           In the United States Court of Federal Claims
                                           No. 18-705C

                                (Filed Under Seal: August 3, 2018)

                             (Reissued: August 10, 2018)
  **********************************
  DZSP 21, LLC,                          )      Post-award bid protest; change in
                                         )      requirements for the procurement;
              Plaintiff,                 )      application of FAR § 15.206(a);
                                         )      evaluation of past performance and
        v.                               )      technical factors, including staffing and
                                         )      technical approach; equitable relief
  UNITED STATES,                         )
                                         )
              Defendant                  )
                                         )
        and                              )
                                         )
  FLUOR FEDERAL SOLUTIONS,               )
  LLC,                                   )
                                         )
              Defendant-Intervenor.      )
 ***********************************

        Anuj Vohra, Crowell & Moring, LLP, Washington, D.C., for plaintiff. With him on the
briefs were Hart W. Wood, Crowell & Moring, LLP, Washington, D.C., Jason A. Carey, Nooree
Lee, John R. Sorrenti, and Alexis Dyschkant, Covington & Burling, LLP, Washington, D.C.

        Veronica N. Onyema, Trial Attorney, Commercial Litigation Branch, Civil Division,
United States Department of Justice, Washington, D.C., for defendant. With her on the briefs
were Chad A. Readler, Acting Assistant Attorney General, Civil Division, Robert E. Kirschman,
Jr., Director, and Douglas K. Mickle, Assistant Director, Commercial Litigation Branch, Civil
Division, United States Department of Justice, Washington D.C. Of counsel were Richard J.
Huber and Patricia J. Battin, Department of the Navy.

       Richard B. O’Keeffe, Jr., Wiley Rein, LLP, Washington, D.C., for defendant-intervenor.
With him on the briefs were Samatha S. Lee, George E. Petel, and William A. Roberts, III,
Wiley Rein, LLP, Washington, D.C..

                                    OPINION AND ORDER1

       1
        Because of the protective order entered in this case, this opinion was filed initially under
seal. The parties were requested to review this decision and provide proposed redactions of any
confidential or proprietary information. The resulting redactions are shown by brackets
enclosing asterisks, e.g. “[***].”
LETTOW, Senior Judge.

        Pending before the court is the sixth protest filed regarding an award in the procurement
at issue. Four of the prior protests were brought before the Government Accountability Office
(“GAO”), and this is the second protest to come before the court.

        Previously, slightly over four months ago, on March, 22, 2018, this court issued its
decision in a protest of an award in the procurement. See DZSP 21, LLC v. United States, 137
Fed. Cl. 38 (2018). In that opinion, the court concluded that the Navy’s contractual award to
defendant-intervenor, Fluor Federal Solutions, LLC, for base operation services for military
installations in Guam was arbitrary and capricious and enjoined the Navy to perform a new
evaluation of the proposals of both Fluor and plaintiff, DZSP 21, LLC,2 or to conduct an entirely
new solicitation. Just 22 days later, on April 13, 2018, the Navy issued a new decision upon
reevaluation, once again awarding the contract to Fluor.

        DZSP again challenges the Navy’s award as arbitrary and capricious and in violation of
the law. As such, DZSP has moved for judgment on the administrative record, seeking both a
declaratory judgment and permanent injunction setting aside the contractual award to Fluor and
requiring the Navy to issue a new, updated solicitation. The government and Fluor have opposed
that motion and have filed cross-motions for judgment on the administrative record.

                                             FACTS3

       The Navy issued the solicitation underlying this protest in October 2013, solicitation No.
N62742-13-R-1150. DZSP 21, 137 Fed. Cl. at 40. The solicitation is thus nearly five years old.
Proceedings challenging awards under the solicitation have been undertaken at regular intervals.
Based upon the protests filed before the GAO, the Navy took corrective action on three separate

       2
         “DZSP is a corporation based in Guam [that] began offering base operation services for
the military installations in Guam in 2005.” DZSP 21, 137 Fed. Cl. at 41. DZSP is owned by
Pacific Architects and Engineers Incorporated (“PAE”), which owns other entities that provide
services to governmental installations worldwide. See Pl.’s Reply . . . and Response . . . (“Pl.’s
Reply”) at 21, ECF No. 42.

        Fluor is a subsidiary of Fluor Enterprises, Inc. and is based in Greenville, South
Carolina. AR 240-29789 to -29790. Fluor owns other entities that provide services to the
government worldwide. Id.
       3
         The recitations that follow constitute findings of fact by the court drawn from the
administrative record of the procurement filed pursuant to Rule 52.1(a) of the Rules of the Court
of Federal Claims (“RCFC”). See Bannum, Inc. v. United States, 404 F.3d 1346, 1356 (Fed. Cir.
2005) (explaining that bid protest proceedings “provide for trial on a paper record, allowing fact-
finding by the trial court”). Extensive factual findings will also be drawn from this court’s
opinion in DZSP 21, as the same administrative record, albeit with added elements, applies in
and to this post-award protest.

                                                 2
occasions before protests were filed in this court. See id. DZSP has been performing the base
operation services on Guam since 2005, operating under bridge contracts since 2014 while the
protests related to awards under the 2013 solicitation have been litigated. See DZSP 21, 137 Fed.
Cl. at 40, 43 & nn.4-6.

