         In the United States Court of Federal Claims
                              No. 15-1425C
                        (Filed: March 30, 2016)*
       *OPINION ORIGINALLY FILED UNDER SEAL ON MARCH 25, 2016

                                        )
REMINGTON ARMS CO., LLC,                )
                                        )
                     Plaintiff,
                                        )      Bid Protest; Responsibility
v.
                                        )      Determination; FAR § 9.104-1;
THE UNITED STATES,                      )      Bankruptcy; Injunctive Relief Granted
                                        )
                    Defendant.          )
and                                     )
                                        )
COLT DEFENSE, LLC,                      )
                                        )
                Defendant-Intervenor    )
and                                     )
FN AMERICA, LLC,                        )
                                        )
                Defendant-Intervenor    )
                                        )

      Walter Brad English, with whom were J. Andrew Watson, III, Kevin C. Gray, Jon
D. Levin, and Emily J. Chancey, Huntsville, AL, for plaintiff.

       Igor Helman, Civil Division, U.S. Department of Justice, Washington, DC, with
whom were Benjamin C. Mizer, Principal Deputy Assistant Attorney General, and Robert
E. Kirschman, Jr., Director, and Douglas K. Mickle, Assistant Director, for defendant.
Frank A. March, US Army Legal Services Agency, and Casey P. Nix, US Army
RDECOM-ARDEC, of counsel.

       John E. McCarthy, Jr., with whom was Robert J. Sneckenberg, for defendant-
intervenor Colt Defense, LLC.

      William A. Wozniak, with whom was Anthony H. Anikeeff, of counsel, Tysons,
VA, for defendant-intervenor FN America, LLC.
                                        OPINION
FIRESTONE, Senior Judge

       Pending before the court in this post-award bid protest are cross-motions for

judgment on the administrative record filed under Rule 52.1 of the Rules of the United

States Court of Federal Claims (“RCFC”) by plaintiff, Remington Arms Company, LLC

(“Remington”); the defendant, the United States; defendant-intervenor, Colt Defense

LLC (“Colt”), and defendant-intervenor FN America, LLC (“FN”). Remington

challenges the government’s decision to award one of two Indefinite Quantity Indefinite

Award (“IDIQ”) contracts for producing M4 and M4A1 carbines to defendant-intervenor

Colt. The other contract was awarded to FN America, LLC. Also pending before the

court is Remington’s motion to supplement the administrative record.

       Remington’s bid protest is focused on whether the contracting officer’s (“CO”)

decision to award a contract to Colt while Colt was still in bankruptcy and was labeled

“high” risk by the Defense Contract Management Agency (“DCMA”) was arbitrary,

capricious, and an abuse of discretion. The DCMA based its high risk rating on fact that

Colt had recently filed for Chapter 11 bankruptcy protection and the fact that Colt’s

liabilities far exceeded its assets. The DCMA was uncertain whether Colt would have

enough working capital to fulfill the contract. Further, at the time of the award, Colt did

not have a long-term lease for the facility in which it intended to manufacture the M4s.

According to Remington, the CO failed to properly evaluate the DCMA report or

evidence she reviewed from the bankruptcy proceeding. Remington relies on evidence

from the bankruptcy proceeding to show that, at the time of award, Colt faced possible



                                             2
liquidation and that Colt’s manufacturing facility lease was set to expire. Remington

argues that the CO’s responsibility determination under FAR § 9.104 is unsupported and

was thus arbitrary and capricious.1 Remington further argues that the government’s

technical evaluation of Colt’s proposal was arbitrary, capricious, or an abuse of discretion

because the technical evaluation did not take into account the possibility that Colt would

lose its lease. Remington is seeking an injunction requiring the government to either set

aside the award to Colt or to redo Colt’s responsibility determination. In the interim

Remington asks that no additional task orders be awarded to Colt.2

         The government and Colt argue in response that the CO’s award decision and

responsibility determination are both rational and supported by the record. The

government and Colt also argue that even if Remington is correct with regard to the CO’s

responsibility determination or technical evaluation that Remington was not “prejudiced”




1
    Under FAR § 9.104-1, to be determined responsible a prospective contractor must:
         (a) have adequate financial resources to perform the contract, or the ability to obtain
         them;
         (b) be able to comply with the delivery or performance schedule;
         (c) have a satisfactory performance record;
         (d) have a satisfactory record of integrity;
         (e) have the necessary organization to perform the work;
         (f) have the necessary production, and technical equipment, and facilities; and
         (g) be otherwise qualified and eligible to receive an award under applicable laws.
With regard to resources necessary to perform the contract under FAR § 9.104-1(f), the CO must
ensure that there is evidence that the contractor has a commitment for the necessary facilities.
See FAR § 9.104-3. A final responsibility determination is required before the contract may be
signed. FAR § 9.105-1. A pre-award survey by the DCMA is authorized where the CO needs
additional information to make a responsibility determination. FAR § 9.106.
2
  Pursuant to the contract, the two awardees must compete with each other for each task order
beyond the first minimum order.


                                                  3
by any error because the government never guaranteed it would award two contracts.

With respect to Remington’s motion to supplement, the government has agreed to add to

the record the bankruptcy documents the CO expressly states she reviewed and

considered, but opposes the inclusion of the other documents from the bankruptcy that

Remington has identified. The government has also asked that several other documents,

including a declaration from the CO, be added to the record.

