81 Fed. Cl. 300 | Fed. Cl. | 2008
This matter is before the Court on Plaintiffs Motion For Summary Judgment On The Administrative Record, as well as Defendant’s Motion To Dismiss Or, In The Alternative, For Judgment Upon The Administrative Record. Plaintiff has also filed a Motion To Supplement The Administrative Record. Plaintiff contests an allegedly improper sole source procurement by the Department of Homeland Security (“DHS”) for financial systems application software. The specific solicitation identified by plaintiff, Solicitation No. HSHQDC-08-Q-00018 for “Transformation and Systems Consolidation,” is for software development and integration support services to support DHS in its transition to the alleged improperly-selected financial system. Plaintiff requests that this Court prohibit defendant from proceeding with this or any related solicitation until DHS conducts a competitive procurement in accordance with the law to select financial systems application software.
Plaintiff contends that defendant’s selection of financial systems application software via a brand name justification violated the Competition in Contracting Act (“CICA”), 41 U.S.C. § 253(a) (2008), because defendant failed to obtain full and open competition through use of competitive procedures. Plaintiff further asserts that defendant’s Brand Name Justification violates various provisions of the Federal Acquisition Regulation (“FAR”). Finally, plaintiff avers that defendant’s selection of software systems is arbitrary, capricious, and an abuse of discretion.
Defendant, on the other hand, argues that plaintiff has not identified a solicitation or procurement over which this Court would have jurisdiction. Specifically, defendant avers that its selection of financial systems application software was an agency decision to standardize its software, not a procurement. Additionally, defendant asserts that the solicitation identified by plaintiff is a task order request issued under an existing contract, and is thus precluded from this Court’s bid protest jurisdiction by the Federal Acquisition Streamlining Act of 1994 (“FASA”). See 41 U.S.C. § 253j (2008). Defendant further contends that plaintiff lacks standing to challenge the award of a task order because it is not an interested party. Moreover, defendant asserts that the solicitation for software development and integration support services is neither arbitrary nor capricious.
1. Background
The Department of Homeland Security was created in 2003 by a merger of 22 separate federal agencies. Currently, five different financial systems application software solutions are in use among the 22 components: (1) Savantage’s Federal Financial Management System (“FFMS”)
In an effort to integrate DHS’s financial systems, DHS began implementation of the Electronically Managing Enterprise Resources for Government Effectiveness and Efficiency (“eMerge”) project in 2003. Subsequently, DHS abandoned the eMerge project because it failed to build a system that provided value beyond what was already in place at DHS. DHS then proposed instead to consolidate its financial systems application software by “migrating” DHS components to a shared software baseline in the Transformation and Systems Consolidation (“TASC”) initiative.
On July 26, 2007, a DHS contracting officer signed a “Brand Name Justification” document, which indicated that DHS had selected the Oracle and SAP financial management systems as the baseline for its TASC initia
On August 22, 2007, DHS issued Solicitation No. HSHQDC-07-Q-00294 for services to manage the migration process to the Oracle and SAP systems. The solicitation was open to prospective offerors from functional category four contractors under DHS’s Enterprise Acquisition Gateway for Leading-Edge Solutions (“EAGLE”) contracts, which are Indefinite Delivery/Indefinite Quantity (“IDIQ”) contracts.
On November 20, 2007, DHS issued the TASC Solicitation No. HSHQDC08-Q-00018 as a task order request under the EAGLE contract, functional category four. The purpose of this solicitation was the same as that issued on August 22, 2007: to provide support in pursuing the TASC initiative to migrate DHS’s financial management software systems to Oracle and SAP. It is this TASC solicitation that plaintiff protests in the instant action, on the basis that the underlying decision to use Oracle and SAP systems as the TASC baseline should have been made through competition.
Plaintiff Savantage Financial Services (“Savantage”) filed this bid protest with the United States Court of Federal Claims on January 11, 2008. Plaintiff seeks injunctive and declaratory relief prohibiting DHS from proceeding with the TASC solicitation or any related solicitation or task order without first complying with applicable statutory and regulatory requirements in its selection of a financial systems application software migration candidate for its TASC initiative.
2. Discussion
A. Standard of Review
When considering a Motion to Dismiss pursuant to RCFC 12(b)(1), “[t]he court must accept as true the facts alleged in the complaint and must construe such facts in the light most favorable to the pleader.” Patton v. United States, 64 Fed.Cl. 768, 773 (2005) (citing Reynolds v. Army & Air Force Exch. Serv., 846 F.2d 746, 747 (Fed.Cir.1988)). When the court’s subject matter jurisdiction is called into question, the plaintiff “bears the burden of establishing subject matter jurisdiction by a preponderance of the evidence.” Id. (citing Reynolds, 846 F.2d at 748).
