Weeks Marine, Inc. v. U.S.

Decision Date10 August 2009
Docket NumberNo. 2008-5034.,2008-5034.
PartiesWEEKS MARINE, INC., Plaintiff-Appellee, v. UNITED STATES, Defendant-Appellant.
CourtU.S. Court of Appeals — Federal Circuit

Michael H. Payne, Payne Hackenbracht & Sullivan, of Fort Washington, Pennsylvania, argued for plaintiff-appellee.

L. Misha Preheim, Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellant. With him on the brief were Jeanne E. Davidson, Director, and Harold D. Lester, Jr., Assistant Director. Of counsel on the brief was Thomas J. Warren, CPT, JA, Office of the Chief Counsel, Assistant Counsel for Procurement Law and Contract Disputes, United States Army Corps of Engineers, of Washington, DC.

Before RADER, SCHALL, and DYK, Circuit Judges.

Opinion for the court filed by Circuit Judge SCHALL, Dissenting opinion filed by Circuit Judge DYK.

SCHALL, Circuit Judge.

The United States appeals the November 16, 2007 amended final judgment of the United States Court of Federal Claims, which granted Weeks Marine, Inc. ("Weeks") a permanent injunction after sustaining its pre-award protest. In sustaining Weeks's protest, the court determined that the Army Corps of Engineers's ("Corps's") solicitation for indefinite duration indefinite quantity ("IDIQ") multiple-award task order contracts ("MATOCs") for dredging was contrary to 10 U.S.C. § 2304(a), and lacked a rational basis. The court also determined that the solicitation was contrary to a requirement of the Corps's Engineering Federal Acquisition Regulation Supplement ("EFARS"). Weeks Marine, Inc. v. United States, No. 07-700C (Fed.Cl. Nov. 16, 2007) ("Amended Final Judgment"). For the reasons set forth below, we hold that the solicitation does not violate § 2304(a) and does not lack a rational basis.1 We therefore reverse the Amended Final Judgment insofar as it enjoins the Corps from proceeding with the solicitation. In all other respects the Amended Final Judgment is affirmed.

BACKGROUND
I.

Weeks lodged its protest in response to the Corps's solicitation relating to maintenance dredging and shore protection work in the Corps's South Atlantic Division. The South Atlantic Division encompasses all or part of six states: North Carolina, South Carolina, Georgia, Florida, Alabama, and Mississippi. Currently, the Division has district offices in Wilmington, North Carolina; Charleston, South Carolina; Savannah, Georgia; Jacksonville, Florida; and Mobile, Alabama.

Maintenance dredging removes material (for example, silt and sand) from the bottom of a navigable waterway, in order to facilitate movement of commercial, pleasure, and military vessels. Shore protection restores land along the shoreline that has been damaged by erosion or weather events by redepositing material (for example, sand) along the water's edge.

Up until now, the Corps has awarded dredging contracts in the South Atlantic Division on a district basis through the use of competitive sealed bidding.2 For each project, the district in which the work is to take place prepares an invitation for bids ("IFB") and receives bids from multiple dredging contractors. After bid opening, the contract is awarded solely on the basis of price and price-related factors. Each district office within the South Atlantic Division assesses its own dredging needs and issues its own IFBs; there is little coordination between the districts.

The MATOC solicitation represents a significant departure from current Corps practice. First, the solicitation employs a negotiated, rather than sealed bidding, format. Second, pursuant to the solicitation, multiple contractors will be awarded indefinite duration indefinite quantity multiple-award task order contracts (IDIQ MATOCs). It is envisioned that, thereafter, an unknown number ("indefinite quantity") of task orders will be issued under each of the contracts. MATOC contractors will submit bids and will compete with each other for task orders as they arise. Through the solicitation, the Corps is seeking to cover all dredging projects within the South Atlantic Division over the next five years.3

The Corps created an Acquisition Plan to explain its decision to switch procurement methods, and to provide details about the procurement plan. The Acquisition Plan lists 108 potential projects divided into four MATOC groups: Group I, certified hopper dredging projects (2-5 total MATOC contracts);4 Group II, small business set-aside projects (2-7 total MATOC contracts); Group III, shore-protection projects (2-7 total MATOC contracts); and Group IV, other projects not listed in any of the other three categories (2-7 total MATOC contracts). Each group has an estimated cost of between $440 million and $500 million for the full five-year period. That means that, assuming all four option years are exercised, the total cost of the procurement will be approximately $2 billion. The minimum task order amount is $100,000, while the maximum is $500 million. Although each MATOC awardee will be guaranteed a contractual minimum of $2500, there is no guarantee that any awardee will receive more than that amount.