       For the reasons discussed below, Remington’s motion to supplement the

administrative record is GRANTED. Remington’s motion judgment on the

administrative record is GRANTED IN PART AND DENIED IN PART. The case is

REMANDED for re-evaluation consistent with this opinion. Further, the government is

enjoined from awarding additional task orders to Colt until a new responsibility

determination based on the most up-to-date financial information is complete and

submitted to the court.3

I.     MOTION TO SUPPLEMENT THE ADMINISTRATIVE RECORD

       In deciding a bid protest, the court’s review is ordinarily limited to the

procurement record existing at the time of the decision. Axiom v. United States, 564

F.3d 1374, 1379 (Fed. Cir. 2009) (citing Camp v. Pitts, 411 U.S. 138, 142 (1973)). The

Federal Circuit has held that supplementation is proper where “the omission of extra-



3
  The CO issued her responsibility determination in September of 2015. The court understands
that on January 12, 2016, the bankruptcy court approved Colt’s reorganization plan thus allowing
Colt to exit Chapter 11 bankruptcy proceedings. However, as discussed below, Colt’s
reorganization plan details the significant risks the company still faces. Because the CO has not
yet adequately evaluated Colt’s present risk factors, the case is not moot.


                                               4
record evidence precludes effective judicial review.’” Id. (citing Murakami v. United

States, 46 Fed .Cl. 731, 735 (2000)). In the context of a case involving a parallel

bankruptcy proceeding, this court has held that it “does not need every document in the

[bankruptcy docket], only those documents relevant to the decision that is properly before

the court.” Eskridge Research Corp. v. United States, No. 10-50C, 2010 WL 1837799, at

*3 (Fed. Cl. May 3, 2010) (citing Pers. Watercraft Indus. Ass’n v. Dep’t of Commerce,

48 F.3d 540, 546 n.4 (D.C. Cir. 1995)).

       Remington argues that because the CO has admitted that she reviewed bankruptcy

court documents while making her responsibility determination, the court needs to review

the bankruptcy documents relevant to Colt’s financial status and lease arrangement at the

time of award before any additional task orders are issued. The government seeks to add

to the record the documents from the bankruptcy proceeding the CO, Jacyln Dayda

references in her affidavit. The government also seeks to add to the record Ms. Dayda’s

affidavit. In a telephonic conference held on January 8, 2016, the court agreed that the

record would need to be supplemented with documents from the bankruptcy proceeding

but reserved ruling on which documents until briefing was complete. See January 8,

2016 Order, ECF No. 37. The government now seeks to add the following documents to

the administrative record:

          (1)    Declaration of Nikhil Menon [Menon Decl.] in Support of Debtors’
                 Motion, Pursuant To 11 U.S.C. §§ 105, 363, And 365, And Fed. R.
                 Bankr. P. 2002, 6004, 6006, 9008 and 9014 . . . , In re Colt Holding Co.,
                 No. 15-11296-LSS (Bankr. D. Del. Aug. 17, 2015), Dkt. No. 348;

          (2)    Declaration of Keith Maib [Maib Decl.] In Support of the Debtors'
                 Motion for Entry of an Order Approving Key Employee Incentive Plan


                                             5
                   (KEIP), In re Colt Holding Co., No. 15-11296-LSS (Bankr. D. Del.
                   Aug. 20, 2015) Dkt. No. 361;

          (3)      Statement of Financial Affairs for Colt Security LLC, In re Colt
                   Holding Co., No. 15-11296-LSS (Bankr. D. Del. Aug. 25, 2015), Dkt.
                   No. 392;

          (4)      Notice of (I) Proposed Sale of Substantially All of the Debtors' Assets
                   Free and Clear of Liens, Claims, and Encumbrances, (II) Auction and
                   (III) Sale Hearing Thereof, In re Colt Holding Co., No. 15-11296-LSS
                   (Bankr. D. Del. Sept. 9, 2015), Dkt. No. 453 (indicating an anticipated
                   Sale Hearing on October 26, 2015);

          (5)      The “Hot Off The Press” internal publication and

          (6)      The Declaration of Jacalyn B. Dyda, contracting officer

Gov’t MJAR 42-44. As noted, Remington agrees to the government’s proposed additions

to the record and has identified approximately twenty-five additional documents from the

bankruptcy docket that it wishes to also add to record. See Appendix A to Pl. MJAR

(“Pl.’s App’x”).

       The court has reviewed the documents presented by both sides and concludes that

the documents the government has identified and the additional documents Remington

has identified from the bankruptcy docket are needed for effective judicial review.

Remington has identified bankruptcy documents that show that Colt did not have a plan

of reorganization in place at the time the CO signed her responsibility determination.

Remington also has identified documents to show that Colt’s relationship with its

creditors, including Colt’s landlord at the facility where it intended to manufacture M4s

under the contract, were not resolved at the time the CO signed her responsibility

determination. Regardless of whether the CO reviewed each document, they were



                                              6
available to her at the time she made her responsibility determination and she claims to

have reviewed the bankruptcy court record. In such circumstances, the court finds that

the documents identified by both parties are necessary for effective judicial review and

are thus properly before the court and will be added to the record. Consequently, the

motions of both parties are GRANTED.

II.    FACTUAL BACKGROUND

       A.     The Solicitation
       On December 5, 2014, the Army issued Solicitation No. W15QKN-15-R-001 (the

“Solicitation”) seeking offerors for up to two contracts to provide M4 and M4A1 carbines

to the United States military. AR 593. The Army expected the awardees to be able to

produce and deliver between 2,000 and 6,000 M4/M4A1 carbines per month. AR 645. If

two companies were awarded the contract, “subsequent delivery orders will be competed

based on best value between the awardees.” AR 35-36. The solicitation also provided

that the proposals most advantageous to the Army would be selected utilizing the “Best

Value Trade-Off” procedures. AR 593. The Solicitation set forth four evaluation factors:

Production Capability, Past Performance, Small Business Participation, and Price. AR

700. Under the terms of the Solicitation, the factors were listed “in descending order of

importance,” with Production Capability identified as the most important factor, followed

by Past Performance, Price, and Small Business Participation as the least important

factor. Id.