“[A] Motion for Judgment on the Administrative Record, pursuant to RCFC 52.1, is similar but not identical to a Motion for Summary Judgment, pursuant to RCFC 56.” Info. Scis. Corp. v. United States, 73 Fed.Cl. 70, 97-98 (2006) (citing Bannum, Inc. v. United States, 404 F.3d 1346, 1355 (Fed.Cir.2005)). Summary judgment is appropriate when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. See RCFC 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Jay v. Sec’y, DHHS, 998 F.2d 979, 982 (Fed.Cir.1993). In contrast, under Rule 52.1, the court must weigh the evidence when considering a Motion for Judgment on the Administrative Record. See Bannum, 404 F.3d at 1355-56. RCFC 52.1 is “designed to provide for a trial on a paper record, allowing fact-finding by the trial court.” Id. at 1356.
This Court reviews bid protest actions under the standards of the Administrative Procedure Act (“APA”). See 28 U.S.C. § 1491(b)(l)-(4) (2008). The Court of Federal Claims has explained that “[ajgency procurement actions should be set aside when they are ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,’ or “without observance of procedure required by law.’ ” KSD, Inc. v. United States, 72 Fed.Cl. 236, 250 (2006) (citing 5 U.S.C. § 706(2)(A), (2)(D) (2000); Bannum, 404 F.3d at 1351). In determining whether defendant has acted arbitrarily and capriciously, the court must consider four factors:
B. Jurisdiction
The Tucker Act, as modified by the Administrative Dispute Resolution Act of 1996 (“ADRA”), Pub.L. No. 104-320, 110 Stat. 3870 (1996), grants this Court jurisdiction “to render judgment on an action by an interested party objecting to a solicitation by a Federal agency for bids or proposals for a proposed contract or to a proposed award or the award of a contract or any alleged violation of statute or regulation in connection with a procurement or a proposed procurement.” 28 U.S.C. § 1491(b)(1) (2008) (emphasis added). Significant to our inquiry here, the “phrase ‘in connection with’ is very sweeping in scope. As long as a statute has a connection to a procurement proposal, an alleged violation suffices to supply jurisdiction.” RAMCOR Services Group, Inc. v. United States, 185 F.3d 1286, 1289 (Fed.Cir.1999). Moreover, the Court of Federal Claims has found jurisdiction proper not only where an actual procurement is being challenged, but also where the claim is that a government agency is “procuring goods and services through a process that should have been the subject of competition; and that the failure to compete the procurement is in violation of law.” CCL, Inc. v. United States, 39 Fed.Cl. 780, 789 (1997).
1. Was DHS’s decision to migrate to Oracle and SAP a procurement?
Congress has defined the term “procurement” to encompass “all stages of the process of acquiring property or services, beginning with the process for determining a need for property or services and ending with contract completion and closeout.” 41 U.S.C, § 403(2) (2008) (cited in OTI Am., Inc. v. United States, 68 Fed.Cl. 108, 114 (2005)); see also Pub. Warehousing Co. K.S.C. v. Def. Supply Ctr. Phila., 489 F.Supp.2d 30, 38 (D.D.C.2007). Here, plaintiff asserts that DHS’s Brand Name Justification is a “procurement” as defined by Congress because it reflects DHS’s determination of a need to consolidate its financial management software systems, and its selection of the Oracle and SAP systems to meet that need.
Plaintiff also directs the Court’s attention to CCL, 39 Fed.Cl. 780. There, the Department of Defense (“DOD”) was restructuring its IT systems. When plaintiffs IT systems contract expired, DOD expanded an existing contract with another IT systems provider to encompass the work under plaintiffs expired contract. The Court of Federal Claims found jurisdiction to be proper because the government was “procuring goods and services through a process that should have been the subject of competition.” Id. at 789. Plaintiff asserts that DHS’s decision to expand the Oracle and SAP contracts was a procurement of goods and services like that in CCL, and therefore should have been the subject of competition.
Defendant, on the other hand, argues that the decision to use the Oracle and SAP financial management software systems is not one which may be challenged under this Court’s bid protest jurisdiction because it was an agency standardization decision, not a procurement.
