     In the United States Court of Federal Claims
                               No. 16-1311C
                   (Originally filed: December 16, 2016)
                       (Reissued: January 25, 2017)1

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

GLOBAL DYNAMICS, LLC,

              Plaintiff,

v.                                            Post-award bid protest; Price
                                              analysis; Price realism; waiver.

THE UNITED STATES,

              Defendant,

LOYAL SOURCE GOVERNMENT
SERVICES, LLC.,

              Intervenor.

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

      Edward J. Tolchin, Washington, DC, with whom was Revee M.
Walters, for plaintiff.

      Jana Moses, United States Department of Justice, Civil Division,
Commercial Litigation Branch, with whom were Benjamin C. Mizer, Principal
Deputy Assistant Attorney General, Robert E. Kirschman, Jr., Director,
Debroah A. Bynum, Assistant Director, Washington, DC, for defendant. Julie
Glascott, U.S. Army Legal Services Agency, of counsel.

       Michelle E. Littken, Washington, DC, for intervenor.




1
  This opinion was originally issued under seal in order to afford the parties
an opportunity to agree upon protected material to be redacted. Those
redactions are indicated by brackets.
                                  OPINION

BRUGGINK, Judge.

        This is a post-award bid protest of the Army’s decision not to award one
of several contracts for nursing, medical, and ancillary services in Hawaii and
Guam to the plaintiff, Global Dynamics, LLC (“Global”). Oral argument on
the parties’ cross-motions for judgment on the administrative record was held
on December 9, 2016. As stated at the conclusion of the argument, because
plaintiff waived its right to protest the substance of the Army’s discussions
with it and because plaintiff has not otherwise established irrationality on the
part of the agency, we deny plaintiff’s motion and grant defendant’s and
intervenor’s cross-motions.

                              BACKGROUND

       The Army issued request for proposals No. W81K04-14-R-001 (“the
RFP”) on April 22, 2014. It solicited offers for medical and ancillary services
staffing at military medical facilities in Hawaii and Guam. The solicitation
was set aside entirely for small businesses. It anticipated award to a minimum
of five offerors per labor specialty for an indefinite delivery and indefinite
quantity of service provided under each contract. Offerors could bid on only
one labor specialty or any combination of them: physician, traveling physician,
nursing, traveling nursing, ancillary medical, and traveling ancillary medical
services. Each specialty was further subdivided into multiple labor categories.
Services were to be ordered by the issuance of task orders for which the
contract holders would further compete. The task orders thereafter were to be
on a fixed-price basis.

       The solicitation called for a best value procurement based on three
factors. They were technical quality, performance risk (past and present
performance), and price. The first two were of equal importance and, when
combined, of significantly more importance than price. Offerors were required
to submit one volume for each factor. The RFP stated that the agency would
make a trade off determination between price and the technical factors to
determine the best value and most advantageous contract for the government.
See Administrative Record (“AR”) 272.

       The first two factors, technical quality and performance risk, were rated
adjectively, and price was ranked based on a total evaluated price calculated

                                       2
for the entire proposal based on a matrix of labor rates for each labor category
multiplied by the government’s estimate of hours needed for each category.
The contract has an anticipated four-year life. The offerors’ proposed rates
were in effect ceiling prices because each task order issued under the contract
would be further competed among the contract holders.

       In order to be considered for an award, offerors had to be rated at least
“acceptable” for technical quality and “satisfactory” for performance risk. Id.
The solicitation stated that price would be evaluated for reasonableness “based
on adequate competition.” AR 276. This was not further defined in the RFP
nor did it list any other evaluative criteria for price.

       The Army received 45 offers, and the Source Selection Evaluation
Board (“SSEB”) met and reviewed the technical volumes of the proposals, and
the Performance Risk Assessment Group met and reviewed the performance
risk submissions. They assigned adjectival ratings for reach offeror. The
Contracting Officer (“CO”) adjusted six of the SSEB’s technical ratings after
reviewing all of the results. AR 1286. The CO also performed the price
calculation to come up with each offeror’s total evaluated price. The Source
Selection Authority (“SSA”) reviewed all of these ratings and selected 18
offerors to comprise the competitive range.2 Not all of the offerors in the
competitive range met the criteria for award eligibility initially, but this was
allowed because of the SSA’s determination to hold discussions as part of a
negotiated procurement under Federal Acquisition Regulation (“FAR”) part
15. The SSA determined that the problems presented by each of the proposals
in the competitive range could potentially be improved through discussions
and could thus result in an award. See AR 1290.

       Of the 18 offerors in the competitive range, Global Dynamics had the
lowest evaluated price at [                ]. The highest offeror’s price was
over [        ] dollars. The Army’s internal estimate for the four-year life of
the contract was $51,895,298.88.

