Blue & Gold Fleet, L.P. v. U.S.

• Decision Date: 26 June 2007
• Docket Number: No. 2006-5064.,2006-5064.
• Citation: 492 F.3d 1308
• Parties: BLUE & GOLD FLEET, L.P., Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee, and Hornblower Yachts, Inc., Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

492 F.3d 1308

BLUE & GOLD FLEET, L.P., Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee, and Hornblower Yachts, Inc., Defendant-Appellee.

No. 2006-5064.

United States Court of Appeals, Federal Circuit.

June 26, 2007.

Alan I. Saltman, Saltman & Stevens, P.C., of Washington, DC, argued for plaintiff-appellant. With him on the brief was Ruth G. Tiger.

Sean M. Dunn, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee, United States. With him on the brief were Peter D. Keisler, Assistant Attorney General, and Kathryn A. Bleecker, Assistant Director. Of counsel was Carolyn A. Lown, United States Department of the Interior, Office of the Solicitor, of Oakland, CA.

Kevin R. Garden, The Garden Law Firm, P.C., of Alexandria, VA, argued for defendant-appellee, Hornblower Yachts, Inc. Of counsel were Brian A. Bannon and Andrew W. Dyer, Jr., Blank Rome LLP, of Washington, DC.

Before BRYSON, GAJARSA, and DYK, Circuit Judges.

GAJARSA, Circuit Judge.

This is an appeal from a pre-award bid protest filed under 28 U.S.C. § 1491(b). The plaintiff, Blue & Gold Fleet, L.P. ("Blue & Gold"), appeals the decision of the United States Court of Federal Claims granting judgment on the administrative record to the defendants, the United States and Hornblower Yachts, Inc. ("Horn blower"), allowing the United States to award the contract to Hornblower. Blue & Gold Fleet, L.P. v. United States ("Judgment on Admin. Record") 70 Fed.Cl. 487 (2006). For the reasons stated below, we affirm.

I.

This court summarizes the following background facts, which the parties do not dispute, based on the findings of the Court of Federal Claims.

Alcatraz Island is a National Historic Landmark site situated in the San Francisco Bay, attracts over 1.3 million visitors per year, and generates over $13 million per year in revenue. The National Park Service ("Park Service") is the government entity responsible for the maintenance of Alcatraz and for the "solicitation and selection of contractors to provide ferry transportation, sell concessions, and perform other Alcatraz-related services." Judgment on Admin. Record, 70 Fed.Cl. at 489.

Blue & Gold was the incumbent ferry operator. Id. In July 2004,

the Park Service issued a notice of availability of a prospectus for the solicitation of proposals for the Alcatraz concession contract. The proposed contract was to include land and water transportation to and from the island, food and beverage services, ticket sales, as well as maintenance of visitor arrival, assembly, and departure facilities.

Id. at 490 (footnote omitted). The solicitation prospectus contained instructions stating that questions must be submitted "in writing . . . no later than 30 days in advance of the due date" of the proposals. To ensure complete dissemination of the bidding information, the Park Service, if it received any questions regarding the solicitation, would distribute the answer to any such questions to all potential offerors. Id. at 512-13. "The closing date for the receipt of the proposals originally was November 24, 2004, but was extended to March 30, 2005." Id. at 490.

The solicitation prospectus also notified offerors that the Park Service would evaluate the proposals using specific selection factors and subfactors, worth a total maximum of thirty points, and the proposal with the highest score would be selected. These factors and subfactors included the financial viability of the offeror, the proposed franchise fee to the government, compliance with Tier 2 emission standards,¹ commitment to state of the art technology and alternative fuel sources for vessels, and the quality of visitor services. Id. at 490-91.

After receiving the various proposals, the Park Service convened a review panel. The panel issued an extensive evaluation summary that described the narrative basis for scoring each of the factors considered in the proposals. After scoring each proposal based on the enumerated factors, the panel awarded Hornblower the highest overall score of 26.5 points and Blue & Gold the second highest score of 21.5 points. The panel recommended that the Park Service award Hornblower the contract, and the Regional Director of the Park Service approved the panel's recommendation. In September 2005, the Park Service advised all of the offerors that Hornblower had been selected and would be awarded the contract. Id. at 491-92.