        “The solicitation offered a cost-plus multi-year contract” “for base service operations for
the Joint Region Marianas, comprising various military installations in Guam.” DZSP 21, 137
Fed. Cl. at 40-41. Bidders demonstrated their ability to provide “integrated base operations
services” by submitting proposals that included both technical and cost elements. Id. at 41; see
also AR 8a-340.4 The Navy evaluated those proposals to determine which provided the best
value to the government, “considering cost and five non-cost factors, designated as factors A
through E.” DZSP 21, 137 Fed. Cl. at 41. “Cost accounted for roughly 50% of the evaluation
with the confidence assessment under Factor A, [past performance,] accounting for
approximately another 25% and with the technical factors, Factors B, C, D, and E, collectively
accounting for the remaining 25%.” Id. (citing AR 8a-343). After evaluating the technical
factors, the Navy assigned an adjectival rating of outstanding, good, acceptable, marginal, or
unacceptable and, for Factor A, assigned a confidence assessment stated in terms of an adjectival
rating of substantial confidence, satisfactory confidence, limited confidence, no confidence, or
unknown confidence. Id. Cost proposals, on the other hand, were not assigned an adjectival
rating but were evaluated for completeness, cost reasonableness, and cost realism. Id. (citing AR
8a-343).

         Back in 2014, “[p]ursuant to the initial evaluation of submitted proposals, both DZSP and
Fluor received an overall technical rating of ‘outstanding’ and a confidence assessment rating of
‘substantial confidence.” DZSP 21, 137 Fed. Cl. at 41 (citing AR 8a-5405). Because DZSP’s
proposal was the less costly of the two, the Navy determined that DZSP provided the best value
to the government, and awarded it the contract. Id. Fluor filed a protest that the GAO sustained.
Id. This was the first of seriatim protests filed with GAO by Fluor; after each, the Navy took
corrective action but again awarded the contract to DZSP. See id. at 41-42. This pattern
continued through 2016, when, in July, the Navy completed another round of both technical and
cost evaluations of DZSP’s and Fluor’s proposals. See id. at 42. The Navy again rated both
proposals as technically outstanding and evoking “substantial confidence.” Id. Although the gap
in cost between the two proposals had closed, with DZSP holding a $2.6 million advantage, the
Navy once again determined that DZSP provided the best value to the government and awarded
it the contract. Id.5 In October, Fluor again filed a GAO protest, which was again sustained. Id.
at 42-43.



       4
         Citations to the administrative record refer to the record as filed on May 29, 2018. The
record is divided into tabs and paginated sequentially. In citing to the record, the court will first
designate the tab, followed by the page number. For example, AR 8a-340 refers to tab 8a, page
340 of the administrative record.
       5
        The total value of the contract has approximated $500,000,000.00 throughout the
proceedings on the procurement, so the difference in price between the various offers of DZSP
and Fluor has been relatively small as a percentage of the total.
                                                 3
        After this protest, when the Navy took corrective action in 2017, it reversed itself,
awarding the contract to Fluor. See DZSP 21, 137 Fed. Cl. at 43. The cost evaluation performed
in 2017 stated that the Navy no longer considered DZSP’s approach to “maintaining exempt
labor rates” to be “reasonable and realistic.” Id. (citing AR 192-26972). In support of this
reversal, the cost evaluation team and Source Selection Authority (“SSA”) considered data from
the current and past bridge contracts under which DZSP had been operating while the
procurement process was pending. See id. The Navy also changed its views on the
reasonableness of Fluor’s proposal and made upward adjustments to both cost proposals. Id. at
43-44. “With these changes to the proposals, Fluor’s and DZSP’s non-cost ratings remained
unchanged, but Fluor now had the less costly proposal” with a $[***] million advantage. Id. at
44; see also AR 193-26986. With the cost advantage, Fluor was determined to provide the best
value to the government and was awarded the contract. See DZSP 21, 137 Fed. Cl. at 44.

         DZSP filed a protest with GAO, but it was denied and dismissed. See DZSP 21, 137 Fed.
Cl. at 44. DZSP filed a complaint in this court in January 2018 and prevailed. Id. at 44, 50. The
court determined that various aspects of the Navy’s award were arbitrary and capricious and
enjoined the Navy “to perform a new evaluation of DZSP’s and Fluor’s proposals or to conduct
an entirely new solicitation, whichever it cho[se].” Id. at 46-50. The court concluded that the
Navy had erroneously assigned a strength to Fluor under Factor C, staffing and resources, where
it may have been required to assess a weakness, id. at 46-47, and had arbitrarily made an upward
adjustment to DZSP’s cost estimate, id. at 47-48. The court took particular exception to the
Navy’s “selective[] use [of] the bridge contracts.” Id. at 48. It was unreasonable, the court held,
for the Navy to consider the bridge contracts only as to cost, while ignoring other aspects that
were relevant to a full evaluation of Fluor’s and DZSP’s proposals, especially those concerning
staffing and contractual risk of satisfactory performance. See id. at 48-49 (noting the Navy’s
failure to consider the “increased need for exempt employees” under the bridge contracts and to
apply those considerations and their implications to both Fluor and DZSP). In conjunction with
these rulings, the court concluded that the Navy was not required to amend its 2013 solicitation,
notwithstanding the fact that “military assets based on Guam by the Navy, Marine Corps, and
Air Force ha[d] very significantly expanded over recent years,” id. at 46, increasing requirements
for contractual operational services by large amounts, id. at 45. The court accorded “great
deference to the professional judgment of military authorities” in that regard. Id. (quoting Winter
v. Natural Res. Def. Council, Inc., 555 U.S. 7, 24 (2008) (quotation marks omitted).

        After this court’s decision, the Navy declined to conduct a new solicitation. It
determined that despite “the lengthy period that ha[d] passed since th[e] solicitation was
originally issued as well as changes that ha[d] occurred in the requirements that were originally
identified, . . . further reevaluation [was] most appropriate.” AR 240-29775. The Navy also
decided against “reconven[ing] the . . . cost evaluation and technical teams.” AR 240-29776.
Just 22 days after this court’s decision, the Navy reissued its award decision, again awarding the
contract to Fluor. See AR 240-29778, -29800 to -29801.

