                                9
States, 554 F.3d 1029, 1034 n.2 (Fed. Cir. 2009) (“Responsibility refers to an
offeror’s apparent ability and capacity to perform all contract requirements and is
determined, not at proposal opening, but at any time prior to award of the contract
based on any information received by the agency up to that time.”) (citation
omitted); Noslot Cleaning Servs., Inc., B-228538, 88-1 CPD ¶ 58, 1988 WL
226934, at *3 (Comp. Gen. Jan. 21, 1988) (distinguishing between criteria which
might render a proposal ineligible for award, and responsibility criteria which can
be satisfied at any time up until award). The court concludes that Excel’s failure to
comply with DLAD 52.209-9005 was a matter of responsibility, not eligibility for
award.

       Finally, Tennier argues that “Berry Amendment” requirements for
domestically manufactured components are implicated when an offeror does not
comply with DLAD 52.209-9005, because failure to list sources for components
frustrates an agency’s ability to enforce the requirements of that statutory
provision. Tennier Mot. at 11-12, 14 (citing 10 U.S.C. § 2533a (2006)). “The
Berry Amendment generally restricts the Department of Defense’s expenditure of
funds for certain articles (including ‘clothing’) to domestically produced products.”
Integrity Supply, B-406860, 2012 CPD ¶ 256, 2012 WL 3893612, at *1 (Comp.
Gen. Sept. 10, 2012) (citing 10 U.S.C. § 2533a(b)). Intervenor-defendant contends
that the Berry Amendment requirements referenced in the solicitation further
support its view that Excel’s proposal was rendered ineligible by its failure to
include component source information.

       The court does not consider the Berry Amendment requirements referenced
in the solicitation to alter the nature of DLAD 52.209-9005, a responsibility
requirement. If Excel had been selected for contract award, the requirements of
DLAD 52.209-9005, as they impact the Berry Amendment, could have been
satisfied by the provision of additional component source information by Excel.
Furthermore, as defendant notes, Excel’s proposal included a reference to Berry
Amendment requirements and stated that Excel’s product samples complied with
those requirements. AR at 326. Excel’s proposal, on this record, did not evidence
any violation of or an intent to violate Berry Amendment requirements.

      The court agrees with defendant that “the record demonstrates that the
evaluators correctly determined that Excel met all the [evaluation] factors and


                                         10
subfactors in Section M of the Solicitation.” Def.’s Reply at 4. For all of the
above-stated reasons, the court concludes that Excel’s proposal was eligible for
award. But for the agency’s alleged error in accepting Tennier’s proposal, Excel
had a substantial chance of being awarded the contract. The court concludes that
Excel is an interested party and has standing to bring this suit.

V.    Analysis of the Merits of Excel’s Protest

      A.     Supplementation of the Administrative Record

       As a threshold issue, plaintiff and Tennier rely upon affidavits or
declarations to support their arguments on the merits of this bid protest. Plaintiff
relies on the declaration of Joel Ortega, Excel’s project manager, filed at the outset
of this litigation; Tennier relies on the affidavit of Steven Eisen, its chief financial
officer, attached to Tennier’s motion for judgment on the administrative record.
These documents present statements of fact regarding various aspects of Tennier’s
costs of manufacturing the parkas and trousers.

        According to Axiom Resource Management, Inc. v. United States, 564 F.3d
1374 (Fed. Cir. 2009), “supplementation of the record should be limited to cases in
which ‘the omission of extra-record evidence precludes effective judicial review.’”
Id. at 1380 (quoting Murakami v. United States, 46 Fed. Cl. 731, 735 (2000), aff’d,
398 F.3d 1342 (Fed. Cir. 2005)). Here, plaintiff’s entire case is framed as an
inquiry into whether the agency should have doubted whether Tennier’s costs of
manufacturing would exceed Tennier’s subcontractors’ costs of manufacturing.
Both documents are necessary to an effective review of the parties’ arguments
regarding Tennier’s costs of manufacturing the parkas and trousers. For this
reason, supplementation of the administrative record with these two documents is
deemed warranted and will be permitted by the court.