                                             7
       The Production Capability factor is the only factor at issue in this protest.4 The

evaluation of Production Capability was further divided into three subfactors,

Manufacturing Plan, Key Tooling and Equipment, and Quality Control, with the

Manufacturing Plan identified as the most important subfactor. Id. The overall

Production Capability factor included an evaluation of an offeror’s risk of non-

performance, and set a range of five possible ratings: Outstanding, Good, Acceptable,

Marginal and Unacceptable. AR 701. “Outstanding” and “Good” proposals reflected

“very low” and “low” risk, respectively, while “Marginal” and “Unacceptable” proposals

reflected high risk. With regard to the “Manufacturing Plan,” offerors would be

evaluated on their proposed manufacturing facilities, including the “adequacy of the

proposed production facility layout to accommodate a minimum production rate of 2,000

and a maximum production rate of 6,000 [M4s] per month,” as well as the “adequacy and

capacity of the available weapon and ammunition storage facilities,” and the adequacy of

proposed schedules. AR 702. Evaluation under “Key Tooling and Equipment” would

focus on the “capability of the key tooling and equipment that w[ould] be used to produce

the M4[s]” as well as the “adequacy of the proposed critical subcontractor support” for

certain M4 components, such as barrels, bolts, and receivers. Id. Finally, under “Quality

Management” the Army would assess the adequacy of the various quality management

systems, including whether the systems were compliant with ISO9001 standards, and


4
 Remington initially challenged the government’s evaluation of the past performance factor in
Colt’s proposal as well, but agreed at oral argument that this objection was not well-founded.
Therefore, the court will not further consider Remington’s objections to Colt’s past performance
evaluation.


                                               8
whether the offeror had processes for inspecting, identifying, and preventing non-

conforming products. AR 702-03.

       The Army received six offers, including offers from Colt, Remington, and FN.

See AR 739-1478 (Colt’s proposal), 1479-1933 (FN’s proposal), 1934-2344

(Remington’s proposal). Colt was the original developer and owner and licensor of the

intellectual property for the M4 that was included in the solicitation’s Technical Data

Package (“TDP”). AR 2, 13.5

       On July 22, 2015, the Source Selection Authority (“SSA”) approved a competitive

range that included only FN, Colt, and Remington. AR 3006-24. After discussions with

the CO about their proposals, each offeror was given the opportunity to submit a final

revision to its proposal. Colt and FN each responded that their proposals, which they had

amended with responses to the agency’s evaluation notices, were their final proposals.

AR 3097, AR 3263. Remington, in addition to incorporating its responses to the

evaluation notices, submitted a revised proposal which included an increased price on

August 18, 2015. AR 3273, AR 3274-98.

       The proposals were evaluated and incorporated into the Source Selection

Evaluation Board (“SSEB”) Final Report. See AR 3300-86. Colt received an

“Outstanding” rating for the Production Capability factor, including “Outstanding”

ratings for the Manufacturing Plan and Key Tooling and Equipment sub-factors, and a



5
  Under the terms of the solicitation other potential bidders would be provided the TDP and
would pay a royalty fee of five percent “if the item is manufactured by an entity other than Colt”
or its licensees. AR 20.


                                                9
“Good” for the Quality Control sub-factor. AR 3317. Overall, Colt was listed as having

seven “Significant Strengths” and twelve “Strengths” in its Production Capability

proposal. Id. The evaluation for this factor noted Colt’s “extensive 20-plus year

background producing the Army’s M4 carbine” as well as the fact that a [xxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]. AR 3318. Colt’s position as the “owner

and licensee of all non-Government owned M4[] technology and[] technical data”

allowed Colt’s proposal to “convey[] a deep knowledge of M4 production covering

virtually every aspect of the process.” Id. The risk of unsuccessful performance was

rated as “very low.” AR 3317.6

       Remington received a “Good” rating for the Production Capability factor, with

“Good” ratings for all three sub-factors. AR 3336. The report listed Remington as

having two “Significant Strengths” and fifteen “Strengths.” Despite “Remington’s recent

2014 experience in producing up to 600 M4-type [R4A3] firearms daily for an

international military customer,” Remington did not have a “hot” production line that

would enable the Government to waive the FAT requirement. Id. Remington’s risk of

unsuccessful performance was rated as “low.” Id.




6
  FN received an “Outstanding” rating for the Production Capability factor and had seven
“Significant Strengths” and eleven “Strengths.” AR 3327. The report noted that FN is
“currently producing US Army M4[] Carbines under Government contracts [xxxxxxx].” Id.
FN’s risk of unsuccessful performance was rated “very low.” Id.


                                             10
        For the Past Performance factor, both Colt and Remington received a rating of

“Satisfactory Confidence,” and FN received a higher “Substantial Confidence” rating.

AR 3347, 3367. The total evaluated price for Colt’s proposal placed just slightly over

$206 million. AR 3372. The total evaluated price for FN was at almost $219 million,

AR 3374, and the total evaluated price for Remington was almost $230 million, AR

3376.

        B.    Colt’s Bankruptcy and the CO’s Responsibility Determination
        On June 14, 2015, Colt filed for Chapter 11 bankruptcy protection. Pl.’s App’x

A1-50. According to Keith Maib, Colt’s Chief Restructuring Officer, Colt was suffering

“from an over-leveraged capital structure that has resulted in ongoing liquidity

constraints.” Id. at A209. Mr. Maib stated that during “the second half of 2014 the

Company continued to experience slow sales across all of its core business channels.” Id.

at A210. Colt also had a significant debt burden. Colt was a borrower under a $72.9

million term loan, a $35 million revolving loan and $250 million in 8.75% Senior Notes

maturing in 2017 (the “Senior Notes”). Id. at A209. The Senior Notes required annual

interest payments of $22 million, and were set to mature in 2017. Id. at A212. In Colt’s

Schedules of Assets and Liabilities, as amended, Colt identified owning only $5,027,406

in assets, while having aggregate liabilities of $384,839,567. See id. at A54. Colt

acknowledged in many of its filings and sworn statements submitted to the Bankruptcy

Court that it had been forced to borrow substantial amounts of money in the years

preceding the submission of its proposal for this contract, was highly leveraged and

facing severe liquidity issues. See, e.g. id. at A209, A226-27. As a result of the liquidity


                                             11
problem combined with the high level of debt, Mr. Maib concluded that Colt “will not

survive protracted chapter 11 litigation and delay,” and determined that the “only other

alternative” to an expedited reorganization “is chapter 7 liquidation,” which would,

among other things, “curtail the critical delivery of weapons to military and law

enforcement agencies . . . .” Id. at A208. In this connection, Colt also was exploring the

viability of a bankruptcy 363 sale, in which a new owner would take over Colt’s assets.

