CACI, Inc.-Federal v. U.S.
| Decision Date | 28 October 1983 |
| Docket Number | No. 83-742,83-742 |
| Citation | 719 F.2d 1567 |
| Parties | , 31 Cont.Cas.Fed. (CCH) 71,709 CACI, INC.-FEDERAL, Appellee, v. The UNITED STATES, Appellant. Appeal |
| Court | U.S. Court of Appeals — Federal Circuit |
Lenore C. Garon, Washington, D.C., argued for appellant. With her on brief were J. Paul McGrath, Asst. Atty. Gen. and David M. Cohen, Director, Washington, D.C.
Jeffrey P. Elefante, Arlington, Va., argued for appellee. With him on brief were Michael S. Friedman, Arlington, Va., John W. Douglas, David K. Flynn, Washington, D.C., and William E. O'Brien, Jr., Arlington, Va.
Leslie H. Lepow, Washington, D.C., and Deborah Dakin and Weldon H. Latham, Washington, D.C., were on brief for Sterling Systems, Inc., amicus curiae.
Before FRIEDMAN, RICH, and BENNETT, Circuit Judges.
This is an appeal by the United States from a judgment of the United States Claims Court that permanently enjoined the United States from awarding a contract to supply automated data processing and related services to the Antitrust Division of the United States Department of Justice. 1 Cl.Ct. 352 (1983). The award was enjoined on the ground that the relationship between officials in the Antitrust Division who participated in the process through which the contractor was selected and an officer of the firm to which it appeared the contract would be awarded violated ethical standards of conduct for government employees, created the appearance of impropriety, and resulted in prejudice in favor of that firm and against other firms seeking the contract. We reverse.
The following description of the procedures by which the Department of Justice ("the Department") evaluated the bids in this case and of the relationships among the persons involved is based upon the findings of the Claims Court, considerably amplified by the uncontradicted evidence in the record. In the subsequent portions of this opinion, we discuss some of these matters in greater detail.
A. On September 3, 1982, the Department of Justice issued a request for proposals ("the proposal") to supply automated data processing and litigation support services to the Information Systems Support Group ("the Group") in the Department's Antitrust Division through a "baseline services contract." The Group is a section in the Antitrust Division that provides office automation, management information systems, and economic analysis services to the Division. Since there are "great fluctuations" in the Division's need for litigation support services, the Group's limited staff (27) sometimes cannot supply those services. The Group therefore uses contractors to provide the services it cannot supply through its own staff.
In employing such outside contractors, the Department has used short term, sole-source, noncompetitive contracts that are subject to extension. Several of the firms that submitted proposals in this case, including the appellee CACI Industries, Inc. ("CACI"), were then supplying services to the Antitrust Division under such contracts.
The proposal in this case involved a two-step competitive and negotiated bidding process, for a single contractor to supply many of the services that separate contractors previously had provided. First, prospective contractors were to submit an initial proposal. After government officials evaluated these bids and selected those deemed competitive, those bidders were invited to negotiation sessions which focused on improving their offers. Each of those firms then would submit its "best and final" offer, from which the government would select the offer it considered most advantageous.
Under the proposal, each bid was to contain two separate parts: a "technical proposal" and a "business management" proposal containing cost and price information. Each part was separately evaluated in both the initial and final phases of the bid process. The technical proposal was to be evaluated by a Technical Evaluation Committee, composed of Department officials, on the basis of a number of technical factors, including qualifications of technical personnel, prior corporate experience, and technical approach. In its evaluation of the initial submissions, the committee also would determine the areas where the bid could be made "more competitive" and improved through negotiations. The initial business proposal, i.e., the cost of the contract, was to be evaluated by the contracting officer.
The proposal provided that the contracting officer would award the contract on the basis of a weighted formula, under which 70 percent of the total was based upon the score of the technical portion of the bid and the remaining 30 percent was based upon the estimated cost.
