Per Aarsleff A/S v. United States
2016 U.S. App. LEXIS 12711
| Fed. Cir. | 2016Background
- Thule Air Base (Greenland) solicitation required bidders be registered in the Danish Business Register (CVR) and stated the registered office "shall not be registered as a subsidiary of [a] foreign company." The Air Force incorporated a Q&A saying the CVR has a field indicating "subsidiary of foreign company."
- Exelis Services A/S, a Danish-incorporated wholly owned subsidiary of a U.S. company, submitted the low bid with the required Danish registration certificate and a Danish bank letter and was awarded the contract.
- Three disappointed bidders (Per Aarsleff, Copenhagen Arctic, Greenland Contractors) protested, arguing Exelis was ineligible because it was a Danish subsidiary of a foreign company and the CVR cannot actually indicate foreign-subsidiary status. GAO denied the protests; the Court of Federal Claims granted relief and enjoined performance.
- The Claims Court construed the solicitation to bar Danish subsidiaries of foreign entities and found the solicitation defective/ambiguous, applying contra proferentem to favor protesters; it considered extra-record foreign-government declarations.
- On appeal the Federal Circuit reversed: it held the solicitation was clarified by the incorporated Q&A to mean the CVR must facially indicate subsidiary-of-foreign status, Exelis’s CVR did not so indicate (and it submitted the required documents), and the Air Force reasonably accepted Exelis’s certification.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1. Ambiguity/interpretation of "shall not be registered as a subsidiary of foreign company" | Protesters: the phrase should be read to bar any Danish subsidiary of a foreign entity from eligibility. | Exelis / U.S.: language is plain or clarified by Q&A to refer only to CVR facial registration indicating "subsidiary of foreign company." | The phrase was ambiguous but the Q&A (incorporated into the solicitation) clarified it to mean whether the CVR facially indicates foreign-subsidiary status. |
| 2. Whether Exelis met eligibility | Protesters: Exelis is a Danish subsidiary of a U.S. parent and thus ineligible under the solicitation's intent and reasonable reading. | Exelis/U.S.: Exelis submitted the required Danish registration and bank letter; nothing in the CVR facially showed foreign-subsidiary status, so Exelis met the (clarified) criteria. | Exelis satisfied the eligibility requirement as properly construed; award to Exelis not arbitrary. |
| 3. Waiver / timeliness of protest of solicitation terms | Protesters: solicitation was defective/latent; Claims Court properly considered challenge post-award. | U.S.: bidders had notice/questions during Q&A and failed to protest before bid close; they waived objections under Blue & Gold. | Majority: ambiguity was patent and bidders waived objections by not challenging pre-award; concurrence stressed Blue & Gold timeliness grounds as dispositive. |
| 4. Whether award should be set aside because agency failed to evaluate compliance with local-sourcing requirement (maximize Danish/Greenlandic subcontracts) | Greenland Contractors/Copenhagen Arctic: Air Force failed to evaluate bidders' ability to maximize local subcontracts; proposals on their face show heavy reliance on U.S. partners. | Exelis/U.S.: sourcing/maximization are performance requirements, bidders certified compliance, and agency may rely on certifications unless proposal on its face shows inability to comply. | Court: H-6 / PWS §3.1.16 are performance, not eligibility, requirements; no facial showing that bidders could not comply, so agency's award was not arbitrary. |
Key Cases Cited
- NVT Techs., Inc. v. United States, 370 F.3d 1153 (Fed. Cir.) (APA arbitrary and capricious standard for procurement review)
- Banknote Corp. of Am. v. United States, 365 F.3d 1345 (Fed. Cir.) (solicitation interpretation: plain meaning, ambiguity rules, consider solicitation as whole)
- Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308 (Fed. Cir.) (pre-award protest timeliness rule; duty to challenge patent defects before bid close)
- Bannum, Inc. v. United States, 404 F.3d 1346 (Fed. Cir.) (de novo review of solicitation interpretation in §1491(b) actions)
- E.L. Hamm & Assocs., Inc. v. England, 379 F.3d 1334 (Fed. Cir.) (definition of patent defect and bidder's duty to seek clarification)
- Centech Grp., Inc. v. United States, 554 F.3d 1029 (Fed. Cir.) (agency may rely on offeror certifications unless proposal shows inability to comply)
- Allied Tech. Grp., Inc. v. United States, 649 F.3d 1320 (Fed. Cir.) (reliance on bidder certifications and the exception when proposal on its face shows noncompliance)
- PAI Corp. v. United States, 614 F.3d 1347 (Fed. Cir.) (review standard: sustain agency action unless lacking rational basis)