        The Navy’s evaluation in 2018 was undertaken by the SSA, the Vice Commander of the
Naval Facilities Engineering Command Pacific, based in Hawaii. See AR 240-29776. The
record of her evaluation consists solely of a new Source Selection Decision Document. See
generally AR Tab 240. In it, the SSA removed the strength assessed to Fluor under Factor C,
staffing and resources. AR 240-29794. She also readjusted DZSP’s cost estimate, returning it to

                                                4
its 2016 level, and increased Fluor’s cost estimate “to account for the [delayed] start date.” AR
240-29777. But in making these cost adjustments, the SSA did not assess the relevant portions
of the bridge contracts that she had previously ignored; notably, she decided to disregard the
bridge contracts in their entirety. See, e.g., AR 240-29779 (“I did not consider . . . the Guam
BOS bridge contracts.”). After these cost adjustments, DZSP had a $[***] million cost
advantage over Fluor, [***]. Compare AR 240-29777, with AR 108-14029, and 110-14056.
The basic non-cost factor ratings remained unchanged from the 2016 evaluation, compare AR
240-29777, with AR 108-14029, although the SSA did adjust DZSP’s risk under Factor D,
technical approach, from “low” to “low to moderate,” Compare AR 240-29786, with AR 193-
26996.

        DZSP filed a bid protest in this court on May 18, 2018, see generally Compl., and filed
an amended complaint on June 12, 2018, seeking declaratory and injunctive relief, see generally
Am. Compl., ECF No. 36. DZSP claims that the Navy’s reevaluation was arbitrary and
capricious and in violation of law on several grounds. Am. Compl. at 34-43. Among other
things, it argues that the Navy’s reevaluation was unreasonable for failing to consider “the
current circumstances in Guam” by not taking into account the significant increase in operational
requirements at Guam since 2013 and the bridge contracts, and for not following its 2016 award
decision when the non-cost factor ratings have remained unchanged and DZSP’s cost advantage
[***]. See Am. Compl. at 34-35, 37-39.

        Pending before the court is DZSP’s motion for judgment on the administrative record, see
generally Pl.’s Mot. for Judgment on the Administrative Record (“Pl.’s Mot.”), ECF No. 34, and
the government’s and Fluor’s cross-motions for judgment on the administrative record, see
generally Def.’s Mot. for Judgment on the Administrative Record and Opp’n to Pl.’s Cross-Mot.
for Judgment on the Administrative Record (“Def.’s Cross-Mot.”), ECF No. 39; [Def.-
Intervenor’s] Cross-Mot. for Judgment on the Administrative Record and Opp’n to [Pl.’s] Mot.
for Judgment on the Administrative Record (“Def.-Intervenor’s Cross-Mot.”), ECF No. 40. All
issues have been fully briefed and argued and are now ready for disposition.

                                STANDARDS FOR DECISION

        Section 706 of the Administrative Procedure Act (“APA”), 5 U.S.C. § 706, governs the
court’s review of a challenge to an agency’s contract award, see 28 U.S.C. § 1491(b)(4) (“In any
action under this subsection, the courts shall review the agency’s decision pursuant to the
standards set forth in section 706 of title 5.”). Under the APA, courts may set aside agency
decisions that are “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance
with law,” 5 U.S.C. § 706(2)(A), subject to the traditional balancing test applicable to a grant of
equitable relief, see PGBA, LLC v. United States, 389 F.3d 1219, 1224-28 (Fed. Cir. 2004). The
court may overturn an agency decision only “if ‘(1) the procurement official’s decision lacked a
rational basis; or (2) the procurement procedure involved a violation of regulation or
procedure.’” Centech Grp., Inc. v. United States, 554 F.3d 1029, 1037 (Fed. Cir. 2009) (quoting
Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324, 1332 (Fed. Cir.
2001)). And, because “[c]ontracting [o]fficers are entitled to exercise discretion upon a broad
range of issues . . . , procurement decisions are subject to a highly deferential rational basis
review.” PAI Corp. v. United States, 614 F.3d 1347, 1351 (Fed. Cir. 2010) (internal citations
and quotation marks omitted). Accordingly, “the court must sustain an agency action unless the

                                                 5
action does not evince rational reasoning and consideration of relevant factors.” Id. (internal
quotation marks and brackets omitted); see also Motor Vehicle Mfrs. Ass’n v. State Farm Mut.
Auto. Ins. Co., 463 U.S. 29, 43 (1983) (“[U]nder th[e arbitrary and capricious] standard, a
reviewing court may not set aside an agency rule that is rational[ and] based on consideration of
the relevant factors . . . .”).
                                           ANALYSIS

         DZSP’s first challenge to the Navy’s contract award to Fluor rests on the contention that
the Navy has changed its requirements since the solicitation was issued nearly five years ago and
thus is required by Federal Acquisition Regulations (“FAR”), specifically 48 C.F.R. § 15.206(a),
to issue a new, amended solicitation. See Pl.’s Mot. at 16-20; see also id. at 20-24. In other
respects, DZSP asserts that the Navy failed to rationally explain its departure from its 2016
award decision, see id. at 33-38, that the Navy improperly evaluated Fluor’s proposal by erring
in its assessment of past performance proffers and by failing to consider the implications of the
Fluor’s possible inability to retain DZSP’s incumbent work force, and that the SSA increased
DZSP’s performance risk rating without explanation. See id. at 24-28; Hr’g Tr. 23:20 to 24:25
(Aug. 1, 2018).6

     A. Increased Requirements, the Bridge Contracts, and Amendment of the Solicitation

        The court in DZSP 21 enjoined the Navy “to perform a new evaluation of DZSP’s and
Fluor’s proposals or to conduct an entirely new solicitation, whichever it chooses.” 137 Fed. Cl.
at 46-50. As noted, despite the SSA’s acknowledment that “changes . . . ha[d] occurred in the
requirements” of the solicitation, she decided that “reevaluation [was] most appropriate.” AR
240-29775. She based this determination on three considerations: “1) both DZSP and Fluor are
completely capable of adequately meeting the Navy’s requirements and have provided
outstanding proposals to do so; 2) both firms have invested substantial resources in this
competition; and 3) resolicitation would involve an additional lengthy period of time during
which services would have to be procured on a non-competitive basis and would involve a
substantial dedication of resources that have not been planned for such effort.” AR 240-29775 to
-29776. Although these considerations are relevant to administrative convenience and
efficiency, matters as to which all involved in this procurement are sensitive, they do not address
and thus cannot justify a departure from the requirements of FAR § 15.206(a). It is the FAR, not
administrative convenience, that must guide the SSA’s determination to reevaluate the proposals
instead of amending the solicitation.

