Michael Stapleton Assocs. v. United States

• Decision Date: 30 November 2022
• Docket Number: 22-573,22-620,22-630
• Parties: MICHAEL STAPLETON ASSOCIATES, LTD, Plaintiff, v. THE UNITED STATES, Defendant, And AMERICAN K-9 DETECTION SERVICES, LLC, Defendant-Intervenor. GLOBAL K9 PROTECTION SERVICES, LLC, Plaintiff, v. THE UNITED STATES, Defendant. AMERICAN K-9 DETECTION SERVICES, LLC, Plaintiff, v. THE UNITED STATES, Defendant.
• Court: U.S. Claims Court

MICHAEL STAPLETON ASSOCIATES, LTD, Plaintiff, v. THE UNITED STATES, Defendant, And AMERICAN K-9 DETECTION SERVICES, LLC, Defendant-Intervenor. GLOBAL K9 PROTECTION SERVICES, LLC, Plaintiff, v. THE UNITED STATES, Defendant.

AMERICAN K-9 DETECTION SERVICES, LLC, Plaintiff, v. THE UNITED STATES, Defendant.

Nos. 22-573, 22-620, 22-630

United States Court of Federal Claims

November 30, 2022

Pre-Award Bid Protest; Organizational Conflict of Interest; Mail; USPS Resolicitation; Bid Protest; Patent Ambiguities; Injunctive Relief; Arbitrary and Capricious; APA Rational Basis.

Daniel J. Strouse, of Cordatis LLP, with whom was Joshua D. Schnell both of Arlington, VA, for plaintiff American K-9 Detection Services, LLC.

W Brad English, of Maynard, Cooper & Gale, PC, with whom were Jon D. Levin, Emily J. Chancey, Mary Ann Hanke, and Nicholas P. Greer, all of Huntsville, AL, for plaintiff Global K9 Protection Group, LLC.

Ryan C. Bradel, of Ward & Berry PLLC, with whom was P. Tyson Marx, both of Tysons, VA, for plaintiff Michael Stapleton Associates, Ltd.

John J. Todor, Senior Trial Counsel, Commercial Litigation Branch with whom were Reginald T. Blades Jr., Assistant Director, Patricia M. McCarthy, Director, Brian M. Boynton, Principal Deputy Assistant Attorney General, Civil Division, Department of Justice, and Shoshana O. Epstein, Attorney, United States Postal Service, all of Washington, DC, for defendant.

OPINION AND ORDER

RYAN T. HOLTE Judge

Plaintiffs, Michael Stapleton Associates, Ltd. ("MSA"), Global K9 Protection Group, LLC ("GK9"), and American K-9 Detection Services, LLC ("AMK9"), bring three separate pre-award bid protests, consolidated on 13 June 2022, against the United States Postal Service ("USPS") in which the USPS solicitated a contract for canine explosive detection and alarm resolution services under Solicitation No. 2B-20-A-0087. Pending before the Court are plaintiffs' motions for judgment on the administrative record ("MJAR"), the government's cross-MJAR, MSA's motion for a stay or injunction pending appeal, MSA's motion to expedite consideration of its motion for a stay or injunction pending appeal, and GK9's and AMK9's motions for a status conference.

For the multiple protests and remands related to this solicitation, the Court has formally issued 129 pages of opinions and orders-and USPS has written 117 pages of reports, decisions, and exhibits-documenting the potential for organizational conflicts of interest ("OCIs") and problems with contracting. The Court continues adding to the page count, again addressing the government's actions, the persisting OCIs, and the slew of other motions recently filed. All plaintiffs ask for injunctive relief: GK9 argues, the "USPS's corrective action is irrational because it failed to adequately consider or evaluate MSA's immitigable . . . OCIs that should have resulted in MSA being disqualified from the competition[, ]" GK9's MJAR at 7, ECF No. 53, while AMK9 contends, "MSA stands to potentially receive an award that USPS should prohibit MSA from receiving[, ]" AMK9's MJAR at 13, ECF No. 51. MSA previously asked the Court for a temporary restraining order and preliminary injunction; MSA requests the same relief here. Tr. of 21 Oct. 2022 OA on Cross-MJARs ("Tr.") at 220:19-221:3.

After extensive conversation at oral argument held 21 October 2022, see id., the Court determined it did "not have enough information to make [an equitable] determination." 26 Oct. 2022 Order at 5, ECF No. 72. Accordingly, the Court issued an order "to seek USPS guidance on several reevaluation or resolicitation factors to craft an equitable remedy, if any, in [the present] order." Id. at 2. While the Court found "the OCIs connected to the 2020 solicitations remained in the 2022 resolicitation process and are immitigable, which may prompt the need to disqualify MSA from participation in the 2022 resolicitation[, ]" the Court "ask[ed] USPS to offer guidance on the prospect of resoliciting or reevaluating the 2022 resolicitation in the event the Court's equitable remedy disqualifies MSA from participation in the 2022 resolicitation[.]" Id. at 4-5. The USPS filed two supplemental statements offering guidance and only plaintiff GK9 responded with its concerns. See Gov't's First Resp. to 26 Oct. 2022 Order, ECF No. 71; GK9's Resp. to 26 Oct. 2022 Order, ECF No. 75. The Court now makes its equitable determination on the motions and generally agrees with the USPS' proposed plans to phase-out MSA and disqualify MSA from future performance as a result of OCI-tainted solicitations.

