Tinton Falls Lodging Realty, LLC v. United States
2015 U.S. App. LEXIS 15567
| Fed. Cir. | 2015Background
- The Navy (MSC) issued a total small-business set-aside solicitation (NAICS 721110) to provide lodging and transportation for CIVMAR trainees near MSC Training Center, requiring a primary hotel, overflow hotels, and daily transport coordination.
- MSC received multiple proposals; initial proposals were found technically unacceptable, bidders revised, and Mali’s revised bid was selected as lowest-priced, technically acceptable.
- SBA Area Office found Mali (and several related hotel entities) affiliated with Hotels Unlimited and therefore other-than-small; Mali’s disqualification made DMC the next eligible awardee.
- Tinton Falls filed a size protest alleging DMC would subcontract most lodging (≈80% of value) and thus be an ostensible subcontractor situation; SBA Area Office and SBA-OHA concluded DMC would perform the primary and vital requirement (coordination/management) and therefore qualified as small.
- Tinton Falls sued in the Court of Federal Claims seeking relief; that court upheld SBA-OHA. On appeal the Federal Circuit reviewed standing and whether the SBA-OHA had a rational basis for treating the contract’s primary and vital requirements as coordinated lodging/transportation management rather than pure hotel-room provision.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing — whether Tinton Falls is an interested party prejudiced by award | Tinton Falls argued it has a substantial chance to compete on a rebid if DMC is disqualified, so it is prejudiced. | Government/DMC argued Tinton Falls is other-than-small so cannot show a substantial chance; thus lacks standing. | Court held Tinton Falls did not clearly err in showing prejudice/standing because a realistic possibility existed that rebid would be unrestricted and Tinton Falls could compete. |
| Merits — proper identification of the contract’s “primary and vital” requirements | Tinton Falls argued the primary and vital requirement is lodging provision (hotel rooms) — not management — so DMC would be an ostensible subcontractor and ineligible as a small business. | SBA/MSC/DMC argued the solicitation requires ongoing coordination and management of fluctuating room and transport needs (single point of contact, logs, scheduling), making management the primary and vital requirement. | Court held SBA-OHA had a rational basis to find the primary and vital requirement was coordination/management of lodging and transportation; thus the ostensible subcontractor rule did not disqualify DMC. |
Key Cases Cited
- CMS Contract Mgmt. Serv. v. Mass. Hous. Fin. Agency, 745 F.3d 1379 (Fed. Cir.) (standard of review for Claims Court legal determinations and factual clear-error review)
- Glenn Def. Marine (ASIA), PTE Ltd. v. United States, 720 F.3d 901 (Fed. Cir.) (review of judgment on the administrative record de novo)
- Weeks Marine, Inc. v. United States, 575 F.3d 1352 (Fed. Cir.) (standing under 28 U.S.C. § 1491(b)(1) and procurement-review principles)
- Savantage Fin. Servs., Inc. v. United States, 595 F.3d 1282 (Fed. Cir.) (deferential rational-basis review of procurement decisions)
- Ala. Aircraft Indus., Inc.—Birmingham v. United States, 586 F.3d 1372 (Fed. Cir.) (administrative action set-aside standards; citation for State Farm standard)
- Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (U.S.) (standard for arbitrary and capricious review)
- Info. Tech. & Applications Corp. v. United States, 316 F.3d 1312 (Fed. Cir.) (interested-party and prejudice requirements)
- Myers Investigative & Sec. Servs., Inc. v. United States, 275 F.3d 1366 (Fed. Cir.) (what constitutes a "substantial chance" for prejudice)
- Labatt Food Serv., Inc. v. United States, 577 F.3d 1375 (Fed. Cir.) (standing is reviewed de novo)
- Bannum, Inc. v. United States, 404 F.3d 1346 (Fed. Cir.) (factual-review principles for administrative-record judgment)
- Impresa Construzioni Geom. Domenico Garufi v. United States, 288 F.3d 1324 (Fed. Cir.) (rebid theory: protester has standing if successful protest would obligate rebid and protester could compete)