       Plaintiff was presented with eight written discussion items in the first
round of negotiations, two of which are relevant to its protest. They concerned
Global’s proposed prices. The agency informed plaintiff that its “total
proposed price . . . appear[ed] low when compared to all other offerors in the


2
    For this procurement, the SSA and CO were not the same individual.

                                       3
competitive range.” AR 1386. That was followed directly by a request to
“review your total proposed price.” Id. The next discussion item listed 29
labor category prices that the agency determined to “appear low when
compared to all other offerors in the competitive range.” Id. That was
followed by a similar request for Global to “review your proposed hourly rates
for the specialities listed.” Id.

        A review of the discussion items sent to the other 17 offerors in the
competitive range reveals that all of them received discussion items regarding
their proposed prices. Four offerors were informed that their total evaluated
price appeared high in comparison to the other offerors, and three offerors,
including Global, were told that their total prices appeared low as compared
to the other offerors. The agency “request[ed]” all seven of them to “review
[their] total proposed price[s].” E.g., AR 1448. All 18 of the competitive
range offerors were informed that some number of their proposed prices for
one or more labor specialties were high, low, or both as compared to all other
admitted offerors. The agency asked all of them to review these proposed
prices. Eight offerors were told that their price proposals contained rounding
errors. The Army asked these offerors to “correct [their] proposed rates to
comply with solicitation requirements.” E.g., AR 1443. One offeror was
informed that it had not listed a price for one labor specialty, and the agency
requested that the offeror supply that price. All 18 offerors were invited to
make proposal revisions and submit revised proposals to the agency by June
2, 2015.

       The Administrative Record reveals that the agency’s price analysis was
comprised of calculating the mean of every offeror’s price for each labor
specialty and the mean of all of the offeror’s total evaluated prices and then
comparing that mean against each individual offeror’s prices (both for each
specialty and the overall price). Any price found to be at least one standard
deviation above or below the mean was flagged as a discussion item. See AR
1292-93. The memorandum for the record concerning the price analysis states
that the Army was concerned with the reasonableness of offered prices and
cited FAR 15.401-1(b)(1): Price Analysis for commercial and non-commercial
items. Id. at 1292.

       In response to the Army’s initial discussion items, plaintiff reviewed its
pricing data by updating its market research to use 2015 estimates instead of
the 2014 numbers on which its initial proposal had been based. As a result,
Global raised its price for 36 specialties, and its overall price thus increased to

                                        4
[              ]. AR at 1496.7. The Army responded to the revised proposals
with one more letter, several more discussion items, and a request for final
proposal revisions. In the letter to plaintiff, the agency informed Global that
its price for one labor specialty, Dosimetrist, remained low in comparison to
all other offerors. In its final revised proposal, however, Global raised its
proposed prices for 36 specialties, which brought its final proposed total price
to [              ]. AR at 1953.11-1953.13 (specialties); AR at 1958 (total
price).

         After receiving all of the final revisions, the Army convened the Source
Selection Advisory Council (“SSAC”) in May 2016, which reviewed all of the
final offers and recommended award to five offerors. The SSAC noted that
all of the final offers had a technical rating of “acceptable” and that 14 of them
had performance rating of “substantial confidence.” AR at 2068 (technical),
2077-78 (performance risk). Of the other three, two had “satisfactory” ratings
and one was “limited.” AR at 2078. The SSAC also noted that Global had
received a strength as part of its technical proposal for its [       ] feature that
would give the agency the ability to call upon a roster of “qualified back-fill
candidates when an open shift is identified.” AR at 2080. The Army did not
find, however, that this strength was worth paying any price premium. The
end result of the SSAC’s review was a recommendation to award to the 5
lowest priced offerors because they all had “acceptable” Technical Quality
ratings and “substantial” Performance Risk ratings. No distinction between
the offerors was therefore justified based on anything other than price. See AR
at 2082. Global had the seventh lowest price and was thus not recommended
for award.

       The SSA agreed and followed these recommendations. The Source
Selection Determination document largely parroted the SSAC’s report, finding
that none of the 17 proposals warranted paying any premium. AR 2554-55.
On May 12, 2016, the CO sent a letter to all 17 of the final offerors identifying
the five awardees.3 Plaintiff requested a debriefing on May 16, 2016. On
June 16, 2016, the CO sent all of the debriefed unsuccessful offerors a written
explanation, which included the prices of 4 of the successful awardees
(Intervenor’s price was not included in the list) and attached redacted copies
of the SSAC’s recommendations and the Source Selection Determination.



