Lead Opinion
Concurring opinion filed by Circuit Judge REYNA.
In this gоvernment contract bid protest appeal, three unsuccessful bidders challenged the decision of the United States Department of the Air Force Space Command (“Air Force”) to award a contract to the successful bidder, Exelis Services A/S (“Exelis”), for the operation and maintenance of an Air Force base in Greenland. The United States Court of Federal Claims (“Claims Court”) granted the challengers’ motions for judgment on the administrative record and enjoined the Air Force from proceeding under the contract with Exelis. The Claims Court found the award to Exelis — a wholly-owned subsidiary of a U.S.-based company — was contrary to the terms of the bid solicitation, which required that bidders “not be registered as a subsidiary of [a] foreign [i.e., non-Danish] company.” Per Aarsleff A/S v. United States,
BACKGROUND
Thule Air Base is a United States Air Force base situated in a remote area of northwestern Greenland, a largely self-governing entity of the Kingdom of Denmark (“Denmark”). Exceptions to Greenland’s self-governance include foreign policy and defense, which remain under the control of the Danish government. In 1951, the United States and Denmark entered into an agreement that led to the establishment of the Thule Air Base and provided the United States rent-free use of the land on which the base is situated. A 1991 Memorandum of Understanding between the United States and Denmark, as amended following discussions in 2008 and 2009, provides that “either [p]arty mаy award contracts to commercial enterprises for goods and services, including construction projects, in Greenland, and shall procure directly from Danish/Greenlandic sources” whenever “feasible.” Id. at 609 (citation omitted).
In 2013, the Air Force and United States Department of State (“State Department”) entered into negotiations with the Danish Ministry of Finance to consider what criteria would be used to appropriately classify an entity as “Danish/Greenlandic” for the Thule Air Base bid solicitation. Following an expression of concern by the Danish Ministry of Foreign Affairs that an eligibility determination by the Danish government could be problematic under European Union procurement regulations,
During the course of this effort, [[name redacted]], a State Department employee stationed at the U.S. Embassy in Denmark, informed the Air Force contracting officer by email that “[i]n the searchable part of the CVR [Det Central Virksom-hedsregister, i.e., the Danish central business register] there is an information point called ‘tyрe of company/virksomhedsform’ that [has] ‘subsidiary of foreign company
The Air Force issued a draft solicitation specifying, as a condition of eligibility, that bidders provide a
[corporation certificate (Selskabscertifi-kat m. oblat) verifying that your company is registered as a business in the Kingdom of Denmark. (Det Central Virksomhedsregister (CVR); Det Grpnlandske Erhervsregister (GER); Skráseting Fproya (Skrás. Nr.)) NOTE: THE REGISTERED OFFICE OF THE ENTERPRISE SHALL BE IN THE KINGDOM OF DENMARK AND SHALL NOT BE REGISTERED AS A SUBSIDIARY OF FOREIGN COMPANY.
Per Aarsleff,
When a potential bidder asked “[w]hat do you mean by ‘not be registered’?,” id. the Air Force posted the following answer, which echoed the email оf the State Department employee, [[name redacted]]: “In the searchable part of the CVR [ ] there is an information point called ‘type of company/virksomhedsform’ that has ‘subsidiary of foreign company
Four bidders — Per Aarsleff A/S (“Per Aarsleff’), Copenhagen Arctic, Exelis, and incumbent Greenland Contractors — each submitted a bid in response to the final solicitation. Exelis, a wholly-owned Danish subsidiary of United States-based Veetrus Systems Corporation (“Veetrus”), submitted the lowest bid and was awarded the contract. The three unsuccessful bidders each filed protests with the Government Accountability Office (“GAO”), asserting Exelis “was incorporated in Denmark only shortly before proposal submission and is a wholly-owned subsidiary of Excelis Systems Corporation [now known as Veetrus], a United States based company.” Per Aar-
Following the GAO decision, the three unsuccessful bidders filed separate complaints in the Claims Court, challenging the Air Force’s award of the contract to Exelis. Per Aarsleff,