This provision of the bankruptcy code envisions more money for creditors where a buyer

is willing to pay a premium to take over the bankrupt company without any debt. See 11

U.S.C. § 363.

       In addition to Colt’s debt and liquidity problems, Colt’s lease on the West

Hartford facility, where Colt manufactured the bulk of its products and where it proposed

to manufacture the M4s if awarded the instant contract, was in jeopardy. The lease,

which was between Colt and the building’s owner, NPA Hartford, LLC (“NPA”), was set

to expire on October 25, 2015. Id. at A209-10. NPA was partially owned by Colt’s

equity sponsor, Sciens Capitol Management, LLC (“Sciens”), and during the bankruptcy

litigation, some of Colt’s creditors accused Sciens of using its ownership of NPA to

refuse extensions and modifications of the lease unless Sciens maintained its controlling

interest in Colt. Id. at A1567-A1568, A1652-A1653. According to a motion filed by the

creditors the loss of the lease would have meant Colt’s destruction: “Sciens was

threatening the [creditors] with the termination of the lease, and by extension, the

destruction of [Colt], if [the creditors] did not accept their proposed exchange offer that

left Sciens in control.” Id. at A294. The Agency entered into discussions on July 28,


                                             12
2015, approximately six weeks after the Petition Date. AR 3436, 3044, 3142, 3203. As

of the date of the Notice of Award in September of 2015, the dispute regarding the

Facility Lease was ongoing. Pl.’s App’x A2307-A2327

       As part of its evaluation, the Army directed the DCMA to conduct a pre-award

survey. See FAR § 9.106. The DCMA conducted a financial evaluation of each of the

three offerors in the competitive range, including Colt. The DCMA found Remington’s

and FN’s financial conditions to be satisfactory. AR 3481, 3506. However, the DCMA

issued a report on September 9, 2015, finding Colt’s “overall financial condition to be

unsatisfactory.” AR 3422. The DCMA found that as of July 5, 2015, Colt’s current

liabilities exceeded its current assets by $332.9 million. AR 3423. According to the

DCMA, this “working capital deficit” left Colt without assets sufficient to meet its then-

current operational needs. Id. Further, the DCMA noted that Colt’s net profit margin

was -53% as of July 5, 2015 (up from -59.5% for fiscal year 2014). AR 3424.

Consequently, the DCMA concluded that Colt’s “overall financial risk [was] HIGH.”

AR 3422.

       After receiving the DCMA report, the CO sent Colt the following list of questions

addressing Colt’s bankruptcy and the status of its lease negotiations:

              I.    How will the entity Colt Defense, LLC change after a
                    363 sale, should one occur? Specifically:
                   1. Will it operate independently or even semi-
                      independently from the other “Colt entities” or
                      from a new parent company?
                   2. What will be the extent of financial resources
                      available [related to contract]?



                                             13
                       a.    What period of operation will these resources
                             cover?
                       b.    What are Colt’s available lines of credit?
                       c.    How would you characterize Colt’s working
                             capital?
                    3. Would the answers to the above questions be
                       different if it were a restructuring vs. a 363 sale? If
                       so, how and to what extent?
              II.    Will the command and control structure, corporate
                     policies, procedures, and employees (corporate
                     experience) differ after if Colt is restructured? If so, to
                     what extent?
              III. Lease Negotiations
                    1. What is the status of the ongoing lease
                       negotiations between Colt and the landlord of its
                       current facilities? In the event a new lease cannot
                       be renegotiated, how and to what extent, would
                       this affect Colt’s ability to produce?
                    2. What are Colt’s plans, if any, to relocate the
                       manufacturing line in the event the current lease
                       does not get renewed? How would this impact the
                       ability to perform on a potential M4 contract
                       award?

AR 3621. In her responsibility determination, the CO stated that on September 10, 2015,

she discussed the DCMA report with Colt’s management and asked them about the

possibility of a “material change in the entity ‘Colt Defense, LLC’ due to the anticipated

363 sale (either in corporate structure, management, premises, facilities or personel).”

AR 3613. According to the CO, in that conversation:

              Colt assured the Government that part of the “core sale value
              of Colt” was its relationship with the Government, including
              current contracts and any anticipated future awards. As stated
              in the [Reorganization Plan], Colt is very close to finalizing a
              restructuring agreement (the Term Sheet) with the Board and
              the Senior Noteholders, which would alleviate the need for a


                                               14
              Section 363 sale and would leave Colt in a positive cash
              position with deleveraged debt. However, if that agreement is
              not finalized by the Bankruptcy Court by September 30,
              2015, it would be necessary to proceed with the Section 363
              sale. But Colt emphasized that its intentions, whether through
              reorganization or the Section 363 sale process, did not include
              relocation of its manufacturing or other facilities or change in
              senior management or workforce personnel. Colt did say that
              if the Section 363 sale was consummated, any potential
              changes with regards to personnel or facilities would depend
              on the Buyer, and would require approval of the Bankruptcy
              Court.

Id. Based on this conversation, the CO found that notwithstanding the negative

information in the DCMA report, Colt “does indeed possess the financial resources to

perform under the current contract, or will have the ability to obtain those resources.” Id.