There, Ezenia! was one of several contractors that provided commercial software to the Army. The Army subsequently made a standardization decision “through a competitive process to select the Adobe product, a product best suited to fulfill its needs.” Id. (emphasis added). The court denied Eze-nia!’s challenge to the Army’s competitively-made decision, stating that such a “challenge would only be proper in this Court if the Army had chosen to standardize its software with the actual intention of knocking out other parties, for a sole-source procurement.”
Plaintiff counters defendant’s argument by asserting that standardization decisions are, in fact, procurement decisions, which fall within the statutory definition of “procurement,” as discussed above.
The Court finds plaintiffs arguments persuasive. Defendant’s contention that the Court lacks jurisdiction is premised solely on the recent decision in Ezenia!. Nevertheless, the circumstances in Ezenia! are not so similar to the present case as defendant would have the Court believe. Significantly, unlike in Ezenia!, defendant has not identified any competitive process through which DHS decided to standardize to Oracle and SAP financial systems application software. The failure to make that determination through a competitive process is exactly what Savantage is protesting.
The circumstances in the CCL case, however, are remarkably similar to the circumstances here. Like DOD’s decision to expand an IT systems contract in CCL, DHS has decided to expand its systems contracts with Oracle and SAP to encompass the work which is currently shared by five financial systems application software solutions. That expansion of work fits squarely within the congressional definition of “procurement” because it is an acquisition of additional property or services from Oracle and SAP. During oral arguments, defendant pointed out that no additional software licenses have actually been purchased.
C. Standing
Under the Tucker Act, bid protest actions may be brought before this Court by
Plaintiff asserts that it has standing to challenge DHS’s procurement of the Oracle and SAP financial software systems because the Oracle and SAP software systems will replace Savantage’s system, which is currently used by various DHS agencies.
Defendant contests plaintiffs standing on the basis that Savantage is not an actual or prospective bidder on the TASC solicitation, or an offeror whose direct economic interest would be affected by its award.
D. Statutory and Regulatory Violations
1. CICA
CICA requires that federal government agencies solicit and procure bids through “full and open competitive procedures.” 41 U.S.C. § 253(a) (2008). There are, however, two ways in which an agency can exempt itself from the full and open competition requirements. See Corel Corp. v. United States, 165 F.Supp.2d 12, 19 (D.D.C.2001).
First, “CICA itself contains several relatively narrow exceptions which are listed in section 253(e).” Id. Relevant for our purposes is the “sole source” exception, which permits an agency to forego full and open competition when “the property or services needed by the executive agency are available from only one responsible source and no
Alternatively, an agency may excuse itself from the requirements of CICA by procuring goods or services “in accordance with another federal procurement statute.” Id. FASA is the federal procurement statute relevant to our inquiry here. FASA was intended “to streamline and simplify federal acquisition procedures.” Id. at 20 (internal citations omitted). One way in which it accomplishes that goal is through “task or delivery order contracts.” Id. (citing 48 C.F.R. § § 16.501-1, 16.501-2). Task or delivery order contracts “essentially create a menu of goods or services of an indefinite quantity that can be ordered by an agency on an as needed basis.” Id. See also 41 U.S.C. § 253k; 48 C.F.R. § 16.501-1. FASA excludes orders placed under task or delivery orders from this Court’s bid protest jurisdiction, so long as “the task or delivery order contract itself has been obtained through full and open competition,” unless an order is protested “on the ground that the order increases the scope, period or maximum value of the contract under which the order is issued.” Id. (citing 41 U.S.C. § 253j(d)).
2. Sole Source Procurement
Plaintiff contends that DHS violated the provisions of CICA because the Brand Name Justification failed to meet the requirements necessary to support a valid sole source procurement.
Additionally, plaintiff asserts that, even if a sole source justification were proper, DHS’s Brand Name Justification failed to comply with the applicable law.
Defendant argues that the Justification document is not a brand name justification for a sole source procurement, but rather is misleadingly titled and irrelevant.
Defendant, however, titled the document “Brand Name Justification,” and under Section (4) of the document, offered a rationale/justification for selecting the two [Oracle and SAP] baselines.
Moreover, plaintiff legitimately argues that other responsible sources for compliant financial management software systems exist. The Justification states that [* * *].
3. FASA
Defendant argues additionally that there is no violation of CICA because the TASC solicitation is a task order request issued under DHS’s EAGLE contract in compliance with FASA, and is therefore exempted from the full and open competition requirements of CICA.