For the following reasons, the Court grants AMK9's motion for judgment on the administrative record, grants in part GK9's motion for judgment on the administrative record, grants in part and denies in part the government's cross-motion for judgment on the administrative record, and denies MSA's motion for judgment on the administrative record. The Court grants AMK9's request for injunctive relief, grants in part GK9's request for injunctive relief, and denies MSA's request for injunctive relief. The Court has no choice but to enjoin MSA and ask the USPS to reevaluate the solicitation in a manner that does not violate its Supplying Principles and Practices. The Court finds as moot MSA's motion for stay pending appeal, MSA's motion to expedite, and GK9's and AMK9's motions for a status conference.

I. Factual Background

This case relates to another pending case before the Court, American K-9 Detection Servs., LLC v. United States, No. 20-1614 (Fed. Cl. Nov. 18, 2020), which is a consolidated bid protest filed by disappointed offerors following the USPS's decision to award a contract for canine explosive detection and alarm resolution services to MSA. See Notice of Directly Related Case, ECF No. 7; Compl. ("2020 Compl."), ECF No. 1, Am. K-9 Detection Servs., LLC v. United States, No. 20-1614 (Fed. Cl. Nov. 18, 2020); Order, ECF No. 59, Am. K-9 Detection Servs., LLC v. United States, No. 20-1614 (Fed. Cl. Apr. 21, 2021) (consolidating cases).

A. Aircraft Operator Standard Security Program Following the September 11^th attacks, the National Commission on Terrorist Attacks Upon the United States ("9/11 Commission") issued a federal mandate to the Transportation Security Administration ("TSA") requiring "100% screening of all air cargo on passenger airlines by 2020." Admin. R. at 3 (USPS Supply Management Competitive Purchase Plan), ECF No. 23-2 ("2020 AR"), Am. K-9 Detection Servs., LLC v. United States, No. 20-1614 (Fed. Cl. Nov. 18, 2020); see also 49 U.S.C. § 44901 ("The Administrator of the [TSA] shall provide for the screening of all passengers and property, including United States mail, . . . that will be carried aboard a passenger aircraft . . . ."). The USPS "is held to this mandate by the TSA/[Federal Aviation Administration] regulations under the Aircraft Operator Standard Security Program . . ., which includes mail over sixteen (16) ounces, Military Mail, [and] registered mail[.]" 2020 AR at 3. Currently, local law enforcement, funded by the TSA, provides screening of mail delivered on airplanes. Id. at 4. Under this system, the USPS has "little, to no, oversight or ability to manage the screenings or the locations as the program is run directly by the TSA." Id.

To grant the USPS control over the package screening process and facilitate development of a program expanding the number of sites with screening capabilities, TSA is currently developing a policy to relieve TSA from package screening and "require the shift of the explosives detection screening to [the USPS]." Id. TSA has "regulatory authority under 49 CFR [§ 5144] . . . to modify the procedures for air cargo security[, ] [a]nd using that regulatory authority for the purposes of this new contract, the [Third-Party Canine-Cargo ('3PK9' or 3PK9-C')] program, for [the USPS] to conduct screening, part of that authority has set up procedures by which it would have the screening be permitted so that it could be part of the same overall screening process that goes onto airlines." Tr. of 8 Feb. 2021 OA on Cross-MJARs ("2021 OA Tr.") at 111:9-17 (quoting the government), ECF No. 44, Am. K-9 Detection Servs., LLC v. United States, No. 20-1614 (Fed. Cl. Nov. 18, 2020).

B. The USPS Pilot Program

In 2019, the USPS developed a pilot program to test the 3PK9-C program to conduct screening for mail weighing more than 16 ounces for transport via air carriers at Phoenix Sky Harbor airport. 2020 AR at 1899-1901 (2-11 February 2021 Supplier Disagreement Resolution Official Questions to the Unites States Postal Inspection Serive ("USPIS"), and their responses via email), ECF No. 62-4, Am. K-9 Detection Servs., LLC v. United States, No. 20-1614 (Fed. Cl. Nov. 18, 2020), 812 (USPS Supplier Disagreement Resolution No. SDR-21-CS-001), ECF No. 62-3, Am. K-9 Detection Servs., LLC v. United States, No. 20-1614 (Fed. Cl. Nov. 18, 2020). The USPS conducted this pilot program jointly with MSA for three months through a noncompetitive (nonformal) contract to MSA. See id. at 816. On completion of the program, the USPIS distributed a presentation to airlines. 2020 AR at 1906-36. The 6 July 2020 presentation was entitled "USPIS-3PK9 Mail Daily Best Practices-Airlines." Id. MSA was featured heavily in the presentation. Id. The USPIS Playbook sent to airlines did not identify any other TSA-certified 3PK9-C vendors, even though the USPS was aware other such companies existed, 2020 AR at 6-7 (USPS Supply Management Competitive Purchase Plan), ECF No. 23-2, Am. K-9 Detection Servs., LLC v. United States, No. 20-1614 (Fed. Cl. Nov. 18, 2020), such as GK9, which has provided the same or similar services to all major airlines and at all major airports for several years. Id. at 988 (GK9...