Mori Assocs. Inc. v. United States, 10-298C
| Decision Date | 15 December 2011 |
| Docket Number | No. 10-298C,10-298C |
| Parties | MORI ASSOCIATES, INC., Plaintiff, v. THE UNITED STATES, Defendant. |
| Court | U.S. Claims Court |
(Reissued December 21, 2011)1
Pre-award bid protest; NIH; NIDDK;
cancellation of procurement; jurisdiction
based on FAR §§ 1.602-2 & 3.101-1; duty
of fair and honest consideration; arbitrary
action; permanent and preliminary
injunctions; FAR § 7.302(b) and OMB
Circular A-76; small business set-asides &
Rule of Two, FAR § 19.502-2(b); task
orders; statutory interpretation; use of
legislative history when text is plain; sunset
clause of 41 U.S.C.A. § 4106(f)(3); agency's
cost-savings analysis.
Joseph G. Billings, Miles & Stockbridge P.C., Baltimore, Maryland, for plaintiff. Rita J. Piel, Miles & Stockbridge P.C., Baltimore, Maryland, Carol L. O'Riordan and Pamela J. Bethel, O'Riordan Bethel Law Firm, LLP, Washington, D.C., of counsel.
Dawn E. Goodman, Commercial Litigation Branch, Civil Division, Department of Justice, with whom were Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, and Steven J. Gillingham, Assistant Director, all of Washington, D.C., for defendant. William Rayel, Commercial Litigation Branch, Civil Division, Department of Justice, Washington, D.C. and Mogbeyi Omatete, Office of General Counsel, Procurement, Fiscal and Information Law Branch, Department of Health and Human Services, Washington, D.C., of counsel.
This matter originally came before the Court as plaintiff MORI Associates' protest of procurement actions taken by an agency of the United States Department of Health and HumanServices. Plaintiff was challenging corrective action proposed by the government in response to a series of protests MORI brought before the Government Accountability Office, and challenging actions taken in the course of the procurement --- including prior evaluations, the immediately preceding award determination, and alleged attempts to improperly assist one offeror and injure plaintiff. While a motion to dismiss the case was pending, the procurement was cancelled, resulting in a supplemental complaint challenging the cancellation. In the middle of the briefing schedule for dispositive motions concerning the cancellation, the government agency issued a request for quotations seeking to acquire by task order some of the services previously sought in the cancelled procurement. This led to a second supplemental complaint challenging the government's failure to determine whether the services should be set aside for a small business award, and to a motion for a preliminary injunction.
For the reasons that follow, the Court has determined that it has jurisdiction over the challenge to the cancellation decision, and over the challenge to the government's failure to follow the small business set-aside regulation. The Court has further determined that the cancellation of the initial procurement was arbitrary, and that plaintiff is entitled to a permanent injunction against that decision and a preliminary injunction preventing the agency from proceeding under the second solicitation.
The United States Department of Health and Human Services ("HHS"), National Institutes of Health ("NIH"), National Institute of Diabetes and Digestive and Kidney Diseases ("NIDDK" or "agency") issued Request for Quotation No. NIH-NIDDK-08-01 ("RFQ" or "IT Services Solicitation") for the procurement of Information Technology ("IT") services on November 9, 2007. Pl.'s Second Amended Second Supplemental Complaint (July 30, 2011) ("Compl.") ¶¶ 42, 43. The RFQ was issued as a follow-on procurement to plaintiff's then-existing contract, No. GS-35F-0464K. Compl. ¶¶ 2, 43. The RFQ sought quotations from firms holding General Services Administration ("GSA") Federal Supply Schedule ("FSS") IT Schedule 70 contracts, and anticipated the award of a fixed-price/time and materials contract for an initial twelve month period, with five additional option periods of twelve months each. Compl. ¶ 68.
The agency awarded a contract to Allied Technologies and Consulting, LLC ("ATC") on January 17, 2008, and MORI filed a protest before the Government Accountability Office ("GAO") on January 29, 2008. Compl. ¶¶ 9-10. In this GAO protest, plaintiff asserted that ATC committed a material misrepresentation as to the availability and qualification of its proposed personnel; that ATC did not provide sufficient similar contracts for evaluation of past performance; and that ATC's FSS contract did not have all the labor categories required by the RFQ. Id. ¶ 10. Plaintiff also alleged that the agency misevaluated its technical proposal. Id. ¶ 10. The agency proposed corrective action, and MORI withdrew its protest. Id. ¶¶ 11-12.