Defendant is correct that the TASC solicitation is identified as a task order issued under DHS’s EAGLE contract. If plaintiff were challenging the TASC solicitation, this Court would indeed lack jurisdiction under FASA. Nevertheless, plaintiff is not challenging the TASC solicitation. Plaintiff is challenging DHS’s decision to use Oracle and SAP software systems as the baseline for its TASC initiative. Defendant’s arguments regarding the TASC solicitation are therefore irrelevant.
E. Was DHS’s Justification Arbitrary and Capricious?
Plaintiff argues that DHS’s Justification was arbitrary and capricious, an abuse of discretion, and contrary to law. First, plaintiff contends that the reasons described in the Justification, Business Case, and Alternatives Analysis for eliminating Savantage’s system from consideration as one of the two systems in the shared baseline are inaccurate and wrong.
Defendant, again, focuses its arguments on the TASC solicitation under the EAGLE contracts, and asserts that the TASC solicitation for software development and integration support services was not arbitrary nor capricious.
Plaintiff has persuasively argued that the Justification for awarding sole source contracts to Oracle and SAP was arbitrary and capricious. First, and most significant, the sole source procurement violated the provisions of CICA requiring full and open competition. See KSD, 72 Fed.Cl. at 250 (stating that agency procurement actions should be set aside when they are not in accordance with law). Moreover, plaintiff asserts that there was no reasonable basis for the decision because all of the reasons cited by DHS in the Justification as supporting its decision to use Oracle and SAP as the TASC baseline are equally applicable to the Savantage system.
F. Supplementing the Administrative Record
Plaintiff filed a Motion To Supplement The Administrative Record on February 27, 2007. Specifically, plaintiff has requested that the administrative record be supplemented with the documents contained in Plaintiffs Appendix In Support Of Its Motion For Preliminary Injunction And Application For Temporary Restraining Order
the agency has to exercise some judgment in furnishing the court with the relevant documents. In order to preserve a meaningful judicial review, the parties must be able to suggest the need for other evidence, and possibly limited discovery, aimed at determining, for example, whether other materials were considered, or whether the record provides an adequate explanation to the protester or the court as to the basis of the agency action. It follows that discovery as well as the breadth of the court’s review has to be tailored in each case.
Cubic II, 37 Fed.Cl. at 350. “[Allowing the agency to retroactively delineate the scope of review may preclude the ‘substantial inquiry’ and ‘thorough, probing, in-depth review’ the court must perform to determine whether the agency’s action was arbitrary and capricious.” Mike Hooks, 39 Fed.Cl. at 156 (internal citations omitted).
Therefore, in order to preserve meaningful judicial review, the court has permitted the parties to supplement the administrative record in limited circumstances:
(1) when agency action is not adequately explained in the record before the court;
(2) when the agency failed to consider factors which are relevant to its final decision;
(3) when an agency considered evidence which it failed to include in the record; (4) when a case is so complex that a court needs more evidence to enable it to understand the issues clearly; (5) in eases where evidence arising after the agency action shows whether the decision was correct or not; (6) in cases where agencies are sued for a failure to take action; (7) in eases arising under the National Environmental Policy Act; and (8) in cases where relief is at issue, especially at the preliminary injunction stage.
Cubic Applications, Inc. v. United States, 37 Fed.Cl. 339, 342 (1997) (Cubic I) (citing Esch v. Yeutter, 876 F.2d 976, 991 (D.C.Cir.1989)) (emphasis added). In cases where the government is being sued for inaction, meaning for failure to conduct a competition, the Court of Federal Claims has stated that “[tjhere is less reason to presume that the record assembled by the agency is presumptively complete.” CCL, 39 Fed.Cl. at 791.
Defendant continues to myopically rely on its lone argument that DHS’s decision to use Oracle and SAP software is not a procurement, and therefore asserts that the Cubic I exception for cases where an agency allegedly failed to take action does not apply here. Nevertheless, the basis of plaintiffs suit is unquestionably DHS’s alleged failure to use competitive processes in selecting financial systems application software for its TASC baseline. Defendant argues further that the declarations of Michael Handberg are not properly part of the administrative record because they were generated solely for purposes of this litigation. Defendant cites to Knowledge Connections, Inc. v. United States, 79 Fed.Cl. 750, 760-61 (2007), where the Court of Federal Claims failed to allow the administrative record to be supplemented with two declarations which were not before the agency when it was making its procurement determination. Knowledge Connections did not, however, involve an alleged failure of the government agency to conduct a competition. Additionally, defendant contends that the declarations and Exhibits 4 and 6 are irrelevant because they do not relate to the procurement of services in the TASC solicitation. Again, defendant misses the point: it is not the TASC solicitation that is at issue; rather, it is the sole source procurement of financial systems application software.