The Corps will evaluate proposals it receives in response to the solicitation on a "best value" basis. The evaluation will take into account four factors: (1) technical merit, (2) past performance, (3) price, and (4) utilization of small businesses. The technical merit factor will assess whether a party submitting a proposal possesses dredging equipment. A party's past performance rating may vary from "very low risk," to "very high risk," with four intermediate levels. The risk factor will assess a prospective contractor's competency in performing prior work (rated on a six-level scale), and the relevancy of that work (rated on a three-level scale). As far as price is concerned, the solicitation includes four representative tasks. Each party submitting a proposal in response to the solicitation will submit a bid on one of the tasks, thereby allowing the Corps to evaluate the price factor for that party. Weeks Marine, Inc. v. United States, 79 Fed.Cl. 22, 27 (2007) ("Initial Opinion"). The Corps will pick several contractors for each MATOC based on the four listed factors. Individual task orders under the MATOCs will be awarded primarily using Low Price Technical Acceptable procedures, although the Corps states in the Acquisition Plan that it will use Best Value Trade Off procedures for some tasks.

Before issuing the solicitation, the Corps "conducted market research," in order to evaluate potential interest in the solicitation and the availability of contractors for the task order work. Ten contractors, including Weeks, indicated interest in the solicitation. Weeks is a large marine construction and dredging company. It performed eighteen dredging contracts for the South Atlantic Division in the five years prior to the solicitation. Weeks was one of only three contractors that expressed interest in the solicitation that had (1) unlimited bonding capability, (2) hopper dredging equipment, and (3) significant dredging experience.

II.

The MATOC solicitation issued on June 4, 2007. On September 28, 2007, Weeks filed suit in the Court of Federal Claims, seeking declaratory and injunctive relief to prevent the South Atlantic Division from moving forward with the procurement. After the Corps filed a 2000 page administrative record, the parties filed cross motions for judgment on the administrative record. After hearing oral argument, the court issued a sealed version of its opinion on November 1, 2007. The opinion was made public on November 6, 2007, after the parties had a chance to review the sealed version and submit proposed redactions of confidential information. Initial Opinion, 79 Fed.Cl. at 22.

In the Initial Opinion, the Court of Federal Claims ruled that the MATOC solicitation violated 10 U.S.C. § 2304(a)(2), which provides that sealed bidding must be used when an agency plans to award a contract based solely on price and price-related factors. Initial Opinion, 79 Fed. Cl. at 29-30. Although the Corps indicated it would be evaluating non-price-related factors, the court found that the "evaluation factors will not permit the determination of any meaningful distinctions among the offerors, nor will they allow for any different ways to make task orders awards." Id. at 30. Thus, the court reasoned the Corps would actually be making its determination based on price. Id.

The Court of Federal Claims also ruled that the MATOC solicitation had no rational basis. Having ruled in its disposition of the § 2304(a) issue that the Corps would not be considering non-price related factors, such as contractor qualifications, the court rejected the additional justifications proffered for the Corps's procurement action. Initial Opinion, 79 Fed.Cl. at 31-34. The government asserted the use of IDIQ MATOCs would reduce the procurement cycle, but the court found "the record contain[ed] no evidence showing that a shortened procurement cycle would enhance [the] ability to complete projects in a timely manner." Id. at 32. Although the government asserted that the new procurement scheme would reduce administrative costs by $1.5 million over two years, the court found "no evidence of how this savings is calculated, or how it will occur." Id. at 33. Further, the court found that the hours estimated for evaluating the proposals received in response to the solicitation were too low for a negotiated procurement, and that administrative costs thus would likely be much higher than estimated. Id. The government also argued that IDIQ MATOCs would reduce the need for emergency procurements. However, the court rejected this contention as well, indicating that emergency procurements had constituted only 2.4 percent of South Atlantic Division expenditures in the prior two years, and did not justify a "procurement overhaul." Id. Additionally, the government asserted...

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