The CO explained that the “DCMA report was based on information submitted before

Colt had submitted its bankruptcy petition” and so the DMCA report was out of date. AR

3614. The CO also noted that “Colt’s financial status is now being closely monitored by

the Bankruptcy Court.” Id.

       With respect to Colt’s manufacturing facilities, the CO found that:

              Colt currently has the production, construction, and technical
              equipment and facilities for the manufacture of the M4A1
              Carbines that are more than adequate to meet this
              requirement. As of 09/22/2015 Colt is still in bankruptcy and
              the proceedings were still pending. There was no decision
              made by the landlord, NPA Hartford, LLC as to renewal of
              the lease for the West Hartford facility; however, the current
              lease has been extended to November 26, 2015. During the
              teleconference with Colt management on 10 September 2015,
              Colt reiterated that they had no intention of moving their
              plant or hiring new people and they were very confident in
              getting approval of their restructuring plan in a matter of
              days.



                                             15
             Moreover, even if the restructuring plan is not approved and
             Colt must be sold, multiple other parties have already
             expressed an interest in purchasing Colt along with its
             technical equipment and facilities. This is evidenced by the
             United States Bankruptcy Court documents which indicate
             the sale is due to take place in October, 2015 and instruments
             have been filed by Offerors regarding their intent to bid.

             In the event Colt were to relocate under a new entity the
             schedule might be affected. The time it would take to obtain
             facilities, install equipment, hire or relocate personnel, obtain
             the necessary Preaward surveys and approvals of a new site
             might adversely impact the schedule. Colt would be required
             to pass First Article in time to meet the delivery schedule
             which must begin within 365 days after award. However, as
             of 09/18/2015 Colt is operating as debtor-in-possession in
             Hartford, CT and has a reorganization plan (the Term Sheet)
             that is due to be finalized 30 September 2015. The plan does
             not include relocating Colt to any site other than the current
             facility. Further, during my teleconference with Colt
             leadership on 10 September 2015, they expressed to me that it
             was very unlikely that a relocation would occur.

             In light of the above, I have deemed Colt to have the
             necessary production, construction, and technical equipment
             and facilities, or the ability to obtain them.

AR 3619.

      On September 23, 2015, the CO signed the Determination, finding that Colt was a

“Responsible Contractor.” AR 3620; see Dyda Decl. ¶ 8. On the basis of the SSEB final

report, the Source Selection Advisory Council (“SSAC” or “advisory council”), on

September 24, 2015, evaluated the proposals and recommended that the contracts be

awarded to Colt and FN, determining that they represented the best value to the

Government. AR 3400. The next day, the SSAC issued the Source Selection Decision

Document for the solicitation. AR 3401-12. The SSAC determined that there was “no



                                            16
justification for the Government to pay Remington’s price premium of 11.5% over Colt’s

or 5.1% over FN’s” proposals. AR 3411. On September 25, 2015, Colt and FN were

selected to receive the contracts. AR 3636, 3722. Remington was informed that it was

not selected for an award. AR 3808-09. To date, two task orders for the minimum

required amounts of $10,000 each have been issued to FN and Colt. See AR 3637-3720

(Colt), AR 3723-3806 (FN).

       After filing and then withdrawing a protest with the Government Accountability

Office, Remington filed this protest on November 24, 2015. On January 12, 2016, the

bankruptcy court approved Colt’s reorganization plan. The parties completed briefing on

their cross-motions on February 19, 2016. Oral argument was held on February 26, 2016.

III.   APPLICABLE STANDARDS

       A.     Standard of Review for Bid Protests
       This Court has jurisdiction to review post-award bid protests pursuant to the

Tucker Act, 28 U.S.C. § 1491(b). See Impresa Construzioni Geom. Domenico Garufi v.

United States, 238 F.3d 1324, 1330 (Fed. Cir. 2001). The court reviews the agency’s

decision pursuant to the standards set forth in the Administrative Procedures Act

(“APA”), 5 U.S.C. § 706. 28 U.S.C. § 1491(b)(4); see also Impresa, 238 F.3d at 1333

(noting that “the 1996 amendments to the Tucker Act require that [courts] apply the APA

standard of review”). Under 5 U.S.C. § 706(2), a court “shall . . . set aside agency action,

findings, and conclusions found to be . . . arbitrary, capricious, an abuse of discretion, or

otherwise not in accordance with law.” The Federal Circuit has stated that in a bid

protest, the court must determine whether “the government acted without rational basis or



                                              17
contrary to law when evaluating the bids and awarding the contract.” Bannum, Inc. v.

United States, 404 F.3d 1346, 1351 (Fed. Cir. 2005). In this context, a “disappointed

bidder faces a heavy burden of showing that the award decision had no rational basis.”

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

238 F.3d at 1332-33). Agency action is irrational if 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 is so implausible that it could not be

ascribed to a difference in view or the product of agency expertise.” Alabama Aircraft

Indus., Inc.-Birmingham v. United States, 586 F.3d 1372, 1375 (Fed. Cir. 2009) (quoting

Motor Vehicle Mfrs. Ass’n of U.S. v. State Farm Mut. Auto Ins. Co., 463 U.S. 29, 43

(1983)). With respect to responsibility determinations in particular, the Federal Circuit

has explained that “contracting officers are ‘generally given wide discretion’ in making

responsibility determinations and in determining the amount of information that is

required to make a responsibility determination.” Impresa, 238 F.3d at 1334-35. The

Federal Circuit has further stated that responsibility determinations are “complicated

business judgments” and that the court will not second guess them where there is

supporting evidence. Bender Shipbuilding & Repair Co. v. United States, 297 F.3d 1358,

1362 (Fed. Cir. 2002).

