Starry Associates, Inc. v. United States
131 Fed. Cl. 208
| Fed. Cl. | 2017Background
- HHS issued an RFQ (Nov. 2014) for UFMS-related support; Starry licensed two proprietary systems (MACCS, GovNet-NG) used by HHS. Three offerors bid; Intellizant was lowest-priced and evaluated for technical acceptability.
- The Technical Evaluation Panel (TEP) had split views; two members rated Intellizant acceptable while one dissented for missing elements and staffing concerns. The Contracting Officer/SSA nonetheless awarded to Intellizant.
- Starry filed a GAO protest (Dec. 2014). HHS promised corrective action and later represented it would reevaluate proposals; but the agency did not conduct a meaningful re‑evaluation and instead sought to bolster the record.
- After a GAO protest sustained parts of Starry’s challenge (Aug. 2015), HHS cancelled the solicitation (Sept. 2015), citing alleged redundancies with license agreements—a rationale the court later found unsupported.
- Starry sued in the Court of Federal Claims (Jan. 2016). The court allowed depositions, found pervasive procurement flaws and an unsupported cancellation decision, enjoined cancellation, and later granted Starry’s EAJA fee motion in part, finding the government not substantially justified and awarding a special-factor rate adjustment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the government was "substantially justified" in agency conduct and litigation | HHS conduct (misleading corrective action, sham reevaluation, unsupported cancellation) was unreasonable; government not substantially justified | DOJ relied reasonably on agency representations and GAO’s denial of the third protest; litigation defense therefore justified | Government not substantially justified for the entirety of conduct and litigation; EAJA eligibility satisfied |
| Whether a "special factor" or COLA justifies rates above $125/hr under EAJA | The agency’s unusual, egregious misconduct and the litigation burden justify awarding fees at actual billed rates (special factor); alternatively, COLA applies | If any upward adjustment, limited to COLA (CPI) to $192.09; special factor unjustified absent scarcity of specialized counsel | Court awarded special-factor adjustment — permitting recovery at counsel’s billed rates (in addition to COLA); found misconduct sufficiently unique and severe |
| Whether record supported agency cancellation rationale (standing for fee award rationale) | Cancellation rationale (redundancies) was contrived and unsupported; misrepresentations to GAO and court warrant fee recovery | GAO accepted the rationale and denial of protest supports reasonableness of cancellation decision | Court found cancellation arbitrary and capricious and agency misrepresentations undermined reasonableness; supports EAJA award |
Key Cases Cited
- Doty v. United States, 71 F.3d 384 (Fed. Cir.) (government bears burden to prove substantial justification)
- Renee v. Duncan, 686 F.3d 1002 (9th Cir. 2012) (definition of substantial justification as reasonable in law and fact)
- Comm’r, I.N.S. v. Jean, 496 U.S. 154 (1990) (court must consider entirety of government conduct for EAJA)
- Pierce v. Underwood, 487 U.S. 552 (1988) (limits and examples of "special factor" under EAJA)
- Chui v. United States, 948 F.2d 711 (Fed. Cir.) (discretionary nature of EAJA awards)
- Carmichael v. United States, 70 Fed. Cl. 81 (Fed. Cl.) (burden on claimant to establish entitlement to special-factor adjustment)