      B.     The Proper Analytical Framework for Compliance with
             a Limitations on Subcontracting Clause

             1.     Formula for Measuring Compliance with the Limitations
                    on Subcontracting Requirement



                                           11
        Where applicable to contracts for supplies, the text of FAR 52.219-14(c)(2)
requires that a contractor “shall perform work for at least 50 percent of the cost of
manufacturing the supplies [provided the government], not including the cost of
materials.” 48 C.F.R. § 52.219-14(c)(2). What is obvious from this regulatory text
is that the cost of materials is not included in the comparison of the cost of the
work performed by the contractor to the overall cost of manufacturing of the
finished product, in this case parkas and trousers. What is less obvious from the
text of this regulation, however, is the formula which should be used to determine
compliance with the requirement. The parties vigorously dispute the issue;
unfortunately for plaintiff, the only persuasive authority on this issue favors the
government’s and Tennier’s position.

      The GAO has adopted the following formula for determining whether a
contractor is in compliance with the limitations on subcontracting clause in FAR
52.219-14(c)(2):

             [T]he total contract cost (including profit) less
             materials and subcontracting costs is to be compared
             with all subcontracting costs less the subcontractor’s
             materials costs.

Mech. Equip. Co., B-292789.2, 2004 CPD ¶ 192, 2003 WL 23782511, at *18
(Comp. Gen. Dec. 15, 2003) (Mechanical Equipment) (citing Marwais Steel Co.,
SBA No. 3884 (Feb. 10, 1994); Phoenix Sys. & Techs., Inc., SBA No. 3220 (Nov.
29, 1989) (Phoenix Systems)). Furthermore, the contractor’s total costs figure
should include overhead costs, general and administrative (G & A) costs and profit.
Id. (citing Phoenix Systems). Thus, although the text of FAR 52.219-14(c)(2)
might be assumed to require a simple comparison of the labor costs of the prime
contractor and the labor costs of all of its subcontractors, both the GAO and the
Small Business Administration (SBA) have found that a more comprehensive
formula is required to determine compliance with this regulation. Id.

       Plaintiff attempts to rebut Mechanical Equipment and Phoenix Systems by
reference to various accounting standards set forth in the FAR or developed by the
Financial Accounting Standards Board (FASB). Pl.’s Mot. at 11-13. None of
plaintiff’s arguments are supported by caselaw, decisions of the GAO, or decisions


                                         12
of the SBA. The general accounting principles cited by plaintiff are less pertinent
to this case than the decisions of the GAO and the SBA which have specifically
addressed compliance with FAR 52.219-14(c)(2). The court recognizes the GAO’s
expertise in this area and defers to its interpretation of FAR 52.219-14(c)(2). See,
e.g., Centech, 554 F.3d at 1038 n.4 (“While not binding authority on this court, the
decisions of the Comptroller General are instructive in the area of bid protests.”
(citing CHE Consulting, Inc. v. United States, 552 F.3d 1351, 1355-56 (Fed. Cir.
2008); Planning Research Corp. v. United States, 971 F.2d 736, 740 (Fed. Cir.
1992))). Thus, in this case, the court holds that Mechanical Equipment and
Phoenix Systems provide the proper formula to test a contractor’s compliance with
the limitations on subcontracting clause.

             2.    Review of an Agency’s Acceptance of a Proposal Where the
                   Limitations on Subcontracting Clause Applies

       The court now turns to a separate issue, an agency’s acceptance of a
proposal and its representations as to subcontracting. The parties present a variety
of articulations of the analytical framework for the review of an agency’s
acceptance of a proposal which may or may not indicate, on its face, that the
awardee will comply with the limitations on subcontracting clause. Plaintiff, in its
response brief, suggests that the proposal must clearly show on its face that the
contractor will comply with this requirement:

             The issue in this situation is not whether Tennier took
             exception to the Limitations on Subcontracting clause
             or otherwise indicated that it would not comply. The
             issue is whether Tennier clear[ly] showed that it would
             comply.

