American Sanitary Products, Inc. v. United States
133 Fed. Cl. 327
| Fed. Cl. | 2017Background
- BOP issued an RFQ (small-business set-aside) for EPA "Safer Choice" solid laundry products to be ordered via GSA Schedule; award to lowest-priced, technically acceptable offeror using a price-per-case formula based on ounces per CWT and CWT per case.
- Two quotes were received (American Sanitary and Native Green); both deemed technically acceptable and American Sanitary was awarded a BPA on Dec. 1, 2016 as lowest-priced.
- Native Green filed a GAO protest (Dec. 15, 2016) contending the Solicitation grossly underestimated required quantities. The CO discovered the agency had misestimated case weights (assumed 2 lb but actual 5–16 lb), making Solicitation quantities materially understated.
- BOP cancelled the award and Solicitation and announced corrective action (Jan. 12–13, 2017). GAO dismissed Native Green’s protest as academic. American Sanitary filed suit in the Court of Federal Claims challenging the corrective action.
- Plaintiff argued the corrective action lacked rational basis because (1) Native Green was not technically compliant (products not on GSA Advantage!), (2) quantity estimates did not affect award under the agency’s price formula, and (3) the agency failed to notify American Sanitary of the GAO protest.
- The court held the CO’s cancellation/resolicitation was reasonable because the Solicitation materially understated requirements (impacting pricing and amortization of start-up costs); disclosure of total contract price and late notice did not render corrective action unreasonable. Motions to supplement the record were denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether BOP’s corrective action cancelling award was arbitrary/capricious | American Sanitary: corrective action lacked rational basis because Native Green was ineligible and quantity estimates did not affect the price formula, so American Sanitary would remain low | Government: quantities were materially understated; correcting estimates could change pricing (economies of scale, equipment amortization), so corrective action was reasonable | Held: corrective action was reasonable and not arbitrary; cancellation upheld |
| Whether Native Green was technically eligible (GSA Schedule/GSA Advantage! availability) | American Sanitary: Native Green’s products were not on GSA Advantage! at bid time, so it was ineligible | Native Green: its GSA Schedule was modified to include products before its quote; appearance on GSA Advantage! not dispositive | Held: eligibility dispute irrelevant to reasonableness of corrective action (CO acted to correct agency requirement error) |
| Whether failure to notify American Sanitary of GAO protest prejudiced plaintiff / barred corrective action | American Sanitary: BOP violated 4 C.F.R. § 21.3(a) and lost opportunity to intervene, causing prejudice | Government: protest notice error immaterial because GAO protest was dismissed as academic after corrective action; public info available | Held: late notice was true but not dispositive; corrective action still reasonable and GAO dismissal made notice issue irrelevant |
| Whether disclosure of awarded total contract price improperly prejudiced American Sanitary and requires injunctive relief | American Sanitary: disclosure gives Native Green competitive advantage in resubmission and irreparable harm warrants injunction | Government/Native Green: total price disclosure is routine/obtainable (e.g., FOIA); re-solicitation will change estimates, limiting utility of disclosed total | Held: disclosure alone does not bar corrective action; court ordered agency to structure re-solicitation to mitigate competitive injury but denied injunction |
Key Cases Cited
- Sys. Application & Tech., Inc. v. United States, 691 F.3d 1374 (Fed. Cir.) (agency may take corrective action; courts have jurisdiction to review corrective action decisions)
- Resource Conservation Group v. United States, 597 F.3d 1238 (Fed. Cir.) (Tucker Act grants CFC bid-protest jurisdiction across procurement stages)
- Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (U.S.) (arbitrary-and-capricious standard: agency must consider important aspects and explain decisions)
- Axiom Resource Management v. United States, 564 F.3d 1374 (Fed. Cir.) (disappointed bidder must show clear and prejudicial violation of statutes/regulations)
- Honeywell, Inc. v. United States, 870 F.2d 644 (Fed. Cir.) (courts defer to rational agency procurement judgments even if court would decide differently)
- Banknote Corp. of America v. United States, 365 F.3d 1345 (Fed. Cir.) (APA §706(2)(A) is proper standard for bid-protest review)