Upon a second award to ATC, MORI again filed a protest with the GAO, on December 23, 2008. Plaintiff challenged the award, alleging: 1) the existence of bias and a conflict of interest at the agency; 2) that the agency did not evaluate proposals in conformance with the RFQ's stated evaluation criteria; 3) that the agency failed to engage in meaningful discussions with plaintiff; 4) that ATC did not hold a valid GSA FSS IT Schedule 70 contract at the time of the bid, and that ATC's GSA FSS contracts did not contain the labor categories required by the solicitation; 5) that ATC did not provide sufficient similar contracts necessary to evaluate its past performance; and 6) that the agency misevaluated plaintiff's technical proposal. Compl. ¶¶ 15-16, 132. The bias claim rested, in part, on the allegation that NIDDK's Chief Information Officer, Cyrus Karimian, had engaged in improper efforts to steer the award to ATC, a very small and inexperienced business whose president had been a friend of Mr. Karimian's since the early 1990s. Id. ¶¶ 15(a), 50. Plaintiff alleged that the solicitation's requirements were modified to assist ATC, and learned during debriefing that the team performing the second evaluations was composed of personnel working for Mr. Karimian. Id. ¶¶ 15(a), 124. Apparently, a contractor with an alleged "longstanding and ongoing relationship with" ATC's proposed subcontractor might have been involved in the evaluation of offers. Id. ¶¶ 15(d), 129. On January 9, 2009 the agency began an investigation, to be conducted by the HHS Office of Inspector General ("OIG"), concerning MORI's charges of bias and wrongdoing on the part of Mr. Karimian. Id. ¶ 17. After its request that the protest be completely dismissed was denied, see Compl. ¶¶ 18-20, on January 22, 2009 the agency proposed corrective action, which included excluding Mr. Karimian from further involvement in the evaluations or award decision for the IT services procurement, and promising that any logistics contractor to be used in evaluating proposals will not be affiliated with MORI or ATC. Id. ¶ 21(g)-(h). The GAO then dismissed the second protest. Id. ¶ 22.
On August 24, 2009, NIDDK notified MORI of a third contract award to ATC. Compl. ¶ 23. Plaintiff filed a third protest before the GAO on September 2, 2009, expanding on its claims in the second protest with more information to support the allegations of procurement improprieties --- obtained during the course of a civil action MORI brought against ATC in Maryland state court --- and with greater discussion of the deficiencies resulting from ATC's alleged inability to satisfy the FSS labor category requirements in the RFQ. See id. ¶¶ 24-26. Concerning the former, it was alleged that Mr. Karimian amended the solicitation to require work in the area of medical informatics at about the same time he had introduced a leading expert in the field to ATC's president, and to replace NIDDK protocols with those used by the Food and Drug Administration ("FDA"), with which ATC's subcontractor had experience. Id. ¶¶ 24(a), 55, 58. Plaintiff also alleges that shortly after becoming NIDDK's chief information officer in January 2007, Mr. Karimian told the person who had previously held the position in an acting capacity that he wanted to bring ATC in to do the agency's IT services work, and asked his predecessor to draft a sole source justification. Id. ¶¶ 48, 50-51. Mister Karimian is also alleged to have stated that he would not make a contract award to MORI and wanted plaintiff to be kept out of the competition for the IT services contract. Id. ¶ 53. Plaintiff also contends that Mr. Karimian supplied ATC with a confidential, proprietary proposal from a contractor he had previously supervised at another federal agency, to assist ATC in drafting its proposal. Id. ¶ 56. The GAO dismissed MORI's protest on October 13, 2009, after agency counsel represented thathe would conduct his own investigation of the alleged procurement wrongdoing, in addition to the OIG investigation that was pending. Compl. ¶¶ 29-31.
After agency counsel did not complete his investigation within the thirty- to ninety-day period that MORI believed was promised, on March 23, 2010 plaintiff filed a fourth protest with the GAO. See Compl. ¶¶ 29(b), 33, 36. This protest apparently added to the grounds raised in the third protest the allegation that the agency failed to take the corrective action it proposed in connection with the dismissal of that previous protest. See id. ¶ 36. On April 21, 2010, the agency filed another notice of corrective action and requested that the GAO dismiss the fourth protest. Id. ¶ 38. The agency asserted that the HHS OIG investigation concluded with no finding of potential criminal or administrative violations by Mr. Karimian or other NUT employees, and at that time stated that the agency's own procurement integrity investigation determined there was no violation. See id. ¶ 38; App. to Def.'s Mot. Dismiss at 7-8.2 The agency proposed corrective action related to the other allegations raised in plaintiff's third protest. Compl. ¶ 38. This would include cancelling the award to ATC, providing pl...
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