Owens & Minor Distribution, Inc. v. United States
21-1341
| Fed. Cl. | Jun 22, 2021Background
- This bid protest concerns the VA's MSPV 2.0 procurement and a planned transfer of MSPV requirements from the Department of Veterans Affairs (VA) to the Defense Logistics Agency (DLA). Parties include plaintiff Owens & Minor (O&M), intervenor-plaintiff Concordance, intervenor-defendants Medline and Cardinal, and the United States.
- O&M challenges exclusion from price discussions (Count I, Category 3) and alleges the RFP is materially inaccurate given the planned transfer (Count II, Category 2). Medline and Concordance challenge the lawfulness of the VA-to-DLA transfer (Category 1).
- After merits briefing began, the United States moved for a voluntary remand of Categories 1 and 2 (seeking to exclude Category 3), admitted in court that the administrative record does not support the transfer, and later represented the VA cancelled the planned transfer. The government filed its remand motion very near briefing deadlines and a holiday weekend.
- The government proposed a limited remand that would exclude VISN 6 and VISN 20 (parts already transferred or live under DLA contracts); it indicated it would proceed with those transfers regardless of remand. Plaintiffs disputed the remand’s scope and adequacy.
- The Court applied the three-part test (as used in Keltner) evaluating (1) whether the agency provided a compelling justification for remand, (2) whether finality was outweighed by that justification, and (3) whether the remand scope was appropriate; the Court found the government failed all three prongs and denied the remand. The Court treated the government’s in-court statements as a binding judicial admission that the transfer lacked a rational basis in the record.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Appropriateness of voluntary remand of Categories 1 & 2 | Remand is unnecessary; if sought, it must be complete and accompanied by a stay of procurement | Remand is warranted for Categories 1 & 2 to allow agency reconsideration; exclude Category 3 and VISN 6/20 | Denied: government failed to show a compelling justification, finality outweighed remand, and remand scope was inadequate |
| Lawfulness of VA-to-DLA transfer (Category 1) | Transfer lacks adequate administrative-record support and is arbitrary and capricious | Initially defended transfer but conceded record lacks support; asked for remand instead | Court treated DOJ’s in-court concession as a judicial admission that the transfer was unsupported and therefore unlawful; rejected remand as unnecessary to address that error |
| Scope of proposed remand (excluding VISN 6 and 20) | A partial remand would leave related claims (e.g., price discussions) unresolved and could produce piecemeal, unfair outcomes | Government argued VISN 6/20 already transferred or live and should be excluded from remand | Court found limiting remand to exclude VISN 6/20 inappropriate because those transfers were part of the same arbitrary action and partial remand risked injustice |
| O&M’s exclusion from price discussions (Category 3) | O&M seeks judicial resolution and wants either full remand with stay or continued merits briefing so it may seek injunctive relief | Government sought to sever this claim and litigate it while remanding others | Remand denied; Category 3 remains for merits litigation (no remand relief ordered) |
Key Cases Cited
- SKF USA Inc. v. United States, 254 F.3d 1022 (Fed. Cir. 2001) (remand to agency is usually appropriate when the agency's concerns are substantial and legitimate, but the reviewing court has discretion)
- Keltner v. United States, 148 Fed. Cl. 552 (Fed. Cl. 2020) (articulating a three-part test for assessing voluntary remand: compelling justification, finality, and appropriate scope)
- Rahman v. United States, 149 Fed. Cl. 685 (Fed. Cl. 2020) (government remand motions must be supported and carefully analyzed, not granted perfunctorily)
- John McShain, Inc. v. United States, 375 F.2d 829 (Ct. Cl. 1967) (judicial admissions bind the party making them)
- Reliable Contracting Group, LLC v. Dep’t of Veterans Affairs, 779 F.3d 1329 (Fed. Cir. 2015) (judicial admissions withdraw a fact from issue)
- Star Fruits S.N.C. v. United States, 393 F.3d 1277 (Fed. Cir. 2005) (abuse of discretion occurs when agency action lacks substantial evidence or rational basis)
- Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (U.S. 1983) (agency action must show a rational connection between facts found and decision made; arbitrary and capricious standard)