In response to the proposal, eight firms submitted bids, including CACI and the apparently successful bidder, Sterling Systems, Inc. (Sterling). Most of the allegations of impropriety in this case are based upon relationships between Antitrust Division employees in the group who participated in the bid evaluation process and Robert L. Stevens, the chief of the Group from 1978 to 1980, who, as Sterling's vice president, directed the preparation of Sterling's bid and represented the company before the Department during its consideration of the bids.
The Technical Evaluation Committee had five members. The chairman was Carl E. Anderson, a section chief in the Group. The other members were Terence A. Sweeney, Stevens' successor as chief of the Group; Patricia J. Shelton, another section chief in the Group; Durwin E. Smith, an employee in the Group; and Thomas E. Powers, an employee in the Department's Management Division, an office that oversees the Departmental procurement. Powers was the only member of the committee who did not have some prior social or professional relationship with Stevens.
Anderson had worked either directly or indirectly for Stevens since 1971, in both the government and the private sector. Sweeney had worked under and reported directly to Stevens at the Group, and his professional association with Stevens began in 1978. Shelton also worked under Stevens during the latter's tenure at the Group. Smith had a social relationship with Stevens.
The contracting officer for this procurement was Ronald L. Endicott, an employee of another division of the Department. As the trial judge stated, "[t]here is no evidence of any prior professional or social relationship between him and Stevens." Endicott was directly involved in all phases of the bid process, and "selected and named the Chair and members of the Technical Evaluation [Committee] ...."
In its consideration of the initial bids, the Technical Evaluation Committee evaluated the technical aspects of each proposed contract on a 100-point scoring system. It ranked CACI's bid first at 85.2 and Sterling's second at 79. In scoring the bids, the committee was not shown the cost estimate portion of the bids. After the committee reported these scores to the contracting officer, the latter then evaluated the costs of each bid with the assistance of Anderson, the chairman of the committee.
The contracting officer, Anderson, and Sweeney then met with representatives of each of the six bidders whose proposals were deemed to be in the "competitive range," i.e., that could be made competitive through negotiation. The contracting officer required the bidders to limit their discussions "as much as possible" to "the weaknesses of their [bids] and where the [bids] could be made more competitive."
After these negotiation sessions, each of the six bidders submitted its "best and final offer." Again, the technical and cost portions of the proposals were separated. The Department followed the same procedures in reviewing the final offers that it followed in reviewing the initial submissions.
In their initial submissions, Sterling and another firm, Infodata, each had submitted a proposal in which the other was a subcontractor. At the negotiating sessions, the government's representatives pointed out that elimination of subcontractors could reduce costs. In its final submission, Sterling submitted two best and final offers, both responsive to the proposal. One of Sterling's proposals included Infodata as a subcontractor. The other offer was for a "stand-alone" proposal, which Sterling would staff and perform itself. No other bidder submitted two proposals.
The Technical Evaluation Committee ranked the technical aspects of CACI's final bid the highest, with a score of 87.4. Sterling's teaming proposal with Infodata was ranked second (84.6), and its stand-alone proposal ranked third (84). The other four final bidders were ranked significantly lower (i.e., from 75.8 to 64.6 points). Virtually all the bidders received higher scores on their final proposals than they had received on their initial submissions. Sterling's score was increased more than CACI's. Once again, the committee was not told the cost estimates in the final offers.
The committee reported these scores to the contracting officer, who again, with Anderson's assistance, evaluated and graded the final cost proposals. Then, using the weighted formula described above, the contracting officer determined that Sterling's separate, unteamed bid had the highest overall score. Although Sterling's technical score was below CACI's, Sterling had a higher overall rating because its projected costs were significantly lower than CACI's.
Before any award was made, CACI filed a protest with the General Accounting Office alleging a conflict of interest by the four persons in the Group involved in the bid process who had prior associations with Stevens. It notified the contracting officer of the protest. On December 22, 1982, while the complaint was pending, Sweeney met with Stevens to formulate "transition plans" in connection with the anticipated award of the contract to Sterling.
After the Justice Department informed CACI that the Department would not defer the award...
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