Laboratory Corporation of America Holdings v. United States
116 Fed. Cl. 643
Fed. Cl.2014Background
- VA issued RFQ seeking laboratory testing services at five NY VA medical centers for a 2014 base year + 2015 option year; offerors were to price 1,567 specific test types on a BPA Price Schedule using FY2014 estimated utilization.
- Award was to be made on a best-value basis with three technical subfactors (Capability, Interface Compatibility, Customer Support), past performance, and price; the RFQ stated non-price factors combined were significantly more important than price.
- No vendor’s FSS covered all 1,567 tests; offerors therefore submitted mixes of FSS-covered tests and open-market (non‑FSS) tests. The VA later asked offerors to identify which tests were on their FSS contracts.
- The SSEB’s technical ratings yielded overall “Good” for both LabCorp (incumbent) and Quest; VA evaluated price using only the subset of tests listed on each offeror’s FSS (different sets and counts for each offeror) and selected Quest.
- Quest’s price submission contained computational errors that under‑stated its total; the VA neither corrected nor accounted for those errors. After award the VA allowed Quest indefinite time to complete interface work with VistA.
- LabCorp protested; the Court concluded the VA used an unstated evaluation criterion (number of FSS test types), performed an irrational “apples and oranges” price comparison, failed to perform or document a meaningful best-value tradeoff, and enjoined performance of the BPA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether VA applied an unstated evaluation criterion in rating "Capability" | LabCorp: VA based Capability primarily on the number of test types on offerors’ FSS, a criterion not disclosed in RFQ | Gov.: Parties should have known limitations from FAR Part 8 context; challenge is untimely | Court: VA used an unstated criterion; evaluation inconsistent with RFQ; held for LabCorp |
| Whether price evaluation complied with solicitation | LabCorp: RFQ required pricing/evaluation of all 1,567 tests; VA unlawfully evaluated only FSS subsets, producing an "apples and oranges" comparison | Gov.: In a FAR Part 8 procurement "total price" reasonably refers to FSS items only | Court: Price evaluation violated RFQ and was arbitrary; comparing different test subsets was irrational |
| Whether VA accounted for Quest’s pricing errors | LabCorp: Quest had computational errors materially understating price; VA failed to detect/adjust | Gov.: (Implicitly) no correction required or was appropriate | Court: Errors existed, VA did not account for them; agency lacked accurate price information |
| Whether VA conducted/documented a best-value tradeoff and whether award decision rational | LabCorp: VA failed to do a meaningful tradeoff and post-hoc addendum is a rationalization; inconsistent SSDs | Gov.: SSD said tradeoff done; addendum clarified decision and equivalence | Court: SSDs contradicted; no documented rational tradeoff; post-hoc addendum insufficient; award arbitrary and capricious |
Key Cases Cited
- Advanced Data Concepts, Inc. v. United States, 216 F.3d 1054 (Fed. Cir. 2000) (standard for deference to agency procurement judgments)
- Bowman Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. 281 (U.S. 1974) (agency action must have rational basis)
- Honeywell, Inc. v. United States, 870 F.2d 644 (Fed. Cir. 1989) (courts defer where agency has reasonable basis)
- Ala. Aircraft Indus., Inc.-Birmingham v. United States, 586 F.3d 1372 (Fed. Cir. 2009) (arbitrary and capricious where agency fails to consider important aspects)
- Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308 (Fed. Cir. 2007) (timeliness / pre-award challenge rules)
- AshBritt, Inc. v. United States, 87 Fed. Cl. 344 (Fed. Cl. 2009) (agency must evaluate under criteria stated in solicitation)
- Wackenhut Servs., Inc. v. United States, 85 Fed. Cl. 273 (Fed. Cl. 2008) (agency discretion in evaluation but must follow solicitation)
- L-3 Commc’ns EOTech, Inc. v. United States, 83 Fed. Cl. 643 (Fed. Cl. 2008) (evaluations must be consistent with solicitation)
- Timken U.S. Corp. v. United States, 421 F.3d 1350 (Fed. Cir. 2005) (agency must adequately articulate procurement decisions)
- Statistica, Inc. v. Christopher, 102 F.3d 1577 (Fed. Cir. 1996) (prejudice standard in bid protests)
- Bannum, Inc. v. United States, 404 F.3d 1346 (Fed. Cir. 2005) (prejudice requirement for injunctive relief)