3
    One offeror withdrew its proposal before the final revised proposals.

                                        5
        On June 24, 2016, Global filed a protest at the Government
Accountability Office (“GAO”), arguing that it was misled regarding its
pricing and arbitrarily induced to raise its prices. It also alleged error in the
Army’s tradeoff decision in not regarding Global’s [              ] f e atu r e a s
something for which more should be paid by the agency. GAO denied the
protest on September 20, 2016, finding that the Army had not instructed
Global to raise its prices and that it had properly considered the relative merit
of plaintiff’s [       ] feature. See AR at 2836-37; Global Dynamics, LLC, B-
413313, 2016 CPD ¶ 307 (Comp. Gen. Sept. 20, 2016). Plaintiff filed its suit
here on October 11, 2016. Loyal Source Government Services, the fifth lowest
priced awardee, intervened on October 14, 2016.

                                DISCUSSION

       We have jurisdiction over challenges to agency actions with regard to
procurements and proposed procurements pursuant to 28 U.S.C. § 1491(b)(1)
(2012). We review agency procurement decisions for arbitrary and capricious
conduct or conduct that is otherwise illegal. Id. § 1491(b)(4) (mandating that
the court reviews agency decisions pursuant to the standards set forth in the
Administrative Procedures Act). This is a highly deferential review; the
standard is one of rationality. The court will not substitute its own judgment
for that of the agency, even if a reasonable person might have come to a
different conclusion. Redland Genstar, Inc. v. United States, 39 Fed. Cl. 220,
213 (1997).

        Plaintiff challenges the Army’s decision not to award it a contract on
the basis that it was induced to raise its price arbitrarily. It argues that the
agency’s discussion items regarding price lead plaintiff to believe that its
prices were too low, effectively a weakness, and that it had no choice but to
raise them. When confronted with a second round of discussion items that
again raised price as an issue, plaintiff believed it was required by the Army
to raise its prices a second time. This was all misleading to plaintiff because,
in fact, the Army made its award determination on the opposite criteria, low
price. Plaintiff was prejudiced, it argues, because it would not have raised its
prices absent the government’s inclusion of low prices as a discussion item
during negotiations. Without a price raise, plaintiff would have remained the
lowest priced offeror and would have received an award, according to plaintiff.

       Plaintiff also argues that the agency should not have been concerned
with the issue of low of prices because a price realism analysis is improper in

                                        6
a fixed price contract unless specifically called out in the solicitation as a
possibility. The risk is on the offeror, not the agency, in a fixed price scenario,
and thus price realism is normally inapplicable in that context, goes plaintiff’s
argument. Global further points to the FAR’s instruction regarding discussion
items in a negotiated procurement, which is that the primary objective of any
discussions is to “maximize the Government’s ability to obtain best value.”
See 48 C.F.R. § 15.306(d)(2) (2016). Here, Global contends that the agency’s
raising the issue of low prices, when it was not and could not have been
concerned with low price as a performance risk was arbitrary and capricious
because it did not further the goal of maximizing the best value to the
government and only served to mislead plaintiff.

       In its response and cross motion, defendant takes the position that the
agency did not perform a price realism analysis, that is, an analysis of whether
Global’s price posed a risk of non-performance. In defendant’s view, the price
analysis and corresponding discussion items were merely an accurate
observation and could not mislead plaintiff. Plaintiff was in fact low as
compared to other offerors. The agency did not instruct plaintiff to raise its
prices nor did it state that the prices were too low. It was Global’s own
business judgment that resulted in plaintiff’s pricing itself out of the
competition, argues defendant. It was not improper, in the government’s view,
to include information regarding low prices as part of the agency’s price
reasonableness determination, although neither in briefing nor at oral argument
could counsel suggest a reason for the agency to have made the comment.

        Intervenor takes a different tack in its briefing. It argues that the agency
was concerned with performance risk posed by low prices and had preserved
for itself the question of whether an offeror’s prices were too low by indicating
in the solicitation that offerors were to demonstrate their understanding of
performance requirements. See AR at 255, 273, 277. Intervenor believes that
the agency was therefore within its rights in conducting a price realism
analysis. Intervenor cites to a number of decisions from GAO that a
solicitation need not invoke price realism by name so long as it otherwise
indicates that the agency is concerned with the risk of nonperformance and
asks for detailed price information. Intervenor argues that plaintiff’s initial
price was too low and reflected Global’s lack of understanding of the
solicitation’s requirements. Thus, the Army’s inclusion of low price in its
discussion items was reasonable and not misleading.