On appeal, Exelis argues the Air Force “rationally determined that Exelis [] was eligible for award of the Thule [Air Base contract] under the [solicitation’s] plain and unambiguous eligibility requirements,” and that the Claims Court erred in concluding otherwise. Non-Confidential Opening Brief of Defendant-Appellant Exelis Services A/S 33 (capitalization omitted). The United States takes a similar position, arguing the Claims Court “erred by rewriting the unambiguous language of the solicitation to add a non-existent ownership requirement.” Brief for Defendant-Appellant United States (“United States Br.”) 24 (capitalization omitted). By contrast, the three unsuccessful bidders argue the Claims Court correctly interpreted the solicitation language and found that Exelis did not meet the eligibility requirements. See, e.g., Greenland Contractors Br. 24 (“The trial court properly determined that the Air Force failed to comply with the [solicitation’s] eligibility requirement.” (capitalization omitted)); Copenhagen Arctic A/S’ Confidential Principal Cross-Appeal and Response to Defendants-Appellants’ Opening Briefs (“Copenhagen Arctic Br.”) 20 (“The trial court’s decision to excise the ‘registered as’ language from the solicitation was not only correct — it was required.” (capitalization omitted)); Brief of Plaintiff-Appellee Per Aarsleff (“Per Aarsleff Br.”) 19 (“The Claims Court correctly interpreted [the solicitation] and properly held that the Air Force’s award violated the eligibility restriction.” (capitalization modified)). This court has jurisdiction over final decisions of the Claims
Disoussion
I. Standards of Review
Protests of agency procurement decisions are reviewed under the standards set forth in the Administrative Procedure Act (“APA”), see 28 U.S.C. § 1491(b)(4) (citing 5 U.S.C. §706), “by which an agency’s decision is to be set aside only if it is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,” NVT Techs., Inc. v. United States,
II. The Claims Court Erred in Its Interpretation of the Solicitation Language
The Ah’ Force issued a final solicitation, including an eligibility provision which stated:
L-3. OFFEROR ELIGIBILITY
Participation in this acquisition is limited to Danish/Greenlandic enterprises. Enterprises must possess a corporation certificate (Selskabscertifikat m. oblat) verifying the company is registered as a business in the Kingdom of Denmark. ... NOTE: THE REGISTERED OFFICE OF THE ENTERPRISE SHALL BE IN THE KINGDOM OF DENMARK AND SHALL NOT BE REGISTERED AS A SUBSIDIARY OF FOREIGN COMPANY....
Per Aarsleff,
We have previously explained the legal framework when interpretation of a term in a bid solicitation is contested:
We begin with the plain language of the document. The solicitation is ambiguous only if its language is susceptible to more than one reasonable interpretation. If the provisions of the solicitation are clear and unambiguous, they must be given their plain and ordinary meaning; we may not resort to extrinsic evidence to interpret them. Finally, we must consider the solicitation as a whole, interpreting it in a manner that harmonizes and gives reasonable meaning to all of its provisions.
Banknote Corp. of Am.,
Solicitation language “is ambiguous ... if its language is susceptible to more than one reasonable interpretation.” Id. Here, the phrase “shall not be registered as a subsidiary of a foreign company,” Per Aarsleff,
The presence of ambiguity is demonstrated by the inquiries received during the solicitation process. See Per Aarsleff (GAO),
One question and answer removed the ambiguity present in the eligibility provision of the solicitation agreement. When the Air Force was asked “ ‘What do you mean by ‘not be registered’?,” it posted a response stating “[i]n the searchable part of the CVR there is an information point called ‘type of company/virksomhedsform’ that has ‘subsidiary of foreign company’ as a possibility, so there is a way to see if the company is fully registered as Danish or acting as a foreign subsidiary in Denmark.” Id. at 612. This answer directly resolved the ambiguity, clarifying that the provision refers to whether the CVR facially indicates the company is a subsidiary of a foreign company. See J.A. 101535 (showing a drop-down menu in the CVR where registrants could select from among, e.g., “A.M.B.A.” (share company with limited liability), “Interessentskаb” (partnership) or “Filial af udenlandsk virk-somhed” (branch of a foreign company)). Because the relevant question and answer was incorporated into the final March 2014 solicitation, it is part of the final solicitation.