       B.     Prejudice and Standing
       The court will first address the government’s argument that Remington was not

prejudiced because there was no guarantee that the contract would be awarded to two




                                            18
bidders, and Remington is not challenging the award of the contract to FN.7 In order to

prevail in a post-award bid protest, the protestor “must first show that it was prejudiced

by a significant error in the procurement process.” Labatt Food Serv., Inc. v. United

States, 577 F.3d 1375, 1378 (Fed. Cir. 2009) (quoting JWK Int’l Corp. v. United States,

279 F.3d 985, 988 (Fed. Cir. 2002)). A party is “prejudiced when it can show that but for

the error, it would have had a substantial chance of securing the contract.” Id. (citing

Bannum, 404 F.3d at 1358). In evaluating prejudice to the unsuccessful offeror, the court

must “make factual findings from the record evidence as if it were conducting a trial on

the record.” Bannum, 404 F.3d at 1354; see id. at 1357 (explaining that the “trial court’s

factual determination on prejudice . . . is entitled to review for clear error”).

       According to the government, because FN’s proposal was superior to Remington’s

in a number of respects, Remington could not show it would have been awarded a second

contract in Colt’s place even if Colt had been eliminated. The government further argues

that because the Solicitation was for an IDIQ contract that contemplated the two

awardees competing for work orders beyond the minimum order, Remington cannot

demonstrate prejudice even if it were awarded a contract because FN, which had

submitted a lower price, would likely receive the subsequent orders.




7
 Though the government presented the prejudice issue as a secondary argument, the court is
obliged to address it first because an argument that a party was not prejudiced is an attack on that
party’s standing, thus implicating the court’s jurisdiction. See Info. Tech. & Applications Corp.
v. United States, 316 F.3d 1312, 1319 (Fed. Cir. 2003) (finding that “because the question of
prejudice goes directly to the question of standing, the prejudice issue must be reached before
addressing the merits.”)


                                                19
       The court disagrees with the government, and finds that Remington has

demonstrated that it had a “substantial chance” of securing the contract absent the alleged

error in the procurement process. In this case, the competitive range was limited to three

bidders—Remington, Colt, and FN—and two of the three bidders were awarded the

contract. The Federal Circuit has found that a protestor had standing where, as here, the

protestor finished directly behind the awardee in the evaluation. See Galen Med. Assocs.

Inc. v. United States, 369 F.3d 1324, 1331 (Fed. Cir. 2004). This case is therefore

distinguishable from Linc Government Services v. United States, 96 Fed. Cl. 672 (2010),

upon which the government relies. In Linc, the court found that a protestor would lack

standing if there would still be six offerors more highly rated than the protestor but for

the alleged error. Id. at 722-23. By contrast, in this case, only FN and Remington would

have remained in the competitive range had Colt been eliminated.

       Though the government is correct that the solicitation did not explicitly guarantee

that two contracts would be awarded, the agency’s intent to award two contracts is

evident from the structure of the contract (for example, the solicitation contemplated that

two awardees would compete with each other for subsequent orders), and the fact that

two contracts were in fact awarded. If the court accepted the government’s argument, a

protestor’s burden would rise from showing a substantial chance success to showing a

near certainty receiving the award, a standard the Federal Circuit has explicitly rejected.

Data Gen. Corp. v. Johnson, 78 F.3d 1556, 1562 (Fed. Cir. 1996) (finding that a protestor

need not show it would have been awarded the contract but for the alleged error because

“[s]uch a rule would make it virtually impossible for a protester ever to prevail . . . .”).


                                              20
       The court also disagrees with the government’s assertion that Remington was not

prejudiced even if it had a substantial chance of being awarded a contract because there

was no guarantee that it would receive any delivery orders beyond the minimum $10,000

order. As an initial matter, the government does not cite any case law supporting its

implication that a $10,000 order would be insufficient to support standing. Further, the

Federal Circuit has stated that the prejudice inquiry is focused on whether the protestor

had a “substantial chance of securing the contract,” Lebatt, 577 F.3d at 1379 (emphasis

added), not subsequent delivery orders.8 This court declines the government’s invitation

to add additional requirements to the threshold issue of standing beyond what the Federal

Circuit has prescribed.9 The court therefore concludes that Remington has established

standing.

IV.    DISCUSSION

       A.      The CO’s Responsibility Determination is not Supported by the
               Record.
       It is well-settled that a contract may be awarded to only responsible offerors. 48

C.F.R. § 9.103(a); see Bender Shipbuilding, 297 F.3d at 1361. Thus, before awarding

any contract, the CO must “make[] an affirmative determination of responsibility.”

Bender Shipbuilding, 297 F.3d at 1361 (quoting 48 C.F.R. § 9.103(b)). The fact that Colt



8
  Remington asserts that the government’s argument would “preclude a post award protest any
time the contract at issue is a multiple award IDIQ.” Remington Reply 25.
9
  Further, the government’s assertion that FN would have filled all of the delivery orders had FN
and Remington been awarded the contract appears to be in tension with the government’s
argument against Remington’s request for an injunction. In objecting to any grant of injunctive
relief, the government argues that it would be harmed if only FN were able to fill the agency’s
orders.


                                               21
was in bankruptcy is not determinative in this case. As Remington acknowledges, the

Federal Circuit found in Bender Shipbuilding that the pendency of a bankruptcy

proceeding does not preclude a responsibility finding. Remington argues, however, that

this case is distinguishable from others where the responsibility determination was

upheld, primarily because at the time the responsibility determination was made it was

not certain whether Colt would be reorganized, sold, or even liquidated. Colt’s lease

arrangement, and thus production capability, was also uncertain. Remington argues that

the CO failed to adequately address how Colt could be responsible in such circumstance.

Remington concludes that the CO therefore had no rational basis for concluding that Colt

could perform the contract.

       The government and Colt argue that the CO carefully considered Colt’s financial

status and did not ignore negative information and that the CO rationally determined

based on the information she received from Colt’s management and from the bankruptcy

filings that Colt was financially capable and would have access to the facilities it needed

to perform the contract.