In October 2005, Blue & Gold filed a protest with the Government Accountability Office ("GAO") regarding the selection decision. In response to concerns about the GAO's jurisdiction, Blue & Gold also filed a bid protest in the Court of Federal Claims pursuant to 28 U.S.C. § 1491(b), protesting the award and requesting an injunction enjoining the Park Service from awarding the contract. Because of the Court of Federal Claims action, the GAO subsequently dismissed the protest before it. Id. at 492.

On cross-motions for judgment on the administrative record, the Court of Federal Claims held that the Park Service's actions were not "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law," and thus, that Blue & Gold failed to meet its burden on the most important factor required to enjoin the award of the contract—success on the merits. Moreover, balancing the factors required for the issuance of an injunction, the Court of Federal Claims determined that the harm to the Park Service and Hornblower outweighed any irreparable harm to Blue & Gold and that an injunction was not in the public interest. Accordingly, the Court of Federal Claims entered judgment in favor of the United States and Hornblower. Id. at 514. Blue & Gold filed a timely appeal to this court.

We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(3).

II.

A.

We have stated that "[t]his court reviews the trial court's determination on the legal issue of the government's conduct, in a grant of judgment upon the administrative record, without deference." Bannum, Inc. v. United States, 404 F.3d 1346, 1351 (Fed.Cir.2005) (citations omitted). That is, "this court reapplies the `arbitrary and capricious' standard of § 706," and "the inquiry is whether the [government]'s procurement decision was `arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.'" Id. (quoting 5 U.S.C. § 706(2)(A); other citations omitted); see also 28 U.S.C. § 1491(b)(4) (stating that in bid protest actions, Court of Federal Claims and district courts "shall review the agency's decision pursuant to the standards set forth in section 706 of title 5").

The substantial evidence standard of 5 U.S.C. § 706(2)(E) "applies to the trial court's review of agency findings." Bannum, 404 F.3d at 1357 (citation omitted). Where the Court of Federal Claims makes factual findings from the administrative record in the first instance, however, "this court reviews such findings for clear error," "like any finding in a bench trial." Id.

B.

Blue & Gold asserted that because Hornblower's proposal did not include the wages and benefits for its employees required by the Service Contract Act, 41 U.S.C. §§ 351-358, the Park Service mistakenly evaluated Hornblower's proposal as financially viable and as allowing Hornblower to offer the Park Service a higher franchise fee. Judgment on Admin. Record, 70 Fed.Cl. at 512. The Court of Federal Claims found that Blue & Gold "missed its chance to protest" based on the Service Contract Act because Blue & Gold (1) was attempting to challenge the terms of the solicitation, rather than the evaluation process, and (2) did not raise the challenge prior to the submission of the proposals. Id. at 513-14.

On appeal, Blue & Gold asserts that the Court of Federal Claims erred on both grounds.

1.

While Blue & Gold characterizes this as a challenge to the evaluation of Hornblower's proposal, we agree with the Court of Federal Claims that this argument is properly characterized as a challenge to the terms of the solicitation. By statute, the Park Service must "evaluate ... proposals and make an award based solely on the factors specified in the solicitation." 10 U.S.C. § 2305(b)(1). In this case, it is true that the decision not to apply the Service Contract Act to the contract may have influenced the evaluation of the proposals; however, the Park Service made this decision during the solicitation, not evaluation, phase of the bidding process. The terms of the solicitation prospectus did not include any requirement that the bidders consider the Service Contract Act, and thus, the Park Service could not decide at the time of the evaluation to apply the Act. Therefore, Blue & Gold's assertion that the proposals should have been evaluated according to the Act is a challenge to the solicitation.

2.

We also hold that a party who has the opportunity to object to the terms of a government solicitation containing a patent error and fails to do so prior to the close of the bidding process waives its ability to raise the same objection subsequently in a bid protest action in the Court of Federal Claims. This is an issue of first impression for this court. Section 1491(b) of title 28 U.S.Code provides the Court of Federal Claims with "jurisdiction to render judgment on an action by an interested party objecting to a solicitation by a Federal agency." 28 U.S.C. § 1491(b)(1). In doing so, the statute mandates that "the courts shall give due regard to the interests of national defense and national security and the need for expeditious resolution of the action." Id. § 1491(b)(3) (emphasis added). Recognition of a waiver rule, which requires that a party object to solicitation terms during the bidding process, furthers this statutory mandate.

Similarly, we have recognized the doctrine of patent ambiguity where the party challenging the government is a party to the government contract. "The doctrine of...