        The increase in the Navy’s requirements at Guam has occurred incrementally but notably
over the past four years, the time during which operation services have been provided by bridge
contracts. In DZSP 21, this court faulted the Navy for its selective consideration of the bridge
contracts, which focused solely on cost elements while not addressing the effects of increased
requirements and staffing. 137 Fed. Cl. at 45-46, 48-49. The Navy’s apparent solution to
correcting selective consideration of the bridge contracts was to disregard those contracts
completely. See AR 240-29779; Pl.’s Mot. at 21 (“Faced with the [c]ourt’s admonition, the
Navy ignored the bridge contracts altogether . . . .”) (emphasis omitted). That approach is not

       6
       The date will be omitted from further citations to the transcript of the hearing conducted
on August 1, 2018.
                                               6
rational in the circumstances. Although the court did not explicitly state that the Navy must
consider the bridge contracts in their entirety, a need to take into account the experience under
the bridge contacts was strongly implied by both the court’s citation to the transcript of the
hearing held on March 9, 2018, see DZSP 21, 137 Fed Cl. at 46 (citing Hr’g Tr. 47:6-8 (March 9,
2018), No. 18-86C, ECF No. 50, (“[H]ow can you put blinders on and not look at the rest of the
situation?”)), and the court’s order to complete the record with not only the portion of documents
that the Navy actually considered, but with the entirety of the bridge contract documentation that
was available to the Navy when it issued its 2017 evaluation, id. at 46, 50. Furthermore, the
Navy had conceded the relevance of the bridge contracts to price realism when it used them to
evaluate DZSP’s cost proposal. See AR 192-26974 to -26975; but see AR 240-29779 (the SSA’s
April 2018 decision) (disclaiming the relevance of the bridge contracts for price realism by
noting that they do not contain demographic data). Those contracts also appear to be relevant to
an evaluation of DZSP’s past performance under Factor A and to staffing under Factor C. See
AR 240-29780 to -29784; see also infra, at 11-12. As counsel for both Fluor and then DZSP
noted at the hearing, “the bridge contract data . . . [are] the canary in the coal mine.” Hr’g Tr.
52:23-25, 61:20-21. An agency decision that is not based on all “of the relevant factors” is
irrational. State Farm, 463 U.S. at 43; see also PAI Corp., 614 F.3d at 1351.

        The government expresses concern that requiring the Navy to consider all relevant bridge
contract data “places an impossible standard on the Navy,” and it claims that such a requirement
“is not the legal standard,” but a “novel proposition” without any legal support. Def.’s Cross-
Mot. at 23. On this point, the government is simply mistaken. Considering relevant factors has
been the standard for arbitrary and capricious review under the APA for decades. See Citizens to
Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971) (describing the arbitrary and
capricious standard as “whether the decision was based on a consideration of the relevant
factors”), abrogated on other grounds as recognized by Califano v. Sanders, 430 U.S. 99, 105
(1977). This is not to say that all bridge contracts are relevant to procurements generally. The
government argues that they are not as a practical matter “because [they] are sole-sourced” and
the contractors are not “incentivized to remain competitive on cost.” Def.’s Cross-Mot. at 23-24.
Agencies are free to take just these kinds of considerations into account as to the degree to which
a particular bridge contract bears on a procurement—the standard is not that agency
decisionmaking must consider all bridge contracts all the time for all purposes but that it must
consider all relevant factors. And as explained previously, in the circumstances at hand,
experience under the bridge contracts is relevant and must be taken into account.

       Considering the bridge contracts as a relevant factor highlights what has already become
evident: the requirements of this solicitation have changed markedly. “When . . . the
[g]overnment changes its requirements or terms and conditions, the contracting officer shall
amend the solicitation.” FAR § 15.206(a). The government claims that the solicitation
requirements have not changed, see Def.’s Cross-Mot. at 20-21,7 but the SSA disagreed. The

       7
          At the hearing on the parties’ cross-motions, the government retreated somewhat from
this broad contention, arguing not that no changes had occurred in the requirements for operation
services but rather that the SSA had made no findings as to the materiality of the changes. Hr’g
Tr. 29:1 to 31:4. The government’s revised and adjusted argument is correct as a factual matter,
but it is legally unavailing. In light of the terms of FAR § 15.206(a), and in recognition that the
requirements of the procurement had actually changed, any conclusion that the provision of the
                                                    7
SSA explained her decision to reevaluate the proposals instead of amending the solicitation by
explicitly “acknowledging the lengthy period that has passed since this solicitation was originally
issued as well as changes that have occurred in the requirements that were originally identified.”
AR 240-29775 (emphasis added). She also implied that the bridge contracts include
requirements distinct from those in the solicitation. See AR 240-29779 (“I did not consider
DZSP’s . . . bridge contracts because this procurement only is evaluating the offerors’
capabilities with respect to this [solicitation’s p]erformance [w]ork [s]tatement.”). The court
concurs with these aspects of the SSA’s evaluation. The requirements and needs of the military
to support installations on Guam have markedly changed, and the question becomes whether the
altered requirements require the Navy to amend the solicitation.

