Agile Defense, Inc. v. United States
959 F.3d 1379
| Fed. Cir. | 2020Background
- DISA issued the Encore III solicitation for multiple indefinite-delivery/indefinite-quantity IT contracts; task orders could be cost-reimbursement (CR) or fixed-price (FP); solicitation listed 116 labor categories with minimum education/experience requirements.
- Offerors had to submit a CR labor-rate table and supporting cost information; DISA would perform a FAR 15.404-1(d) cost realism analysis, computing an average and standard deviation for each labor rate across completed proposals within each suite (full/open and small business).
- The solicitation stated a rate 1 standard deviation below the average would be "considered a realistic rate, subject to cost analysis techniques in accordance with FAR 15.404," and required review of supporting documentation for rates more than 1 standard deviation below the average, with adjustments to average if justification was inadequate.
- Agile (small-business suite) proposed many rates more than 1 SD below the average; DISA found its salary pools included workers who failed to meet solicitation minimums, expanded review to within-deviation rates, asked for revisions, and ultimately found Agile’s evaluated price too high; Agile was not awarded.
- Agile protested, arguing DISA violated the solicitation by scrutinizing within-deviation rates; the Court of Federal Claims rejected that challenge and this Court affirmed, holding the solicitation did not bar FAR-based cost realism review of within-deviation rates and the agency acted within its discretion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Encore III solicitation prohibited DISA from conducting cost-realism scrutiny of CR labor rates within one standard deviation of the average | Agile: The solicitation limited mandatory review to rates >1 SD below average; within-deviation rates are to be treated as realistic and immune from further scrutiny | DISA: The solicitation’s "subject to cost analysis techniques" language and FAR allow further cost-realism techniques; nothing bars expanded review | Court: Solicitation did not preclude review of within-deviation rates; "subject to" permits FAR-based scrutiny; agency’s evaluation was rational and within its discretion |
Key Cases Cited
- Per Aarsleff A/S v. United States, 829 F.3d 1303 (Fed. Cir. 2016) (solicitation interpretation is a question of law reviewed de novo)
- Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324 (Fed. Cir. 2001) (APA standards govern bid-protest review; set-aside if decision lacks a rational basis or violates procedure)
- Banknote Corp. v. United States, 365 F.3d 1345 (Fed. Cir. 2004) (procurement set-aside standards under APA)
- Savantage Fin. Servs., Inc. v. United States, 595 F.3d 1282 (Fed. Cir. 2010) (agency action must not be arbitrary or capricious)
- Mission1st Grp., Inc. v. United States, 144 Fed. Cl. 200 (Fed. Cl. 2019) (agencies have broad discretion in scope of cost realism analysis absent a mandated methodology)
- Dellew Corp. v. United States, 128 Fed. Cl. 187 (Fed. Cl. 2016) (agency need only avoid irrational assumptions or critical miscalculations in cost realism)
- Tinton Falls Lodging Realty, LLC v. United States, 800 F.3d 1353 (Fed. Cir. 2015) (recognizing contracting-officer discretion in procurement evaluations)