Caci, Inc.-Federal v. United States
67f4th1145
Fed. Cir.2023Background
- The Army solicited proposals for a Next Generation Load Device–Medium (NGLD‑M) and required a minimum acceptable rating in each technical subfactor; deficiencies render a proposal unawardable.
- CACI’s initial proposal lacked two‑factor authentication and received an unacceptable technical/risk rating but was allowed to submit a final proposal because only minor revisions were expected.
- CACI’s final proposal added two‑factor authentication using username/password plus a USB dongle; the Army assigned three deficiencies: (1) CACI failed to provide the dongle’s measurements (raising a size noncompliance question), and (2–3) the dongle would occupy the device’s sole USB port, preventing required data distribution/receiving functionality.
- The Army awarded contracts to SNC and GDMS. CACI filed a bid protest in the Court of Federal Claims challenging the technical deficiencies.
- SNC and the government, for the first time in litigation, argued CACI had an unwaivable organizational conflict of interest (OCI) based on prior work by a former CACI employee (SETA work), so CACI lacked statutory standing as an “interested party.” The contracting officer later submitted a declaration concluding CACI had an unmitigable OCI.
- The Claims Court found (a) CACI lacked standing due to the OCI and (b) alternatively sustained the Army’s technical deficiencies. The Federal Circuit held the Claims Court erred by treating statutory standing as jurisdictional and by conducting a de novo OCI determination, but affirmed on the merits because the size deficiency was reasonable.
Issues
| Issue | CACI’s Argument | Government/SNC’s Argument | Held |
|---|---|---|---|
| Whether statutory "interested‑party" standing is jurisdictional and whether the Claims Court could treat standing as jurisdictional | Statutory standing is a non‑jurisdictional issue and the court should address the merits | Standing (interested‑party) is a threshold jurisdictional question that defeats the protest if CACI had an unwaivable OCI | Statutory standing is not jurisdictional; the Claims Court erred treating it as such (Lexmark controls) |
| Whether the Claims Court may conduct a de novo OCI determination when the contracting officer did not decide OCI issues | Court should not decide OCI de novo; contracting officer procedures under the FAR must be respected and agency should make initial OCI findings | OCI made by the contracting officer (via declaration) or by court review of the record supports dismissing for lack of standing | Claims Court erred in de novo factual determination of OCI; OCI determinations are primarily for the contracting officer and reviewed under arbitrary and capricious standard; remand usually required absent Chenery exception |
| Whether Army reasonably assigned a technical deficiency for failing to include dongle measurements (size noncompliance) | Dongle is an accessory/standalone cable not subject to the operational‑hardware size limit; solicitation ambiguous and should be construed against the government | Dongle is required to perform NGLD‑M functions (required to operate device) and thus is operational hardware; failing to provide measurements made compliance unclear | Army reasonably found dongle was operational hardware and that missing measurements created a deficiency; single deficiency made proposal unawardable — affirmed |
| Whether Army engaged in disparate treatment by not assigning a size deficiency to another offeror | Army treated offerors differently; other offeror also omitted measurements | Other offeror’s solution was materially different (a cartridge in built housing) and possibly did not affect device dimensions; not substantively indistinguishable | No proof of substantively indistinguishable treatment; disparate‑evaluation claim fails |
Key Cases Cited
- Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118 (statutory standing/zone‑of‑interests is not jurisdictional)
- Acetris Health, LLC v. United States, 949 F.3d 719 (Fed. Cir.) (distinguishing statutory standing from Article III standing)
- Info. Tech. & Applications Corp. v. United States, 316 F.3d 1312 (Fed. Cir.) (definition of “interested party”/substantial‑chance test)
- Digitalis Educ. Sols., Inc. v. United States, 664 F.3d 1380 (Fed. Cir.) (‘‘substantial chance’’ standard for direct economic interest)
- Axiom Res. Mgmt., Inc. v. United States, 564 F.3d 1374 (Fed. Cir.) (Claims Court erred by de novo OCI review and supplementing the administrative record)
- Oracle Am., Inc. v. United States, 975 F.3d 1279 (Fed. Cir.) (Chenery remand exceptions and when remand is required)
- Bannum, Inc. v. United States, 404 F.3d 1346 (Fed. Cir.) (standard of review for bid protest — arbitrary and capricious)