         The government claims that this is a “game of semantics” because even if the court
“focus[ed] on [these] solitary sentence[s]” in the evaluation, there is no indication “that the
solicitation no longer meets the Navy’s needs.” See Def.’s Cross-Mot. at 20; see also Hr’g Tr.
30:13-16. The government points to the Navy’s use of a cost-reimbursement contract—a
contract defined by uncertainty and indeterminate requirements—and inclusion in its solicitation
of an evaluation of the “[o]fferor[’]s approach to handling surge/contingency operations and
fluctuations in mission requirements.” See Def.’s Cross-Mot. at 20-21 (emphasis in original).
This tangentially digressive argument by the government reaches too broadly; the provision of
the FAR does not differentiate among particular types of contracts. Cf. System Studies &
Simulation, Inc., B-409375.2, 2014 WL 2199666, at *4 (Comp. Gen. May 12, 2014) (“[T]he fact
that a requirements-type contract is being used does not relieve the agency of its fundamental
obligation to conduct a competition on the basis of the most accurate or realistic estimates . . .
.”). Rather, its mandate is triggered “[w]hen . . . the [g]overnment changes its requirements” and
is stated in categorical terms—the government “shall amend the solicitation.” FAR § 15.206(a)
(emphasis added).8 There is no exception in or to the rule that the court has been able to find, or
to which the parties have pointed, for cost-reimbursement contracts. Though it is prudent for the
Navy to choose a type of contractual arrangement that fits the pertinent setting, and the court
does not fault the Navy for choosing a cost-reimbursement contract for this procurement, when
there is a conflict between a duly promulgated regulation and the requirements of a solicitation,
the regulation prevails. But the court does not believe that the solicitation and the regulation are
in conflict. Cost-reimbursement contracts can afford the government flexibility in appropriate
circumstances, but they do not obviate the requirements of Section 15.206(a).

         The government’s final argument against ordering the Navy to amend the solicitation is
that “[t]his [c]ourt has already rejected DZSP’s argument that the Navy was required to amend


FAR did not apply would have to be premised on an explicit, supported finding that the changes
in requirements were immaterial. Otherwise, the pertinent procurement official could evade the
requirements of FAR § 15.206(a) simply by omitting any findings about materiality.
       8
        At the hearing, the government also retreated from this broad argument. See Hr’g Tr.
31:12-15 (“[W]e’re not . . . arguing that in a cost-reimbursement contract there can never be a
change that’s significant enough to require an amendment.”). The government elaborated that
the SSA had chosen an option, i.e., reevaluation, that the court had specifically allowed in is its
prior decision. See Hr’g Tr. 31:24 to 32:3.

                                                  8
the solicitation,” and it afforded “great deference to the professional judgment of military
authorities.” Def.’s Cross-Mot. at 19 (citing, inter alia, DZSP 21, 137 Fed. Cl. at 45-46). Insofar
as circumstances have continued to change, the court’s opinion in DZSP 21 cannot be applied to
freeze the application of law to evolving facts. The court previously deferred to the Navy’s
determination that its requirements had not changed despite evidence that they “arguably” had.
See DZSP 21, 137 Fed. Cl. at 45 (“[T]he increases under the bridge contracts considered by the
Navy arguably would amount to a significant change in the government’s requirements,
requiring an amendment of the solicitation.”) (internal citations omitted). But the circumstances
at military installations on Guam have continued to change and the Navy has acknowledged as
much. Also, the correct application of deference is itself at issue. Should the court defer to the
Navy’s evaluation that states that the requirements of the solicitation have changed or its
conclusion that “reevaluation is most appropriate,” AR 240-29775, given the terms of FAR §
15.206(a)?

        On a different ground, Fluor, but not the Navy, also resists a ruling that the solicitation be
amended. Fluor claims that DZSP’s changed-requirement argument is untimely because DZSP
should have raised it “at the very latest . . . before the Navy’s 2017 award of the contract to
Fluor.” Def.-Intervenor’s Mem. In Support of Cross-Mot. (“Def.-Intervenor’s Mem.”) at 11 &
n.3, ECF No. 40-1 (citing Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308, 1315 (Fed.
Cir. 2007)). This argument is unavailing for a number of reasons. Until 2017, the Navy had
awarded each contract to DZSP. See DZSP 21, 137 Fed. Cl. at 40-43. As the incumbent holder
of the bridge contracts in 2017 and awardee up to that point, see id. at 43 & nn.4-6, DZSP would
not have had an incentive, let alone standing, to challenge the solicitation prior to the Navy’s
award in that year. Second, after the award to Fluor in 2017, DZSP vigorously protested both the
Navy’s selective use of the bridge contracts in its evaluation and its failure to take into account
changed circumstances. See id. at 45-49. And, third, after the court’s decision in March of this
year, the SSA explicitly took account of DZSP’s contention that changed requirements obviated
the solicitation. See supra, at 7-8 (citing AR 240-29775, -29779). Fluor’s citation of Blue &
Gold in this context is mystifying because the court’s remand to the Navy for a new evaluation
or new solicitation explicitly addressed the possibility that changed requirements might make a
revised solicitation the preferred option for the Navy. Thus, the court will apply FAR §
15.206(a) to require the Navy to issue a revised solicitation.

                   B. The SSA’s Past Performance and Technical Evaluations

        Although the SSA did not refer matters to the technical and cost evaluation teams, she
reexamained the past performance submissions of the offerors and made adjustments in the
technical and cost evaluative elements of the offerors’ proposals. The non-cost factors in the
2016 and 2018 evaluations were identical—Fluor would seem to have a technical advantage
because it received an “outstanding” rating under Factor D, technical approach, while DZSP
received only a “good” rating, but both offerors received an overall technical rating of
“outstanding.” Compare AR 240-29777, with AR 108-14029. The two evaluations depart from
each other on estimated cost—in 2016, DZSP had a $[***] million advantage over Fluor; in
2018, it had a $[***] million advantage—and on the final award decision. After the 2016
evaluation the Navy awarded the contract to DZSP, and after the 2018 evaluation it awarded it to
Fluor. Compare AR 240-29777, with AR 108-14029, and 110-14056. The SSA explained this
departure by stating that “[w]hile DZSP’s cost is lower, . . . Fluor’s superior technical proposal

                                                  9
provides advantages to the [g]overnment that are well worth the additional cost.” AR 240-
29800.

