Rlb Contracting, Inc. v. United States
118 Fed. Cl. 750
Fed. Cl.
2014

Background

  • USDA NRCS solicited a firm-fixed-price contract (AG-7217-S-14-0007) for Lake Lery shoreline and marsh restoration in Louisiana, with separate line items (including Item 7: Marsh Creation Dredging) and an estimated value > $10M.
  • Contract was set aside under NAICS code 237990 (Other Heavy and Civil Engineering Construction) with a SBA size standard of $33.5M; a dredging exception (lower size standard and 40% small-dredger performance rule) applied to certain dredging-dominated procurements.
  • Offerors (RLB and Inland) appealed the NAICS classification to SBA OHA, arguing dredging constituted the primary contract component (85–95% by plaintiff’s estimate); USDA/OHA concluded the procurement was general construction, not primarily dredging.
  • RLB filed a pre-award bid protest in the Court of Federal Claims after declining to bid; the court reviewed the administrative record and oral argument was held; court found agency and OHA actions irrational for failing to analyze relative value of contract components and enjoined award pending reconsideration.
  • Key factual dispute: whether Item 7 (and related items) account for the greatest percentage of contract value (agency relied on task descriptions and an inaccurate labor-hours analysis; later internal cost estimates and award data indicated Item 7 constituted a majority share of cost).

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Whether the dredging exception to NAICS 237990 applies (i.e., whether dredging is the primary component) The solicitation’s item pricing and technical requirements show dredging (Item 7 and related items) comprise the greatest percentage of contract value; agency/OHA failed to meaningfully consider relative value The solicitation as a whole requires substantial non-dredging construction (embankments, geotextile, surveys); methods are left to offerors, so dredging is not necessarily primary Court held USDA and OHA acted irrationally; they failed to give primary consideration to the relative value of components and must reconsider, treating the most valuable item as primary (if Item 7 is most valuable, dredging exception likely applies)
Whether agency/OHA lawfully relied on qualitative description rather than quantitative cost comparison RLB: Regulations require primary consideration of relative value/percentage of contract value; qualitative descriptions are insufficient USDA/OHA: Reading the solicitation as a whole supports general construction classification; a quantitative analysis was unnecessary Court: Regulations require quantitative analysis of component value; reliance on overall project description without such analysis was arbitrary and capricious
Admissibility/reliance on post-decision cost analyses and internal estimates RLB: Internal government cost estimates and prior award pricing (showing Item 7 as majority cost) were part of the contract history and should inform classification Govt: Some cost analyses were not before the CO/OHA and should not control; the solicitation text is controlling Court deemed those agency-created documents part of the contract record for reconsideration and noted the agency’s failure to account for them made its decision irrational
Appropriateness of injunctive relief to prevent award RLB: Will suffer irreparable harm (loss of opportunity to compete under smaller-size standard); public interest favors correct NAICS application Govt: Economic harm alone is insufficient; delay risks erosion, resurvey, funding, and undermines SBA scheme Court granted injunction: plaintiff showed success on merits, irreparable harm (lost competitive opportunity), balance of harms and public interest favor injunction

Key Cases Cited

  • InGenesis, Inc. v. United States, 104 Fed. Cl. 43 (Fed. Cl. 2013) (SBA OHA decisions reviewed for rational basis under APA)
  • Ceres Environmental Services, Inc. v. United States, 52 Fed. Cl. 23 (Fed. Cl. 2002) (deference to SBA in NAICS/classification decisions but set-aside rulings reviewable)
  • Red River Services Corp. v. United States, 60 Fed. Cl. 532 (Fed. Cl. 2004) (agency must give primary consideration to relative value of procurement components)
  • PGBA, LLC v. United States, 389 F.3d 1219 (Fed. Cir. 2004) (standards for injunctive relief in bid protests)
  • Lab. Corp. of Am. Holdings v. United States, 116 Fed. Cl. 643 (Fed. Cl. 2014) (public interest favors correct application of procurement law)
  • Mori Associates, Inc. v. United States, 102 Fed. Cl. 503 (Fed. Cl. 2011) (lost opportunity to compete can support injunctive relief)
  • OAQ Corp. v. United States, 49 Fed. Cl. 478 (Fed. Cl. 2001) (economic injury and injunction analysis in procurement protests)
  • Seattle Sec. Servs., Inc. v. United States, 45 Fed. Cl. 560 (Fed. Cl. 2000) (lost profits/opportunity as injunctive harm)
  • eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (U.S. 2006) (traditional equitable test for injunctive relief applies)
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