GOVCIO, LLC v. United States
1:25-cv-00809
| Fed. Cl. | Aug 18, 2025Background
- The IRS awarded a sole-source “Scanning as a Service” (SCaaS) bridge task order to Iron Mountain, bypassing competitive procurement by invoking an "urgent and compelling need" tied to a recent Executive Order mandating digital payments.
- Plaintiffs GovCIO and 22nd Century, both prior participants in pilot digitalization programs, protested the non-competitive award in the Court of Federal Claims, arguing inadequacy of the justification for skipping competition.
- The IRS had already been engaged in digitalization efforts for years and had planned a competitive solicitation (DaaS) to replace the bridge contract, but awarded the bridge to Iron Mountain while awaiting completion.
- The Agency’s justification in the Administrative Record failed to explain how the Executive Order mandating digital payments translated into an urgent need to digitize incoming tax documents via sole-source contract.
- After considering briefing and oral argument, the Court found the Agency's Limited Sources Justification inadequately explained the link between the Executive Order and the sole-source urgency claim.
- The Court remanded the matter back to the Agency, without vacating the award, for 30 days to allow correction of the record; performance under the existing contract may continue in the interim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing (Article III & Statutory) | Plaintiffs have redressable injury and could have competed for award | Plaintiffs lack injury or could not meet requirements | Plaintiffs have both Article III & statutory standing |
| Rational Basis for Urgency in Sole-Source Proc. | IRS’s LSJ lacks rational connection between Exec. Order and SCaaS urgent need | Executive Order accelerated digital need, thus urgent & compelling exception met | LSJ failed to adequately explain urgency link; remand for fuller agency explanation |
| Appropriateness of Injunction Against Performance | Injunction should issue to prevent performance while issues resolved | Less drastic remedy available, performance interruption costly | Remand without injunction; performance continues to avoid taxpayer cost/disruption |
| Adequacy of Administrative Record | Motions to complete/augment necessary to resolve relevant issues | Record as developed sufficient, additional materials not needed | Motions to complete/augment the record denied as moot |
Key Cases Cited
- Bannum, Inc. v. United States, 404 F.3d 1346 (Fed. Cir. 2005) (sets forth bid protest review standard: rational basis and prejudice)
- DynCorp Int’l, LLC v. United States, 10 F.4th 1300 (Fed. Cir. 2021) (bidder must show procurement error and prejudice)
- Dell Fed. Sys., L.P. v. United States, 906 F.3d 982 (Fed. Cir. 2018) (review is whether contracting agency provided coherent, reasonable rationale)
- Bowen v. Am. Hosp. Ass’n, 476 U.S. 610 (1986) (agency actions presumed regular)
- Overton Park, Inc. v. Volpe, 401 U.S. 402 (1971) (reviewing courts cannot substitute own judgment for agency’s; must defer if rational on record)
- Weeks Marine, Inc. v. United States, 575 F.3d 1352 (Fed. Cir. 2009) (court does not second-guess agency if rational basis exists)
- Honeywell, Inc. v. United States, 870 F.2d 644 (Fed. Cir. 1989) (same principle of deference to agency on procurement)
- Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983) (agency must explain the basis for its decision)
- Monsanto Co. v. Geertson Seed Farms, 561 U.S. 139 (2010) (injunctive relief is improper where a less drastic remedy suffices)
- Florida Power & Light Co. v. Lorion, 470 U.S. 729 (1985) (remand is proper where agency’s reasoning not fully explained on record)