We have stated that “where a government solicitation contains a patent ambiguity, the government contractor has a duty to seek clarification from the government, and its failure to do so precludes acceptance of its interpretation in a subsequent action against the government.” Blue & Gold Fleet, L.P. v. United States,
III. Exelis Was Eligible Under the Terms of the Solicitation
Given that the eligibility provision, as clarified in the Air Force’s answer to a potential bidder’s question, refers to whether the CVR facially indicates the company is a subsidiary of a foreign company, Exelis was eligible. The Claims Court found, and the unsuccessful bidders do not contest,' that Exelis’s
proposal included: (1) a certificate from the Danish Business Authority certifying Exelis Services as a legally registered public limited company in Denmark with a report documenting its registration; and (2) a letter signed by a Danish bank confirming a business relationship with Exelis Services and stating that the account was satisfactorily maintained.
Per Aarsleff,
While it is true that any compаny could meet the eligibility criterion by simply registering in Denmark, the record indicates the Danish Ministry of Foreign Affairs was aware of the relative ease of corporate registration. According to an email by [[name redacted]], a State Department employee, [[the Danish government was aware of the ease of corporate registration and its relevance to the bidder eligibility criteria]]. J.A. 111631. The unsuccessful bidders cite no authority suggesting that if eligibility criteria are easily met they are invalid. Accordingly, Exelis met the disputed eligibility criterion.
IV. Copenhagen Arctic and Greenland Contractors Waived Their Objections to the Eligibility Provision
“[A] party who has the opportunity to object to the terms of a government solicitation containing a patent error and fails tо do so prior to the close of the bidding process waives its ability to raise the same objection subsequently in a [§ 1491(b)] bid protest action in the [Claims Court].” Blue & Gold Fleet,
Greenland Contractors and Copenhagen Arctic argue they did not waive their objectiоns to the eligibility provision because any ambiguity or defect in the provision was latent rather than patent. See Copenhagen Arctic Br. 36 (“The trial court’s decision that the mistake in the solicitation was latent was correct.” (capitalization omitted)); Greenland Contractors Br. 39 (“The [solicitation] defect was not patent....” (capitalization omitted)); see also Per Aarsleff Br. 35 (“The CVR’s inability to register subsidiaries was not patent.”). Whether an' ambiguity or defect is patent is an issue of law reviewed de novo. Stratos Mobile Networks USA, LLC v. United States,
Here, the ambiguity in the solicitation was patent, as reflected in the questions received by the Air Force and the two plausible interpretations indicated above. Following clarification during the question
The question then becomes whether the solicitation language, as properly interpreted in light of the questions and answers, contained a possible defect, and if so, whether the possible defect was patent or latent. A patent defect triggers the obligation to challenge the solicitation language and failure to do so generally constitutes waiver. See Bannum, Inc. v. United States,
Without resolving the issue of whether the eligibility provision is defective, we conclude any purported defect is patent, and that the failure of the unsuccessful bidders to challenge the potentially defective provision prior to the close of bidding prevents them from doing so now. See E.L. Hamm & Assocs.,
Furthermore, the record demonstrates that whether the CVR facially indicated foreign subsidiary status could have been “discovered by reasonable and customary care.” Analytical & Research Tech.,
The purpose of the waiver rule is to avoid just such after-the-fact litigation, where the issue could have been raised prior to the close of bidding. As we explained in Blue & Gold Fleet:
In the absence of a wаiver rule, a contractor with knowledge of a solicitation defect could choose to stay silent when submitting its first proposal. If its firstproposal loses to another bidder, the contractor could then come forward with the defect to restart the bidding process, perhaps with increased knowledge of its competitors. A waiver rule thus prevents contractors from taking advantage of the government and other bidders, and avoids costly after-the-fact litigation.
V. Cross-Appeals by Greenland Contractors and Copenhagen Arctic
In Greenland Contractors’ cross-appeal, it argues that “[e]ven if this [c]ourt were to find Exelis eligible to compete in this procurement, there is another basis for setting aside the award to Exelis.” Greenland Contractors Br. 56. That basis, Greenland Contractors explains, is that “the Air Force unreasonably failed to evaluate the [other bidders’] compliance with the [solicitation] requirement to maximize subcontracts from Danish and Greenlandic sources.” Id. (capitalization omitted); see also id. (citing J.A. 105279, ¶ 3.1.16).