       We begin with the obvious. There was an ambiguity regarding whether

                                         7
the agency was conducting a price realism analysis when it announced to
Global and others that it had compared the average of all of the offered prices
with each particular offer and concluded that some were low. Plaintiff is
correct that agencies are required to inform offerors during negotiations of
weaknesses and deficiencies in their proposals. 48 C.F.R. § 15.306(d)(3)
(2016). The cover letter included with the discussion items sent to plaintiff
during the first round of negotiations contained the following proviso:

       Your proposal has areas of concern as detailed in the enclosed
       discussion Items (DIs). While the enclosed DIs are provided to
       facilitate discussions and provides you an opportunity to make
       changes to your proposal, they are not meant to point out each
       and every instance of error or omission in your proposal.

AR 1382. The discussion items attached to the letter contain items for each of
the main evaluation factors: Technical Quality, Performance Risk, and Price.
Other than being in its own section, the items regarding price were not
separately called out as somehow not of concern to the agency. A reasonable
reading of the Army’s negotiation correspondence is that plaintiff’s low prices
were of concern to the agency.

       The solicitation, however, did not invoke price realism by name or use
any specific language regarding risk of nonperformance as a result of low
prices. The general citation to the language in the technical provisions
regarding the offerors’ understanding of performance requirements is certainly
not an explicit indication that the agency would review prices for realism.
Whether, as intervenor argues, the Army could have done so does not affect
the result, however. Plaintiff waived any objection to the agency’s
ruminations on low prices by not objecting prior to adjusting its prices.4 The


4
  The same is true with regard to the second round of negotiations and the
agency’s cover letter, which informed Global that its labor rate for the
Dosimetrist specialty remained low compared to all other offerors. AR 1818.
If there was an ambiguity or question of the propriety of the agency’s price
analysis raised by the second letter, the time to challenge it was before
submitting a final revised proposal, not after. We note that the agency only
identified one labor speciality as being low compared to other offerors.
Plaintiff, however, responded by raising the prices of 36 specialties, which
                                                                  (continued...)

                                      8
agency did not indicate why it was passing this pricing information on to
Global. Either the agency had the right to make the comments, and they were
accurate, or, as Global asserts here, it had no business doing so, in which case,
to avoid overreacting, Global should have inquired why the agency made the
comments.5 In any event, Global’s decision to bump its prices up by
approximately 15 percent was its own business judgment.

        Having waived the issue of the propriety of the price analysis leaves
plaintiff without a factual predicate to support an argument of irrationality.
Plaintiff has not alleged that the mathematics performed by the Army in its
price analysis was incorrect nor that the analysis itself was otherwise irrational,
i.e, that taking the mean of all offers and performing a standard deviation
calculation against it was unreasonable.6 The argument is only that plaintiff
was misled in raising its prices too high. Presumably, had plaintiff raised its
prices somewhat less and remained one of the five lowest-priced offerors, it
would not be suggesting irrationality on the part of the agency.

       Compared to the 17 other offerors in the competitive range, plaintiff’s
prices initially were lower. It was informed of this fact during discussions.
Plaintiff was not instructed to raise its prices, however. There was an


4
    (...continued)
suggests at least that plaintiff was motived by more than just the Army’s
questioning of one of its specialty’s prices when it made its final revisions to
its prices.
5
  When asked by the court during argument why Global did not question the
agency’s price analysis at the time, plaintiff argued that it had no choice.
Having been told its low price was a weakness, in order to remain competitive,
it had to raise them. That is no answer, however. Procurement statutes
provide several levels of administrative review of procurement actions before
award (agency and GAO protests) and a legal challenge before award at the
court is always an option as well. Recourse was plainly available at the time,
but plaintiff chose not to avail itself of the opportunity. It is too late after
bidding to challenge the agency’s price analysis after responding to it with
several proposal revisions.
6
 In fact, the FAR lists a comparison of offerors’ prices as one approved
method of determining that offered prices are fair and reasonable. 48 C.F.R.
15.404(b)(2)(i) (2016).

                                        9
ambiguity regarding how the agency was using that information, but plaintiff
did not pursue it then. That ambiguity cannot form the basis for a successful
protest now because it was patent at the time. That being the case, Global’s
own judgment about how and whether to update and increase its prices are not
proof of agency irrationality. Plaintiff has not established that the Army acted
arbitrarily, capriciously, or otherwise not in accordance with law.

                               CONCLUSION

       Not being able to show success on the merits, plaintiff cannot establish
an entitlement to injunctive relief. We need not further consider the other
injunction factors. Accordingly, we deny plaintiff’s motion for judgment on
the administrative record and grant defendant’s and intervenor’s cross-motions
for judgment. The clerk’s office is directed to enter judgment for defendant.
No costs.



                                                  s/Eric G. Bruggink
                                                  Eric G. Bruggink
                                                  Senior Judge




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