Pl.’s Resp. at 3 (citing Carson Helicopter Servs., Inc., B-299720, 2007 CPD ¶ 142,
2007 WL 2325299 (Comp. Gen. July 30, 2007); Mine Safety Appliances Co.,
B-247919, 92-2 CPD ¶ 150, 1992 WL 224484 (Comp. Gen. Sept. 3, 1992)).
Neither of these GAO decisions cited by plaintiff in its response brief, however,
addresses the requirements of the limitations on subcontracting clause at issue in
this case. The court is not persuaded that the particular analytical framework
presented in plaintiff’s response brief captures the essence of the inquiry required


                                         13
here.

       Defendant, relying on an excerpt from a passage in Centech where the
Federal Circuit was quoting language in a GAO decision, argues in its reply brief
that “‘[t]he issue here does not concern whether [Tennier] can or will comply with
the subcontracting limitation requirement . . . but rather, whether [Tennier] has
specifically taken exception to the subcontracting limitation requirement on the
face of its . . . proposal.’” Def.’s Reply at 2 (quoting Centech, 554 F.3d at
1034-35) (alteration in original). Although the passage is accurately quoted, it is
not part of the holding in Centech – this particular passage is only presented as part
of the history of the appeal then before the Federal Circuit. The court must
therefore reject the analytical framework cited in defendant’s reply brief, as well.

      The proper analytical framework for the review of an agency’s decision to
accept a proposal (and its representations as to subcontracting that will comply
with FAR 52.219-14) is succinctly provided by a different statement in Centech:

             [A] proposal that, on its face, leads “an agency to the
             conclusion that an offeror could not and would not
             comply with the subcontracting limitation” is technically
             unacceptable and “may not form the basis for an award.”

554 F.3d at 1038 (quoting Chapman Law Firm v. United States, 63 Fed. Cl. 519,
527 (2005)). This approach is echoed in a number of GAO decisions, one of which
was cited by plaintiff. See Pl.’s Mot. at 6-7 (citing Global Assocs. Ltd., B-271693,
96-2 CPD ¶ 100, 1996 WL 509228 (Comp. Gen. Aug. 2, 1996)). In that decision,
the GAO stated that

             the protest allegation here challenges the agency’s
             determination that [the awardee’s] proposal was
             acceptable, and is based upon the representations in
             the proposal . . . as to whether the proposal complied
             with the subcontracting limitation. Protests such as
             this, which are directed at the awardee’s proposal,
             challenge the reasonableness of the agency’s
             determination of technical acceptability . . . .


                                         14
Global Associates, 1996 WL 509228, at *4 (citations omitted and emphasis added).
Thus, the court reviews the reasonableness, or rationality, of the agency’s
acceptance of the proposal (and its representations as to subcontracting), in light of
the requirements set forth in FAR 52.219-14.

      In other words, unless a proposal “leads” the agency to question the
awardee’s subcontracting of contract work as a possible violation of the limitations
on subcontracting clause, it is generally reasonable for the agency to accept the
proposal and determine compliance with that clause after the award decision has
been made:

             As a general rule, an agency’s judgment as to whether
             a small business offeror will comply with the
             subcontracting limitation is a matter of responsibility,
             and the contractor’s actual compliance with the
             provision is a matter of contract administration.
             Orincon Corp., B-276704, July 18, 1997, 97-2 CPD ¶
             26 at 4. However, where a proposal, on its face,
             should lead an agency to the conclusion that an
             offeror could not and would not comply with the
             subcontracting limitation, we have considered this to
             be a matter of the proposal’s technical acceptability; a
             proposal that fails to conform to a material term or
             condition of the solicitation such as the subcontracting
             limitation is unacceptable and may not form the basis
             for an award. Coffman Specialties, Inc., B-284546,
             B-284546.2, May 10, 2000, 2000 CPD ¶ 77 at 5.

KIRA Inc., B-287573.4, 2001 CPD ¶ 153, 2001 WL 1073392, at *3 (Comp. Gen.
Aug. 29, 2001) (emphasis added).