        DZSP argues that the Navy’s decision to depart from its 2016 award decision, despite
DZSP’s improved position under the 2018 evaluation, is arbitrary and capricious. See Pl.’s Mot.
at 33-38. The government asserts that, “[a]lthough the overall ratings did not change, the [Navy]
identified differences between the two proposals that supported [its] . . . tradeoff analysis,”
particularly “under [Technical] Factors B and D.” Def.’s Cross-Mot. at 44. The government
also acknowledges that, as to Factors A, C, and E, the proposals are “otherwise equal.” Id. at 17
(citing AR 240-29797 to -29800). DZSP does not challenge the Navy’s conclusions as to Factor
B, occupational safety, but argues that the SSA’s evaluation of Factors A, C, and D was flawed.
Pl.’s Mot. at 28-38.

        Under Factor A, the Navy evaluated the offerors’ past performance. DZSP claims that
the Navy arbitrarily “refused to credit DZSP for two of the five projects it identified as
demonstrating relevant past performance” and failed to properly consider DZSP’s performance
as the incumbent. The government responds that DZSP waived its right to challenge the denial
of credit for the two projects,9 and that, even apart from waiver, DZSP was not prejudiced by the

       9
        The government’s waiver argument is based on the SSA’s decision in her evaluation in
2017 not to credit DZSP for the same two past performance projects. See Def.’s Cross-Mot. at
36. The SSA’s evaluation in 2018 revisited the same projects, AR 240-29782 to -29783, and
came to the same result, Def.’s Cross-Mot. at 36. The SSA undertook her reevaluation without
providing any opportunity for Fluor and DZSP to make further submissions. In the
circumstances, there is no waiver.

        When this court reviews an agency’s past-performance evaluations, it gives broad
deference to the agency’s determination. See Glenn Defense Marine (Asia), PTE Ltd. v. United
States, 720 F.3d 901, 910-11 (Fed. Cir. 2013); see also CSC Gov’t Sols. LLC v. United States,
129 Fed Cl. 416, 435-36 (2016). But when those determinations are contradicted by the record,
no amount of deference can save them from being overturned as arbitrary and an abuse of
discretion. See Mendoza v. Merit Sys. Protection Bd., 949 F.2d 391, 393-94 (Fed. Cir. 1991).
The SSA did not credit DZSP with two past projects: [***] and support for [***]. AR 240-
29780 to -29781. Both of these projects were performed by affiliates of DS2, “a joint venture
member of DZSP.” See AR 240-29780 to -29781; Pl.’s Mot. at 29. The [***] was originally
performed by [***] before it was acquired by DS2’s parent, PAE, and renamed [***]. AR 240-
29780, 150b-23503. The SSA declined to give DZSP credit for the [***] because the [***] were
acquired along with [***] “outside of the . . . evaluation period of May 2012 - April 2013” and
because “[***] [was] not identified as being involved in the contract effort or in shared
management with DZSP.” AR 240-29780.

        Both of the SSA’s rationales are contradicted by the record. In addition to the evaluation
period of May 2012 to April 2013, DZSP’s proposal indicated that the performance period for
the [***] runs from January 2005 to April 2020 and that [***] had been performing under the
contract “for the past 8 years.” AR 150b-23503. Because the record indicates that [***]
continues to perform the project, it was arbitrary for the SSA to discount [***] because [***]
were first achieved by a non-affiliate. Further, SSA’s conclusion that “[***] [was] not identified
                                                 10
Factor A evaluation because it “received the highest rating possible for its past performance.”
Def.’s Cross-Mot. at 36-37, 40-41. The Navy’s Factor A conclusion is flawed on two grounds.
First, DZSP received an “excellent” rating on a “Very Relevant” project, the Guam operation
services contract involved in this case, and it “was the only offeror to receive excellent customer
ratings on a very relevant past performance.” AR 240-29783. The SSA gave DZSP credit for
that highest rating, but did not accord DZSP a higher mark than that received by Fluor for a set
of less relevant projects. In that respect also, the SSA did not address the relevance of the bridge
contracts to DZSP’s past performance on this “Very Relevant” project. DZSP’s performance
under the bridge contracts is quite pertinent to how it will continue to perform when providing
those same services under a new contract. And, consideration of the bridge contracts is not
prohibited by the solicitation. The solicitation states that “the [g]overnment may review any
other sources of information for evaluating relevant past performance,” including “any . . .
known sources not provided by the [o]fferor.” AR 8a-329. It was therefore irrational for the
Navy to not consider DZSP’s work on the bridge contracts under Factor A.

        Second, the government’s claim that DZSP was not prejudiced because it received the
highest possible rating is likewise flawed. By the government’s own consideration of the rating
system, one offeror’s proposal can receive the same rating for a particular factor as another
proposal and yet be considered superior. See Def.’s Cross-Mot. at 44-45; see also Mil-Mar
Century Corp. v. United States, 111 Fed. Cl. 508, 553 (2013). For example, both DZSP and
Fluor received an “outstanding” rating under Factor B, occupational safety, but the Navy
determined that Fluor had a “slight advantage.” See Def.’s Cross-Mot. at 44-45. DZSP and
Fluor were considered by the SSA to be equal as to Factor A, id. at 17, but, again, consideration
of DZSP’s performance on the Guam operations contracts, including the bridge contracts, could
allow DZSP to gain an advantage in Factor A. This is particularly important here because Factor
A is weighted as approximately 25% of the overall evaluation—equal to that of all the technical
factors combined. See AR 8a-343. Even a slight advantage under Factor A could be enough to
counterbalance a disadvantage under a lesser-weighted technical factor. Because DZSP was the

as being involved in the contract effort,” AR 240-29780, was arbitrary as it ignored the explicit
statement in DZSP’s proposal that DS2, [***], and other affiliates are “[***].” See AR 150b-
23494.

