Per Aarsleff A/S v. United States
121 Fed. Cl. 603
| Fed. Cl. | 2015Background
- The Air Force issued RFP FA2523-12-R-0006 for operation/maintenance of Thule Air Base, limited to "Danish/Greenlandic enterprises" and incorporating an international understanding to maximize Danish/Greenlandic sourcing.
- The RFP required a corporate certificate (CVR) and a Danish bank letter and stated: "THE REGISTERED OFFICE OF THE ENTERPRISE SHALL BE IN THE KINGDOM OF DENMARK AND SHALL NOT BE REGISTERED AS A SUBSIDIARY OF FOREIGN COMPANY."
- Exelis Services, a Danish-registered A/S wholly owned by U.S. parent Vectrus, submitted the lowest-priced technically acceptable proposal and received the award. The Air Force was aware Exelis was a foreign-owned subsidiary.
- During the procurement the Air Force relied on (incorrect) guidance that the Danish CVR could show whether a company was registered "as a subsidiary of a foreign company;" the Danish Business Authority later informed the Air Force the CVR does not record owners.
- Protestors (Per Aarsleff, Greenland Contractors, Copenhagen Arctic) challenged the award at GAO (unsuccessful) and then in the Court of Federal Claims, arguing the award violated the RFP eligibility restriction (and related evaluation failures). The Court consolidated the three suits.
- The court found the eligibility language defective as drafted, construed the RFP to exclude Danish subsidiaries of foreign companies, held the Air Force’s award to Exelis Services arbitrary and capricious, set aside the award, and enjoined performance.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Meaning of eligibility clause: whether RFP barred foreign-owned subsidiaries | RFP intended to exclude subsidiaries of foreign companies; the registration wording was a mistaken means to achieve that goal | Government/Exelis: clause concerned registration only (i.e., whether entity was registered in CVR as a subsidiary or branch); Exelis claims a translation error (branch v. subsidiary) | Court construes clause to exclude Danish subsidiaries of foreign companies (excising "registered as" because CVR could not show subsidiary status); award to Exelis (a foreign-owned subsidiary) violated material RFP term |
| Waiver / patent vs latent defect in solicitation wording | Plaintiffs: error was latent; Air Force misled offerors about CVR capability so failure to protest pre-award does not bar relief | Govt/Exelis: mistake patent; offerors should have identified the defect pre-award and waived challenge | Court: defect was latent (Air Force affirmatively misrepresented CVR capability; discovery of impossibility occurred mid-procurement); waiver doctrine not applied |
| Whether Section H-6 / PWS 3.1.16 required pre-award evaluation of use/justification of foreign subcontractors | Plaintiffs (Greenland Contractors, Copenhagen Arctic): agency failed to enforce/evaluate requirement to "maximize" Danish/Greenlandic subcontracts and to justify exceptions, so offers relying on U.S. partners should have been found unacceptable | Govt/Per Aarsleff/Exelis: those clauses are post-award performance standards, not evaluation or eligibility criteria; evaluating them would introduce unstated criteria | Court: H-6 and PWS 3.1.16 are post-award performance requirements (products focus) and did not mandate disqualification absent facial evidence of noncompliance; no relief on this ground |
| Jurisdictional/treaty bar and standing/prejudice for relief | Plaintiffs: court can interpret RFP and underlying international agreements as interpretive aid; claim not barred by 28 U.S.C. § 1502; plaintiffs had standing and prejudice | Government: § 1502 ("treaty bar") precludes court from deciding claims that depend on treaties; Greenland Contractors (lowest chance) lacks standing; any prejudice not shown | Court: § 1502 not a bar because claims do not seek to enforce treaty terms directly; plaintiffs (including Greenland Contractors) have standing and showed prejudice because proper application of eligibility would have given them substantial chance to win |
Key Cases Cited
- Blue & Gold Fleet v. United States, 492 F.3d 1308 (Fed. Cir.) (waiver/patent ambiguity doctrine in procurement challenges)
- Centech Group v. United States, 554 F.3d 1029 (Fed. Cir.) (materiality of solicitation terms and agency’s obligation to assess compliance with subcontracting limitations)
- Motor Vehicle Mfrs. Ass'n v. State Farm, 463 U.S. 29 (U.S. 1983) (arbitrary and capricious standard of review under APA)
- Weld v. United States, 127 U.S. 51 (U.S. 1888) (statute barring claims "growing out of or dependent upon any treaty")
- Hyperion, Inc. v. United States, 115 Fed. Cl. 541 (Fed. Cl.) (prejudice and standing in LPTA procurements where multiple offerors fail mandatory requirements)