      Following Centech, Global Associates and KIRA, this court must determine
whether Tennier’s proposal, on its face, should have led the agency to conclude
that Tennier would not comply with the limitations on subcontracting clause. If
Tennier’s proposal was facially infirm in this regard, and the agency did not
confirm that Tennier would comply with FAR 52.219-14, the award decision


                                         15
challenged here was not rational and cannot stand. If, on the other hand, Tennier’s
proposal would not have led the agency to doubt the awardee’s compliance with
FAR 52.219-14, Excel’s protest must fail.

      C.     Was Tennier’s Proposal Facially Compliant with the Limitations
             on Subcontracting Clause?

       Plaintiff contends that Tennier’s subcontractors will perform more than 50
percent of the work of manufacturing the parkas and trousers for the awarded
contract. More importantly for this bid protest, plaintiff argues that Tennier’s
proposal should have led the agency to question whether Tennier would comply
with the limitations on subcontracting clause:

             Tennier’s proposal, wherein it listed five (5)
             subcontractors, including three (3) . . . who would be
             performing all of the sewing operations, should have
             caused DLATS to at least inquire to verify that Tennier
             would be incurring 50% of the cost of manufacturing
             the Parkas and Trousers (not including materials) . . . .

Pl.’s Mot. at 9. Plaintiff relies on the Ortega declaration for a breakdown of
manufacturing labor costs, and states that “Excel calculated the labor being
provided by Tennier versus the labor being provided by [Tennier’s]
subcontractors.” Id. at 10. According to plaintiff, “Tennier will only be
performing 47.61% of the work (not including the cost of materials), while
its subcontractors will be performing 52.29%.” Id. In plaintiff’s view, the
information Tennier provided in its proposal regarding its subcontracting of
various manufacturing processes should have led the agency to inquire as to
Tennier’s willingness to comply with FAR 52.219-14.

       The court cannot agree for a number of reasons. First, the proposal Tennier
provided DLATS does not contain a statement that Tennier would not comply with
the limitations on subcontracting clause. Second, the proposal includes a long list
of the manufacturing processes which would be performed either by Tennier or by
its subcontractors, a list which includes such operations as cutting, quilting,
sewing, assembly, finishing, inspecting, packing and shipping. See AR at 178. It


                                         16
is certainly not obvious to the average reader, or the court, that this detailed
division of tasks proposed by Tennier, with ten listed operations equally divided
between the contractor and its roster of subcontractors, should have led the agency
to inquire as to Tennier’s willingness to comply with FAR 52.219-14.

       The government argues that “there is nothing on the face of Tennier’s
proposal that showed that Tennier was not agreeing to incur by itself ‘at least 50
percent of the cost of manufacturing supplies, not including the cost of materials,’
as required by the Limitations on Subcontracting clause.” Def.’s Mot. at 14-15
(citations omitted). Having reviewed the administrative record, as supplemented
by the Ortega declaration and the Eisen affidavit, the court must agree with
defendant. Tennier’s proposal, on its face, would not lead the agency to conclude
that Tennier would not comply with the limitations on subcontracting clause.
Furthermore, Excel’s calculations of labor costs do not show any significant error
on the part of DLATS, as explained below.

       Defendant argues that there are at least two problems with plaintiff’s
contention that Tennier was only committing to perform 47.61% of the contract
work. First, Excel’s calculations are based on an assumption that Tennier and its
subcontractors pay their workers the federal minimum wage. Def.’s Mot. at 16;
see also Pl.’s Mot. at 10. According to intervenor-defendant, “Tennier has many
employees who will work under this contract who are paid very significantly in
excess of” the minimum wage. Tennier Mot. at 5 n.2; see also Eisen Aff. ¶ 12.
Thus, at least one of plaintiff’s assumptions regarding labor costs appears to be
questionable.