Greenland Contractors notes that bidders were required to “‘[d]ocument and justify any exceptions’” to the requirement of maximizing procurement from Danish and Greenlandic sources. Id. at 57 (quoting J.A. 105279, ¶ 3.1.16)). It further notes that under section H-6 of the solicitation, the obligations to maximize contract-related purchases and subcontracts from Danish and Greenlandic sources and justify any exceptions were to “ ‘take[ ] precedence in the performance of th[e] contract.’ ” Id. (quoting J.A. 105227, see. H-6).
According to Greenland Contractors, the proposals of Exelis, Copenhagen Arctic, and Per Aarsleff “made clear” these bidders “would not maximize subcontracts from Danish and Greenlandic sources,” id. at 58 (capitalization omitted), and the Air Force’s failure to evaluate compliance with the solicitation requirement constitutes an arbitrary action requiring reversal, id. at 56-57. Specifically, Greenland Contractors asserts the other bidders “made clear in their proposals that they intended to rely heavily on their respective U.S.-based partners to perform significant portions of th[e] contract” and that “[n]one of these [bidders] made any effort to document or justify their use of primarily non-Danish and non-Greenlandic sources.” Id. at 58.
Copenhagen Arctic also cross-appeals, similarly asserting the Claims Court erred in failing to evaluate whether Per Aar-sleffs bid proposal satisfied the material terms of the solicitation. See Copenhagen Arctic Br. 47; see also id. at 54 (“[Per] Aarsleffs proposal flouted the material terms of the [solicitation.... ”). Copenhagen Arctic limits its cross-appeal to Per Aarsleff and does not extend its argument to the remaining two bidders. See id. at 47, 50-54.
According to Copenhagen Arctic, sections L and M of the solicitation “conditioned the acceptability of a proposal [on] demonstrating the ability -to comply with the terms of the [Performance Work Statement].” Id. at 49. Specifically, it notes that “Section 3.1.16 of the [Performance Work Statement] required all [bidders] to ‘maximize and document contract-related purchases and subcontracts from Danish and Greenlandic sources.’” Id.; see J.A. 105279. It argues Per Aarsleffs proposal “clearly did not,” Copenhagen Arctic Br.
The Claims Court correctly rejected the arguments of Greenland Contractors and Copenhagen Arctic. See Per Aar-sleff,
The Air Force did not act arbitrarily in declining to evaluate, as a condition of eligibility, whether each bidder would during the course of performance comply with these Danish/Greenlandic sourcing requirements. Each bidder agreed to comply with the requirements of paragraph 3.1.16. See Per Aarsleff,
Where a[ ] [bidder] has certified that it meets the technical requirements of a proposal, the Contracting Officer is entitled to rely on such certifiсation in determining whether to accept a bid, and the [bidder’s] potential failure to comply with the proposal requirements is ordinarily “a matter of contract administration,” which does not go to the propriety of accepting the bid.
Allied Tech. Grp., Inc. v. United States,
Allied sets forth an exception to the general rule that an agency may rely upon an offeror’s certification of compliance with a solicitation’s technical requirements. The exception states that “‘where a proposal, on its face, should lead an agency to the conclusion that [a bidder] could not and would not comply with the [applicable requirement],’ ” it “affect[s] the propriety of accepting the [bidder’s] offer.” Id. (quoting Centech Grp., Inc. v. United States,
Moreover, paragraph 3.1.16 of the solicitation contemplates exceptions to the requirement to maximize and document contract-related purchases and subcontracts from Danish and Greenlandic sources, so long as those exceptions are “document[ed] and justif[ied].” J.A. 105279. Greenland Contractors fails to explain how the face of Exelis’s proposal (or those of the other bidders) establishes that it will be unable to “document and justify” any exceptions that might arise during performance, asserting only that Exelis has not yet offered any justifications. See, e.g., Greenland Contractors Br. 58 (“None of [the other bidders] made any effort to document or justify their use of primarily non-Danish and non-Greenlandic sources.”).