       For the reasons that follow, the court finds that the CO’s finding that Colt had the

necessary production capability to perform the contract at the time she made her

responsibility determination is not supported by the record. First, the court finds that the

CO’s stated reasons for disregarding the DCMA report were insufficient in light of the

bankruptcy court record before the CO. The CO stated that the DCMA report was based

on old information, and that she had discussed Colt’s current situation with Colt’s

management. See AR 3614. In explaining why she diverged from the DCMA report, the


                                             22
CO noted that “Colt’s financial status is now being closely monitored by the Bankruptcy

Court.” Id. But the fact that Colt’s status was monitored does not mean that the

bankruptcy court would or could ensure Colt’s continued viability, which the record in

the bankruptcy court demonstrates was highly in doubt at the time of the responsibility

determination. Nor does the CO explain how any more recent data would have altered

the DCMA’s conclusion based upon supposedly out of date information.

        During the CO’s September 10, 2015 call with Colt’s management, Colt

represented to the CO that it was “very close” to reaching agreement on a restructuring

plan that would allow it to exit bankruptcy. AR 3613. Colt cautioned that such a deal

would have to be consummated by September 30, 2015. Id. The CO signed the

responsibility determination on September 23, 2015, thirteen days after that telephone

conversation. AR 3620. By this time, the deadline for finding a 363 buyer had expired,

no buyer had come forward, and no restructuring deal was in place. See Pl.’s App’x

A2219; A2517.10 Indeed, at that time the parties to the bankruptcy case were embroiled

in litigation. Id. at A2301-A2327. The CO states that she reviewed all of the filings in

the Bankruptcy Case. Dyda Decl. ¶ 3.a. Thus, she knew, or should have known, that the

bankruptcy outcome was uncertain. In light of these facts, the court finds that it was not


10
  As of the date of the Responsibility Determination, approximately six weeks after the filing of
the declaration upon which the CO relied, Sciens, the one buyer, had withdrawn it bid. Id. at
A2516. Colt had a deadline of September 21, 2015 to find a replacement for Sciens. Id. at
A2219. That deadline had passed and no replacement had been identified. Ultimately, the sale
process failed because Colt did not receive a qualified offer. See id. at A2517. While the sale
process had not yet formally collapsed on September 23, 2015, the proceedings in the
Bankruptcy Case as of that date made clear that it had stalled. Colt was then faced the protracted
Chapter 11 proceedings that Mr. Maib had described as unsustainable.


                                               23
reasonable for the CO to rely only on Colt’s representations to support her conclusion

that Colt was financially able to perform the contract. The self-serving comments from

Colt’s own employees were not consistent with the facts identified in the bankruptcy

court records.

       In addition, and equally importantly, the CO’s conclusions regarding Colt’s ability

to manufacture M4s at its West Hartford facility are also unsupported. The lease on the

Hartford facility was unresolved and the subject of litigation at the time she issued her

responsibility determination. Though Colt informed the CO that it intended to stay in the

facility, the bankruptcy record shows that that decision did not appear to be within Colt’s

control. The CO’s determination did not mention the fact that Colt’s creditors had

accused Colt's landlord of using control over the West Hartford Facility as a means of

maximizing its claims in the bankruptcy case and that Colt’s ability to stay at the facility

was uncertain. See Pl.’s App’x A1652-53.

       It is for these reasons that the government and Colt’s reliance on Bender

Shipbuilding to support their contention that Colt's bankruptcy did not bar a

responsibility finding is misplaced. The facts of this case differ sharply from Bender

Shipbuilding, in which the Federal Circuit found that the CO’s responsibility

determination was based on ample evidence in the record to show that the company was

financially able to perform. In Bender Shipbuilding, the CO relied upon a DCMA report

finding that the awardee “has satisfactorily demonstrated the requisite financial

capabilities necessary for performance.” Bender Shipbuilding, 297 F.3d at 1361. The

CO also considered the fact that the awardee’s parent company had guaranteed the


                                             24
awardee’s performance, and reports and surveys stating that the awardee would acquire

the necessary capital from the parent company’s sale of another subsidiary. Id. at 1362.

In this case, Colt could not give the CO any comparable assurances. Instead, the CO

relied on Colt’s stated expectations of how and when the bankruptcy proceedings would

be resolved without undertaking an investigation into the reasonableness of those

expectations. Under these circumstances, the court finds that the CO’s decision to take

Colt’s word that the lease situation would shortly be resolved and that Colt would emerge

largely intact from bankruptcy, when those statements were largely contradicted by

Colt’s filings in the bankruptcy case, was arbitrary and capricious. See Alabama Aircraft,

586 F.3d at 1375 (agency action is arbitrary and capricious when the agency “offered an

explanation for its decision that runs counter to the evidence before the agency . . . .”).

       Colt has argued that because it has now exited bankruptcy, and has entered into a

long-term lease for the West Hartford facility, the case is moot. However, Remington’s

protest was not limited to the fact that Colt was in bankruptcy, but challenged the CO’s

evaluation of the precarious financial situation that led Colt to file for bankruptcy in the

first place. Though Colt has emerged from bankruptcy, the Disclosure Statement

attached to its Second Amended Joint Plan for Reorganization contains approximately

thirty pages of acknowledged risks to Colt’s creditors, including substantial indebtedness.

Pl.’s App’x 2600-2631. The CO has not yet evaluated these risks, and as such the court

has determined that the case is not moot. Nor does the fact that the army has placed an

initial order with Colt render the case moot, because the agency anticipates issuing




                                              25
additional task orders in the future. See Furniture by Thurston v. United States, 103 Fed.

Cl. 505, 515 (2012).

       B.     Colt’s Technical Evaluation was Not Arbitrary, Capricious, or an
              Abuse of Discretion.
       Remington also argues that the agency’s technical evaluation of Colt was

arbitrary, capricious, and an abuse of discretion because the Army failed to take into

account Colt’s financial status and the precarious nature of the West Hartford facility

lease. The government argues that the technical evaluation was properly performed by

technical specialists and that they properly limited their evaluation to a review of Colt’s

manufacturing capabilities as proposed in Colt’s bid.