        The [***] was performed by another DS2 affiliate—[***]. AR 150b-23509. The SSA
did not credit the [***] because she could not determine if [***] would have “meaningful
involvement” in the contract; in her words, “DZSP introduced ambiguity” by referring to both
PAE the parent and [***] as simply PAE. AR 240-29781 to -29782. This determination is
likewise contradicted by the record. DZSP’s proposal distinguishes between [***], the prime
contractor, referenced as “PAE” and PAE the parent by following the latter with references to its
parent status. See AR 150b-23509 (introducing work to be done by PAE the parent by stating
“PAE, as the parent company”). Any seeming ambiguity is resolved by comparing the [***]
past performance report with the [***] past performance report. In both, the prime contractors,
[***], respectively, are referred to as “PAE” and PAE the parent is identified with reference to
its parent status. Compare AR 150b-23504 (referring to PAE the parent under the heading
“Same company division that will do the work”), with AR 150b-23509 (same). Revealingly, the
SSA did not object to or find this same approach ambiguous in both contexts.

                                                 11
only offeror to receive an excellent rating on a very relevant project, the particular work at issue
in this protest, the SSA’s equivalence in ratings under factor A is not appropriate.

        DZSP argues that the Navy’s evaluation under Factor C, staffing and resources, was
likewise arbitrary when considered against the backdrop of the 2016 evaluation. In that
evaluation, the Navy determined that DZSP provided “slightly more value” than Fluor under
Factor C. AR 191-26967. In the 2018 evaluation, the proposals were determined to be
“essentially equal” under this factor, AR 240-29798, despite Fluor’s loss of a strength for
incumbency retention. See AR 240-29794; DZSP 21, 137 Fed. Cl. at 46-47. The government
argues that this is not inconsistent with the Navy’s 2017 evaluation that also concluded that the
proposals were “essentially equal” when both Fluor and DZSP received strengths under Factor C
that have since been removed. Def.’s Cross-Mot. at 46. But this argument fails to grapple with
the issue at hand. The evaluation’s analysis in 2017 of Factor C was determined to be arbitrary
and was set aside. See DZSP 21, 137 Fed. Cl. at 50. The strength that DZSP lost in the 2018
evaluation had not been assigned to it in the 2016 evaluation. So vis-à-vis the 2016 evaluation,
Fluor has a relatively weaker proposal, yet in 2018 it was determined to be relatively stronger.
As this court said in DZSP 21, “the Navy [is] not bound by its 2016 evaluation, but . . . a reversal
of that evaluation [must] . . . be accompanied by a rational explanation in fact.” Id. at 48 (citing
State Farm, 463 U.S. at 41-42). The Navy has provided no such explanation here.

        Further, DZSP argues that the Factor C evaluation was arbitrary because “the SSA gave
no consideration whatsoever to the substantial performance risk and likelihood of disruption that
would result from Fluor’s inability to retain the incumbent workforce.” Pl.’s Mot. at 25 (internal
emphasis omitted). Although the SSA removed the strength that Fluor had been assessed for
incumbent retention, following this court’s opinion in DZSP 21, DZSP claims that the SSA also
needed to consider the effect of Fluor’s potential inability to retain incumbents on its overall
approach to Factor C. See id. The government counters that the Navy need not “determine
whether Fluor w[ould], in fact, achieve the proposed retention rates identified in its proposal”
and claims that “DZSP’s true argument is that the SSA did not ascribe the same significance to
incumbent retention as DZSP apparently believes is appropriate.” Def.’s Cross-Mot. at 31, 34.
But DZSP cites Fluor’s statements, not its own, about the importance of incumbent retention to
Fluor’s approach to Factor C. See Pl.’s Mot at 26 (citing AR 237a). Fluor described retention of
incumbents as “[***]” of various portions of its proposal. See, e.g., AR 237a-28664; Hr’g Tr.
18-5-8. The SSA was required to fully “account for the distinct possibility that Fluor could not
meet its goal of hiring incumbents and would have to rely on securing less experienced exempt
employees,” both as it affected the strength previously assigned and Fluor’s overall performance
under Factor C. See DZSP 21, 137 Fed. Cl. at 47. Because the SSA did not fully consider the
impact of Fluor’s potential inability to meet its retention goals, the SSA failed to consider a
factor relevant to its evaluation.10

       10
          The government and Fluor each included extra-record materials in its briefs that
addressed Fluor’s efforts in taking transitional steps to recruit DZSP’s employees, as it prepares
to undertake the contract awarded to it. See Def.’s Cross-Mot. Ex. A, ECF No. 39-1; Def.-
Intervenor’s Mem. Ex. 1. DZSP has moved to strike those “materials in their entirety because . .
. they are not part of the Administrative Record” and the SSA “did not consider them.” Pl.’s
Mot. to Strike at 2, ECF No. 41. For good cause shown, DZSP’s motion is GRANTED. Those
extra-record materials shall be stricken.
                                                  12
        DZSP raises a final argument against the Navy’s departure from the 2016 evaluation,
specifically that the Navy increased DZSP’s performance risk under Factor D, technical
approach, from “low” to “low to moderate” without any explanation in the record. Pl.’s Mot. at
32-33. As noted supra, at 9, Fluor received a better rating than DZSP for Factor D, so Fluor had
an overall advantage over DZSP regarding this factor. The change in performance risk,
however, raises a different issue. The government does not dispute that the change occurred or
that the change is unsupported by the record; it argues only that “there is no evidence that” the
change “had any effect on the outcome of the evaluation.” Def.’s Cross-Mot. at 41. Apart from
whether discounting the Navy’s unexplained alteration in the risk rating would itself change the
outcome in this case, the government is wrong about prejudice. “[P]rejudice cannot be assessed
in a vacuum, but must be considered in light of all of the changes the Navy would have to
consider upon reevaluation.” DZSP 21, 137 Fed. Cl. at 47. As the court has noted, a mistake as
to one of the “discriminators” in a procurement can be prejudicial in context. Id. (quoting
PGBA, LLC v. United States, 60 Fed. Cl. 196, 212 (2004), aff’d, 389 F.3d 1219). When
considered under this standard, the unexplained change to DZSP’s performance risk was
prejudicial.11

