RAYMOND EXPRESS INTERNATIONAL, LLC v. United States
1:14-cv-01179
Fed. Cl.Mar 3, 2015Background
- DeCA issued Solicitation No. HDEC09-14-R-0002 to procure fresh fruit & vegetables (FFV) for Defense Commissary Agency commissaries in the Pacific Area (South Korea, Japan, Guam) using an F.O.B. Destination model (contractor bears overseas transport). The solicitation removed an incumbent transportation subsidy that had been paid from appropriated funds.
- REI, the incumbent small-business contractor (which previously received the transportation subsidy), protested repeatedly (agency, GAO, then Court), arguing the subsidy removal violated statutes/regulations and that DeCA’s market research and price-evaluation scheme were deficient or ambiguous.
- GAO sustained limited protest grounds: it found ambiguities in the solicitation’s price-evaluation methodology (how Patron Savings Discount (PSD) and snapshot-in-time prices would be used), recommended clarifications and revised proposals, and otherwise denied REI’s statutory and market-research challenges.
- DeCA amended the solicitation (Amendment 0006) to define PRICE as Minimum Percentage of Patron Savings, changed snapshot period, clarified that snapshot HVCI unit prices could be used for reasonableness/realism but would not be the basis for award, and invited revised proposals.
- The Court reviewed the administrative record under the APA arbitrary-and-capricious standard and granted judgment to the government, holding (inter alia) that DeCA permissibly eliminated the subsidy, conducted adequate market research, the solicitation’s availability rules were rational, and the amended price-evaluation scheme was lawful and rational.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Legality of removing transportation subsidy (10 U.S.C. §§ 2483/2484 and DoD guidance) | REI: statute/regulations require appropriated funds to pay second-destination transport; removing subsidy violates law and DeCA cannot shift costs to contractor/commissary prices | DeCA: statutory/regulatory definitions distinguish first vs. second destination transport; under F.O.B. Destination model government takes title at commissary (no second-destination transport), so subsidy removal is lawful | Court: Agrees with DeCA and GAO; solicitation does not violate §§ 2483/2484 or DoD guidance — subsidy removal permitted |
| Adequacy of market research (FAR Part 10) | REI: DeCA failed to analyze availability, price, quality, safety in Pacific Area; market research was superficial and irrational | DeCA: market research was appropriate to circumstances, identified capable sources, and agency experience + solicitations/offerors support rational conclusion | Court: Market research was rationally sufficient and not arbitrary; GAO's concurrence persuasive |
| Ambiguity: treatment of "unavailable" produce in price evaluation (HVCI availability) | REI: Solicitation ambiguous/contradictory about when HVCI are "not available" and how that affects pricing/evaluation | DeCA: Provisions read together are clear — offerors must price all HVCI; locally unavailable items (by snapshot) are excluded from local-comparison PSD calculations; CO may rule on global unavailability exceptions | Court: Terms unambiguous as amended; scheme rationally accounts for local/global unavailability |
| Price-evaluation methodology (use of PSD vs. snapshot prices; baseline pricing) | REI: Methodology fails to produce meaningful basis for price reasonableness; absence of a government baseline market-basket creates unequal treatment and arbitrary results | DeCA: Amended scheme focuses on minimum PSD as comparative metric; snapshot-in-time unit prices used only for price-reasonableness/realism testing; agency will have offerors' snapshot assumptions so comparisons are workable | Court: Amendment 0006 cured GAO-identified ambiguities; PSD-focused evaluation plus snapshot checks is rational, satisfies statutory/regulatory requirements, and is not arbitrary/capricious |
Key Cases Cited
- Info. Tech. & Applications Corp. v. United States, 316 F.3d 1312 (Fed. Cir.) (standing requirement for bid protesters)
- Weeks Marine, Inc. v. United States, 575 F.3d 1352 (Fed. Cir.) (what constitutes non-trivial competitive injury in pre-award protest)
- Banknote Corp. of Am. v. United States, 365 F.3d 1345 (Fed. Cir.) (APA arbitrary-and-capricious standard governs bid protests)
- Bannum, Inc. v. United States, 404 F.3d 1346 (Fed. Cir.) (RCFC 52.1 review of administrative record)
- Honeywell, Inc. v. United States, 870 F.2d 644 (Fed. Cir.) (deference where agency action has reasonable basis)
- Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (U.S.) (agency action arbitrary and capricious when it fails to consider important aspects)