       The court agrees with the government and finds that Colt’s financial status and

lease issues are properly considered as part of the responsibility determination and should

not be evaluated as part of a technical evaluation. The agency’s technical evaluation

under the Production Capability factor and the Key Tooling and Equipment subfactor was

properly focused on technical matters such as “the Offeror’s proposed assembly line,”

“weapon and ammunition storage facilities,” and “[l]ong lead items,” and sub-factors

such as “the capability of the key tooling and equipment.” AR 3308-09. In contrast,

financial considerations such as whether Colt would still have access to its proposed

manufacturing location are properly evaluated as part of the CO’s responsibility

determination. The solicitation plainly states that the Production Capability subfactors

were to be based on the “proposed production facility” and did not include an evaluation

of the availability of that facility. AR 3307-09. The Army was limited to these criteria




                                             26
and could not judge Colt’s technical proposal based on other criteria. See FAR §

15.305(a) (proposals are to be evaluated “solely on the factors and subfactors specified in

the solicitation”). Consequently, Remington’s motion for judgment on the administrative

record with regard to the government’s technical evaluation must be rejected.

V.     INJUNCTIVE RELIEF

       Having concluded that the government’s responsibility determination cannot be

sustained, the court now turns to whether injunctive relief is appropriate and, if so, the

scope of such relief. This court “may award any relief that the court considers proper,

including declaratory and injunctive relief except that any monetary relief shall be limited

to bid preparation and proposal costs.” 28 U.S.C. § 1491(b)(2). In deciding whether to

grant permanent injunctive relief, a court considers whether: “(1) the plaintiff has

succeeded on the merits, (2) the plaintiff will suffer irreparable harm if the court

withholds injunctive relief, (3) the balance of hardships to the respective parties favors

the grant of injunctive relief, and (4) the public interest is served by a grant of injunctive

relief.” Centech Grp., Inc. v. United States, 554 F.3d 1029, 1037 (Fed. Cir. 2009) (citing

PGBA, LLC v. United States, 389 F.3d 1219, 1228-29 (Fed. Cir. 2004)). In this case, the

plaintiffs have succeeded on the merits. Therefore, the court must consider whether they

will suffer irreparable harm if the court withholds injunctive relief, whether the balance

of hardships to the respective parties favors the grant of injunctive relief, and whether the

public interest is served by a grant of injunctive relief.

       After considering the equities of the parties, the court concludes that the equities

balance in favor of issuing an injunction. Remington has established that it has been


                                              27
irreparably harmed by the government’s failure to prepare a supported responsibility

determination. “When assessing irreparable injury, ‘[t]he relevant inquiry . . . is whether

plaintiff has an adequate remedy in the absence of an injunction.’” PGBA, LLC v.

United States, 57 Fed. Cl. 655, 664 (2003) (quoting Magellan Corp. v. United States,

27 Fed. Cl. 446, 447 (1993)). The government does not suggest alternative remedies for

the plaintiff and courts have found that the “loss of potential work and profits from a

government contract constitutes irreparable harm.” Springfield Parcel C, LLC v. United

States, 124 Fed. Cl. 163, 194 (2015) (citations omitted). The record shows that, but for

the responsibility determination, Remington would have a substantial chance at the award

as the one of three offerors to make the competitive range. This court has found

irreparable injury in similar circumstances. See KWR Constr., Inc. v. United States, 124

Fed. Cl. 345, 362-63 (2015); Caddell Constr. Co. v. United States, 111 Fed. Cl. 49, 115-

16 (2013); CW Gov’t Travel, Inc. v. United States, 110 Fed. Cl. 462, 495 (2013).

       The record further shows that the government has indicated that it will not be

harmed by a limited injunction to allow for a proper responsibility evaluation because FN

is capable of fulfilling the government’s needs. Dyda Decl. ¶ 9 (“If Colt was found not

responsible or otherwise eliminate from competing for the award, the whole contract

production could be absorbed by FN . . . .”). Thus, the court finds that the government

will not be prejudiced by a limited injunction. The court further finds that the public

interest supports injunctive relief as well. Where, as here, the government has awarded a

contract to a party in bankruptcy without fully analyzing its ability to perform, the public




                                             28
interest is served in either ensuring that Colt can produce the M4s or that another

company be awarded a second contract if necessary.

       The court will therefore enjoin the government from awarding any new task orders

to Colt for 30 days or until the agency has performed a new responsibility determination

that addresses Colt’s current financial status and submitted that new determination, and

award decision, if appropriate, to the court. This approach is similar to the

recommendation of the Defense Contract Audit Agency (“DCAA”) in Bender

Shipbuilding, 297 F.3d at 1361. In that case, the DCAA found that the awardee, despite

filing for Chapter 11 bankruptcy, “had sufficient financial capability to perform the base

year, but recommended that another survey be made at the end of the base year before

awarding a contract for any of the option years.” Id. The court finds that this option best

balances the interests of the parties and the public and is most likely to result in a speedy

resolution of this matter.

VI.    CONCLUSION

       For the reasons stated above, Remington’s motion to supplement the

administrative record is GRANTED. Remington’s motion judgment on the

administrative record is GRANTED IN PART AND DENIED IN PART. The case is

REMANDED for re-evaluation consistent with this opinion. Further, the government is

enjoined from awarding additional task orders to Colt until a new responsibility

determination based on the most up-to-date financial information is complete and

submitted to the court. The government shall submit a status report on Monday, April

25, 2016 updating the court on its revised responsibility determination.


                                             29
IT IS SO ORDERED.

                         s/Nancy B. Firestone
                         NANCY B. FIRESTONE
                         Senior Judge




                    30