                                         C. Equitable Relief

        DZSP seeks a declaration setting aside the contract award to Fluor and a permanent
injunction requiring that the Navy amend the solicitation in light of its changed requirements. In
a bid protest, the court may award relief that it considers proper, including declaratory and
injunctive relief. 28 U.S.C. § 1491(b)(2). “The determination of whether injunctive relief is
appropriate is left to the court’s ‘equitable discretion.’” Angelica Textile Servs., Inc. v. United
States, 95 Fed. Cl. 208, 223 (2010) (citing PGBA, 389 F.3d at 1225-26). “In deciding whether a
permanent injunction should issue, a court considers: (1) whether, as it must, the plaintiff has
succeeded on the merits of the case; (2) whether the plaintiff will suffer irreparable harm if the
court withholds injunctive relief; (3) whether the balance of hardships to the respective parties
favors the grant of injunctive relief; and (4) whether it is in the public interest to grant injunctive
relief.” PGBA, 389 F.3d at 1228-29 (internal citations omitted).

       For the reasons explained above, DZSP has prevailed on the merits.



       11
            At the hearing, Fluor’s counsel offered a possible explanation for the SSA’s change:

       “Factor D looks at what you’re proposing to do on this contract with this
       solicitation in the future. . . . [T]hat’s why there’s no inconsistency between . . .
       DZSP . . . getting an outstanding [rating on past performance] . . . and . . .
       being assessed with a . . . low to moderate risk rating for their technical
       approach.”

Hr’g Tr. 58:10-16. The SSA, however, offered no rationale for her change in the risk rating, let
alone that put forward by Fluor’s counsel.

                                                  13
         DZSP claims that it will be irreparably harmed if the court does not grant injunctive relief
because it would “be deprived of the opportunity to compete on a level playing field for a
contract worth over $400 million.” Pl.’s Mot. at 39. The “[d]enial of the opportunity to compete
[fairly] for a contract can constitute irreparable harm.” Miles Constr., LLC v. United States, 108
Fed. Cl. 792, 806 (2013) (citing Electronic On-Ramp, Inc. v. United States, 104 Fed. Cl. 151,
169 (2012); NetStar-1 Gov’t Consulting, Inc. v. United States, 101 Fed. Cl. 511, 530 (2011),
aff’d, 473 Fed. Appx. 902 (Fed. Cir. 2012)); see also United Int’l Investigative Servs., Inc. v.
United States, 41 Fed. Cl. 312, 323 (1998) (“[T]he opportunity to compete for a contract and
secure any resulting profits has been recognized to constitute significant harm.”). While it is true
that “mere allegation[s] that a party will be deprived of a chance to compete fairly [do not] meet
the standard for irreparable harm,” see Def.’s Cross-Mot. at 49 (citing OAO Corp. v. United
States, 49 Fed. Cl. 478, 480 (2001)), DZSP has provided far more than mere allegations.
Because the Navy acted arbitrarily when evaluating DZSP’s and Fluor’s proposals and in
violation of FAR § 15.206(a) by not amending the solicitation, DZSP was deprived of an
opportunity to compete fairly for the contract. Thus, the court finds that DZSP will suffer
irreparable harm if injunctive relief is not provided.

        DZSP claims that the balance of the harms favors injunctive relief because, “if enjoined,
the Navy will continue to receive . . . services . . . through DZSP’s bridge contract,” thereby
receiving little to no harm. Pl.’s Mot. at 39. The government asks the court to “reject DZSP’s
assertion” because it “completely ignores any harm to Fluor” and “the continued use of bridge
contracts is not conducive to cost savings.” Def.’s Cross-Mot. at 49. An injunction would
mitigate harm to Fluor because it would prevent Fluor from expending resources on a transition
that may never occur. And, although single-sourced bridge contracts may cost the government
more than a competitive contract would, the marginal cost to the government does not outweigh
the potential cost of long-term harm from allowing a flawed contractual award to take effect.
Further, the government has already agreed to an extension of DZSP’s bridge contract until
February 2019 and so will not incur any additional costs until after that date. See Pl.’s Mot. at
39.

        Finally, public interest favors a grant of injunctive relief because the public “has a strong
interest in preserving the integrity of the procurement process.” Angelica Textile Servs., 95 Fed.
Cl. at 223 (citing DGR Assocs., Inc. v. United States, 94 Fed. Cl. 189, 211 (2010); Hospital
Klean of Texas, Inc. v. United States, 65 Fed. Cl. 618, 624 (2005)). That interest would be
undermined if the court were to deny injunctive relief and let the Navy’s arbitrary and unlawful
actions in this procurement stand. Injunctive relief is therefore warranted.

                                          CONCLUSION

        For the reasons stated above, DZSP’s motion for judgment on the administrative record is
GRANTED, and the government’s and Fluor’s cross-motions for judgment on the administrative
record are DENIED. The Navy’s contractual award to Fluor is set aside, and the Navy is
enjoined to amend its solicitation. The clerk is directed to enter judgment in accord with this
disposition.12

        As noted supra, at 12-13 n.10, DZSP’s motion to strike extra-record materials
       12

submitted by the government and Fluor is GRANTED.
                                            14
No costs.

It is so ORDERED.


                     s/ Charles F. Lettow
                     Charles F. Lettow
                     Senior Judge




                    15