In short, Greenland Contraсtors has failed to establish that the decision of the Air Force to award the contract to Exelis “ ‘lacked a rational basis,’ ” which is the relevant showing when seeking to set aside a procurement decision as arbitrary or capricious under section 706(2)(A) of the APA. Centech,
C0NCLUSION
In light of the foregoing, the Claims Court erred in “recasting” an eligibility provision for which the meaning was clarified during the question and answer period, and erred in its conclusion that any defect was latent. Because Exelis satisfied the terms of the eligibility provision as properly construed, and because Greenland Contractors has not established that Exelis’s proposal on its face should have led the Air Force to conclude Exelis could not and would not comply with the obligation to maximize subcontracts from Danish and Greenlandic sources, the Air Force did not act arbitrarily in its award of the contract to Exelis. The decision of the United States Court of Federal Claims is
REVERSED
Notes
. The Air Force's Contracting Officer explained, in his Statement of Facts, his understanding that [[confidential information redacted]]. J.A. 100673.
. "A/S” is an abbreviation for "Aktieselskab,” or Danish limited company. J.A. 32.
. In reaching its decision, the Claims Court considered two documents that were not before the Air Force when it awarded the contract to Exelis on October 31, 2014: (1) the declaration of Ambassador Jonas Bering Liis-berg, Danish Under-Secretary for Legal Affairs (Mar. 2, 2015) ("Liisberg Declaration”) (J.A. 220-31); and (2) and the Joint Statement of the United States and the Kingdom of Denmark on the Resolution of the Thule Base Maintenance Contract Acquisition Matter (Mar. 2015) ("Joint Statement”) (J.A. 690). See, e.g., Per Aarsleff,
. There appears to be no dispute that the question and answer were incorporated into the final solicitation. See, e.g., United States Br. 11 ("These questions and answers were included verbatim in the March 2014 solicitation.” (citing J.A. 105469.38&emdash;.39)); Greenland Contractors Br. 9 (“The Q&A response was also published as part of the [solicitation] and, thereby, incorporated into the [solicitation].” (citing J.A. 105469.38)).
Concurrence Opinion
concurring.
This case is the culmination of three post-award bid protests of a solicitation’s eligibility requirements, all of which should have been dismissed as untimely by the Court of Federal Claims. There is no need for this Court to make determinations of patency, latency, and ambiguity.
Per Aarsleff, Greenland, and Copenhagen knew there were unresolved questions about the solicitation’s eligibility requirements well before they submitted their proposals. Offerors questioned the Air Force about eligibility of competitors owned by non-Danish entities during the Question and Answer session, specifically raising the issue of whether a foreign-owned company could be eligible for award. The Air Force’s response did not answer this question, it merely restated the same language that question sought to have clarified.
Despite notice of uncertainty as to whether competitors owned by a Non-Danish entity would be eligible for award, none of the prospective bidders filed a bid protest before submitting their proposals. Instead, they waited until they learned that they lost the competition to an American-owned company to protest the eligibility criteria.
This Court’s decision in Blue & Gold mandates dismissal of protests like these. Blue & Gold Fleet, L.P. v. United States,
This rule furthers the Tucker Act’s statutory mandate to give due regard to the need for expeditious resolution of legal actions. 28 U.S.C. § 1491(b)(3); Blue & Gold,
The disappointed bidders in this case knew there were unresolved questions about the solicitation’s eligibility requirement prior to submitting their proposals, but they failed to protest that issue until after award. As such, their protests of the eligibility requirement were untimely and should have been dismissed by the Court of Federal Claims.
We need not determine whether the solicitation was in fact ambiguous or defective. Nor is there need to determine whether any defect or ambiguity was patent or latent, because the offerors in this case knew about the unresolved questions regarding eligibility of competitors owned by non-Danish entities prior to submitting their proposals.
By analyzing ambiguity, latency, and pa-tency, the majority unnecessarily creates precedential analysis that is likely to cause unpredictable second and third order effects in future bid protest timeliness determinations and contract interpretations. While I concur with the Majority’s decision to reverse, I do so for a different reason.
. See Blue & Gold,