3. Conclusion
For the foregoing reasons, Plaintiffs Motion To Supplement The Administrative Record is ALLOWED. In addition, Plaintiffs Motion For Summary Judgment On The Administrative Record is ALLOWED, and Defendant’s Motion To Dismiss is DENIED. The Department of Homeland Security is therefore enjoined from proceeding with Solicitation No. HSHQDC-08-Q-00018, or any related solicitation until DHS conducts a competitive procurement in accordance with the law to select financial management systems application software. The Clerk shall enter judgment in accordance with this Opinion. No costs.
IT IS SO ORDERED.
. It is not the procurement of support services that plaintiff contends is arbitrary and capricious, however; it is DHS's selection of financial systems application software that plaintiff contests.
. Savantage’s FFMS is an Oracle-based commercial off-the-shelf software system. The DHS owns a paid-up, department-wide license for Sa-vantage's FFMS, and its software is currently used by six DHS agencies.
. Admin. R., at 746-47.
. The EAGLE program is comprised of 53 IDIQ contracts within five functional categories. Sa-vantage competed unsuccessfully to become an EAGLE vendor in categories three and four.
. Pl.’s Mot. for Summ. J. on the Admin. R., at 14.
. Def.’s Mot. to Dismiss, at 9. Notably, defendant stated during oral arguments that "just because an agency makes a determination as to its needs, it does not mean that a ... procurement has occurred. Until the agency crosses that threshold [by purchasing] the particular product that a protester wants to provide, we don’t really know whether ... any ... kind of procurement will occur.’’ Tr. at 49:1-8. This is clearly at odds with the statutory definition of “procurement.”
. Plaintiff argues that defendant's Brand Name Justification proves that defendant made the decision to standardize to the Oracle and SAP systems with the intention of knocking out other parties currently providing financial systems application software to DHS. See Pl.’s Opp’n to Def.’s Mot. to Dismiss, at 4-5.
. Pl.’s Opp’n to Def.'s Mot. to Dismiss, at 5-6.
. Pl.’s Opp’n to Def.’s Mot. to Dismiss, at 5.
. Tr. at 17:6-17.
. Tr. at 44:6-14, 45:19-21.
. Tr. at 50:4-6.
. Tr. at 45:15-16.
. Pl.'s Mot. for Summ. J. on the Admin. R., at 11.
. Pl.’s Mot. for Summ. J. on the Admin. R., at 12.
. Def.’s Mot. to Dismiss, at 16.
. Pl.’s Mot. for Summ. J. on the Admin. R., at 5.
. Defendant attempts to argue that plaintiff would likely be ineligible to compete because a competition for financial systems application software would probably be conducted as a task order. Mere speculation, however, cannot divest plaintiff of standing at this juncture. See Tr. at 51:2-13, 53:2-4.
. Compl., at 6; Pl.’s Mot. for Summ. J. on the Admin. R., at 15-16.
. Pl.’s Mot. for Summ. J. on the Admin. R., at 19.
. Pl.’s Mot. for Summ. J. on the Admin. R., at 21-23.
. Def.'s Mot. to Dismiss, at 21.
. Def.’s Mot. to Dismiss, at 21.
. Def.’s Mot. to Dismiss, at 22.
. Admin. R., at 746.
. Admin. R., at 747.
. Admin. R., at 746.
. Def.’s Mot. to Dismiss, at 12.
. Def.’s Mot. to Dismiss, at 13.
. Pl.'s Mot. for Summ. J. on the Admin. R., at 24.
. Pl.’s Mot. for Summ. J. on the Admin. R., at 25.
. Pl.’s Mot. for Summ. J. on the Admin. R., at 26-30.
. Def.’s Mot. to Dismiss, at 23.
. Pl.’s Mot. for Summ. J. on the Admin. R., at 25.
. During a telephonic conference held on January 14, 2008, the Court agreed to rule on the merits of this case expeditiously. Therefore, plaintiff stated that it would not pursue its Motion for Preliminary Injunction And Application For Temporary Restraining Order, and defendant agreed not to take any action concerning the TASC solicitation until a decision was issued by the Court.
. PL's Mot. to Supplement the Admin. R., at 3-4.
. This opinion is being issued redacted. Defendant submitted redactions in accordance with the court’s order of March 17, 2008.