Dorado Services, Inc. v. United States
128 Fed. Cl. 375
| Fed. Cl. | 2016Background
- The Air Force issued a HUBZone-set-aside RFP for waste collection; Dorado and GEO bid; Dorado received the award on October 29, 2015.
- GEO filed a HUBZone status protest with SBA alleging Dorado did not meet the 35% HUBZone-residency requirement at offer or award.
- SBA requested payroll and residency documentation; Dorado produced payrolls, driver’s licenses, voter records, leases, utility bills, and declarations for claimed HUBZone-resident employees.
- The HUBZone Director initially sustained the protest and decertified Dorado; the AA/GCBD vacated and remanded for fuller explanation and records; on remand the Director again sustained the protest and the AA/GCBD affirmed.
- SBA concluded Dorado either lacked acceptable documentation for 12 claimed HUBZone residents or those employees lived in a census tract whose redesignation expired on October 1, 2015, leaving Dorado below the 35% threshold.
- Dorado sued in the Court of Federal Claims; the court denied the government’s motion to dismiss, then denied Dorado’s motions and granted the government judgment on the administrative record, finding SBA’s decision sustained.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Court has bid-protest jurisdiction over an awardee already performing | Dorado: SBA decertification is a procurement action; award/performance start does not divest jurisdiction | Gov: A contractor performing lacks standing; once performance begins procurement is complete | Court: Jurisdiction exists; key inquiry is whether the claim concerns procurement (here SBA decertification) not contract administration — standing satisfied |
| Whether SBA correctly counted employees at time of award | Dorado: SBA improperly excluded individuals not listed on the single payroll period; employees who worked 40+ hours in October should count | SBA: Used payroll for pay period including award and month totals; even assuming broader count, alternative residency analysis still fails Dorado | Court: Adopted AA/GCBD alternative rationale; treated all who worked 40+ hours in October as employees for analysis, but ruled outcome unchanged |
| Whether SBA reasonably determined which claimed employees resided in HUBZones at award | Dorado: Provided driver’s licenses, voter records, other docs and relied on SBA HUBZone maps; argues some records were ignored and maps were misleading | SBA: Residency governed by regulations (180-day/voter test); census tract redesignation expired Oct 1, 2015; SBA must follow statutory/HUD designations; some proofs insufficient | Court: SBA reasonably excluded 12 employees — four for insufficient proofs and eight because their census tract’s redesignation expired — and Dorado was not prejudiced |
| Whether agency record should be supplemented with Dorado’s extra documents | Dorado: Payroll for Nov 7, 2015 pay period and a 2010 proposed decertification letter bear on employee counts | SBA/Gov: Documents were not before SBA during decision; supplementation unnecessary | Court: Denied supplementation; review confined to administrative record absent showing extra-record evidence necessary for effective review |
Key Cases Cited
- Sys. Application & Techs., Inc. v. United States, 691 F.3d 1374 (Fed. Cir. 2012) (section 1491(b)(1) grants broad bid protest jurisdiction and awardee status does not automatically defeat jurisdiction)
- CGI Fed., Inc. v. United States, 779 F.3d 1346 (Fed. Cir. 2015) (an interested party must have a direct economic interest affected by the award)
- Myers Investigative & Sec. Servs., Inc. v. United States, 275 F.3d 1366 (Fed. Cir. 2002) (standing requires prejudice/competitive injury)
- RCD Cleaning Serv., Inc. v. United States, 97 Fed. Cl. 582 (Fed. Cl. 2011) (SBA decertification challenges fall within bid protest jurisdiction)
- Bannum, Inc. v. United States, 404 F.3d 1346 (Fed. Cir. 2005) (administrative-record review under RCFC 52.1; trial-on-the-record procedure)
- Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto Ins. Co., 463 U.S. 29 (U.S. 1983) (arbitrary-and-capricious standard requires rational connection between facts and agency action)
- Axiom Res. Mgmt., Inc. v. United States, 564 F.3d 1374 (Fed. Cir. 2009) (court generally confines review to the administrative record; supplementation allowed only in narrow circumstances)
- Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324 (Fed. Cir. 2001) (agency must provide coherent, reasonable explanation of its exercise of discretion)
- RAMCOR Servs. Grp., Inc. v. United States, 185 F.3d 1286 (Fed. Cir. 1999) (statute’s jurisdictional grant is sweeping)
- Weeks Marine, Inc. v. United States, 575 F.3d 1352 (Fed. Cir. 2009) (competitive injury standard for standing)