STARRY ASSOCIATES, INC v. United States, 1:16-cv-00044

Background

HHS PSC issued an RFQ (set aside for small business, lowest-priced technically acceptable) for UFMS operational support; Starry was the incumbent and proprietary developer/licensor of two systems (MACCS, GovNet-NG).
Intellizant, the low-priced offeror, was initially found technically acceptable by the SSA despite one TEP member rating it unacceptable; award to Intellizant followed and Starry protested to GAO.
HHS took corrective action, reevaluated proposals (second TEP review with no contemporaneous individual evaluation sheets), again awarded to Intellizant, and Starry filed a second GAO protest alleging unreasonable evaluation and bias by John Davis (PSC Accounting Services Division Manager).
GAO sustained the protest in part (directing reevaluation) but found bias allegations “without merit.” Shortly thereafter HHS announced cancellation of the solicitation, citing that two proprietary systems were covered by separate license/support agreements and would be bundled instead.
Starry protested GAO’s denial of the cancellation claim; GAO upheld cancellation. Starry sued in the Court of Federal Claims seeking supplementation of the administrative record with four depositions to investigate alleged bias by Davis and others; HHS opposed but submitted two additional documents for inclusion.
The Court found credible evidence suggesting Davis’s improper influence despite his claimed recusal and granted limited discovery (depositions of Davis, Joy, Ellis, and a TEP member), adding the two government documents to the AR.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the record should be supplemented with depositions to investigate alleged agency bias	Starry: record has gaps and credible indications of bias by John Davis that cannot be resolved without depositions	U.S.: post-hoc declarations suffice; record is adequate; remand preferable to discovery	Court: granted depositions — credible allegations of bias and discovery likely to produce relevant evidence
Whether plaintiff made the necessary threshold showing to investigate bias	Starry: demonstrated motive and conduct hard to explain absent bad faith (Davis’s recusal then involvement; TEP selection; cancellation after adverse GAO decision)	U.S.: presumption of regularity; plaintiff has not met clear-and-convincing standard	Court: plaintiff met the lower threshold for discovery likelihood of uncovering proof to overcome presumption; depositions warranted
Whether the government may add post-hoc declarations in lieu of discovery	Starry: after-the-fact declarations are insufficient and untrustworthy given bias allegations	U.S.: offered two documents (email and CO declaration) to fill gaps and supplement AR	Court: admitted the two documents to AR but found them insufficient alone and allowed depositions
Whether remand is the appropriate remedy instead of discovery	U.S.: remand to the agency to supply further explanations	Starry: remand inadequate because bias allegations may taint any agency supplement	Court: declined remand — remand unlikely to produce candid contemporaneous evidence and agency already had opportunities to supplement; allowed limited discovery

Key Cases Cited

Axiom Res. Mgmt., Inc. v. United States, 564 F.3d 1374 (Fed. Cir.) (administrative record ordinarily limits review; supplementation only when necessary for effective review)
Am-Pro Protective Agency, Inc. v. United States, 281 F.3d 1234 (Fed. Cir.) (presumption that government officials act in good faith)
Beta Analytics Int’l v. United States, 61 Fed. Cl. 223 (Fed. Cl.) (threshold for investigating alleged bad faith and recognition that bad-faith evidence is rarely in the AR)
L-3 Commc’ns Integrated Sys., L.P. v. United States, 91 Fed. Cl. 347 (Fed. Cl.) (standard for supplementation/discovery in procurement protests)
Int’l Res. Recovery, Inc. v. United States, 61 Fed. Cl. 38 (Fed. Cl.) (courts may consider extra-record evidence when assessing bias or bad faith)
InfoReliance Corp. v. United States, 118 Fed. Cl. 744 (Fed. Cl.) (supplementation warranted where record lacks evidence of bad faith or omitted relied-upon information)
Galen Med. Assocs., Inc. v. United States, 369 F.3d 1324 (Fed. Cir.) (clear-and-convincing standard required to overcome presumption of regularity)