       Second, and perhaps more importantly, Excel’s calculations comparing
Tennier’s labor costs and the labor costs of its subcontractors are not equivalent to
the formula for determining compliance with the limitations on subcontracting
clause discussed supra. As defendant notes, Excel’s calculations do not take into
account profit or G & A, which are necessary cost components of the proper
formula testing compliance with FAR 52.219-14. Def.’s Mot. at 16-17 (citing
Mechanical Equipment and Phoenix Systems). Because Excel’s calculations
supporting its allegation that Tennier would not comply with the limitations on
subcontracting clause do not contain all of the necessary cost elements, the court
cannot rely on Excel’s conclusions as accurate.


                                         17
       Defendant also notes that none of the cost elements which are necessary for
an accurate application of the compliance formula set forth in Mechanical
Equipment are specified in Tennier’s proposal. Id. at 17. The government
therefore argues that “prior to contract award, there was no such cost information
on the face of Tennier’s proposal – or any other offeror’s proposal, for that matter
– to indicate that Tennier would not comply with the subcontracting limitation
requirement.” Id. (citing Precision Standard, Inc. v. United States, 69 Fed. Cl.
738, 755 (2006)). The court agrees with the government that, in the circumstances
of this procurement, there was no information on the face of Tennier’s proposal
which would have led the agency to conclude that Tennier would not comply with
FAR 52.219-14.

       Intervenor-defendant offers substantially the same arguments as the
government. In Tennier’s view, Excel’s calculations showing Tennier’s proposed
non-compliance with the limitations on subcontracting clause are “speculative,
hypothetical and incorrect [because they have] not adhered to the required
standards for interpreting the cost of manufacture provisions of the Limitation[s]
on Subcontracting clause.” Tennier Mot. at 9. The court cannot disagree.
Although the court does not adopt all of intervenor-defendant’s legal analyses, in
this case “the procuring agency’s reliance on the [awardee’s] de[ ]facto promise to
comply with the provisions of the [limitations on subcontracting] clause was
rational.” Id.

                                CONCLUSION

       There was nothing on the face of Tennier’s proposal which would have led
the agency to the conclusion that Tennier would not comply with the limitations on
subcontracting clause. DLATS rationally considered Tennier’s proposal to be
acceptable, and the award to Tennier survives this court’s review. Because
plaintiff’s protest has not succeeded on the merits, the court need not consider
whether the factors justifying injunctive relief have been met in this case.

      Accordingly, it is hereby ORDERED that

      (1)    Plaintiff’s Motion for Judgment on the Administrative Record, filed
             June 11, 2013, is DENIED;

                                         18
(2)   Defendant’s Motion for Judgment on the Administrative Record, filed
      June 18, 2013, is GRANTED;

(3)   Intervenor-defendant Tennier’s Motion for Judgment on the
      Administrative Record, filed June 18, 2013, is DENIED in part, as to
      Tennier’s motion to dismiss; and is GRANTED in part, as to
      judgment on the administrative record;

(4)   The Clerk’s Office is directed to ENTER final judgment in favor of
      defendant and intervernor-defendant, dismissing the complaint with
      prejudice;

(5)   On or before August 2, 2013, counsel for the parties shall CONFER
      and FILE with the Clerk’s Office a redacted copy of this opinion,
      with any material deemed proprietary marked out and enclosed in
      brackets, so that a copy of the opinion can then be prepared and made
      available in the public record of this matter;

(6)   On or before August 2, 2013, intervenor-defendant shall FILE, as
      separate UNSEALED documents, all redacted versions of its sealed
      filings that were previously filed as attachments to sealed filings, so as
      to establish a proper public record of this protest;

(7)   On or before August 2, 2013, plaintiff shall FILE, as separate
      UNSEALED documents, redacted versions of all sealed filings that
      were filed on May 29, 2013 for which no redacted versions have been
      previously submitted, so as to establish a proper public record of this
      protest;

(8)   On or before August 2, 2013, defendant shall FILE, as a separate
      UNSEALED document on CD-ROM, a redacted version of the
      administrative record filed June 4, 2013, so as to establish a proper
      public record of this protest; and,

(9)   Each party shall bear its own costs.


                                   19
     /s/Lynn J. Bush
     LYNN J. BUSH
     Judge




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