MorphoTrust USA, Inc. v. D.C. Contract Appeals Bd.

• Decision Date: 28 May 2015
• Docket Number: No. 13–CV–1002.,13–CV–1002.
• Citation: 115 A.3d 571
• Parties: MORPHOTRUST USA, INC., Appellant, v. DISTRICT OF COLUMBIA CONTRACT APPEALS BOARD, Appellee.
• Court: D.C. Court of Appeals

115 A.3d 571

MORPHOTRUST USA, INC., Appellant

v.DISTRICT OF COLUMBIA CONTRACT APPEALS BOARD, Appellee.

No. 13–CV–1002.

District of Columbia Court of Appeals.

Argued Oct. 23, 2014.

Decided May 28, 2015.

Jessica Ring Amunson, with whom Daniel E. Chudd and Damien C. Specht, Washington, DC, were on the brief, for appellant.

James C. McKay, Jr., Senior Assistant Attorney General, with whom Irvin B. Nathan, Attorney General for the District of Columbia at the time the brief was filed, Todd S. Kim, Solicitor General, and Loren L. AliKhan, Deputy Solicitor General, were on the brief, for appellee.

Before BLACKBURNE–RIGSBY and EASTERLY, Associate Judges, and FARRELL, Senior Judge.

Opinion

EASTERLY, Associate Judge:

This case requires us to interpret the Procurement Practices Reform Act of 2010 (the “PPRA”), D.C.Code § 2–351.01 et seq., legislation which the Council of the District of Columbia passed to promote competition, fairness, and public confidence in the District government's contracting process. Specifically, we consider the work an agency must do before including limiting specifications in a request for proposals (“RFP”) and, relatedly, the role that the statutorily created Contract Appeals Board (“Board”) must play in reviewing pre-award protests to RFPs to ensure that limiting specifications are justified under the PPRA and corresponding regulations.

The RFP in question sought proposals for a contract to produce driver's licenses for issuance by the District of Columbia's Department of Motor Vehicles (“DMV”). MorphoTrust USA, Inc. (“MorphoTrust”) filed a protest with the Board, asserting that a number of the specifications in the RFP were overly restrictive and needlessly chilled competition. After the Board denied the protest and the Superior Court affirmed the Board, MorphoTrust filed this appeal. MorphoTrust argues that the Board improperly deferred to the judgments of the DMV regarding the challenged specifications, failed to resolve important disputed facts, and made findings that were unsupported by the record.

We agree that the Board's review of MorphoTrust's protest to the DMV's RFP was inadequate, and neither complied with the PPRA's text and its corresponding regulations nor fulfilled their goals. Particularly at the initial stage of the procurement process, when the issue is who will be eligible even to submit a proposal, the Board may not defer broadly to agency decision-making. Rather, the Board has a duty to assess “de novo”—the statutory term—whether challenged specifications that limit competition only do so because they reflect the District's stated minimum needs. We question whether the information currently in the record would have permitted the Board to make such a de novo determination, but the point is that this determination is the Board's to make in the first instance. Accordingly, we reverse the order of the Superior Court and remand for proceedings not inconsistent with this opinion.

I. Overview of the Relevant Procurement Law and Regulations

The procurement of goods and services by the District of Columbia government is generally governed by the PPRA and corresponding regulations.¹ Among the Act's central purposes are “foster[ing] effective and equitably broad-based competition in the District,” “obtain[ing] full and open competition by providing that contractors are given adequate opportunities to bid,” and “increas[ing] public confidence in the procedures followed in public procurement.”² The Act itself provides that it shall be “liberally construed and applied to promote its underlying purposes and policies.”³

One means by which a District agency may procure goods and services under the PPRA is through a request for “competitive sealed proposals,” which are solicited by the Office of Contracting and Procurement on the agency's behalf.⁴ Consistent with the statute's general focus on fostering competition, such proposals must be “solicited from the maximum number of qualified sources.”⁵

The District's procurement regulations specify steps that agencies must take to ensure “full and open competition”⁶ from the outset of the solicitation. An agency with a need for a particular good or service must first, before it actually drafts an RFP, “perform procurement planning and conduct market surveys,”⁷ gathering information about the “entire available market.”⁸ The agency must then use this market research to “develop [the] specifications and purchase descriptions” to be included in the RFP, “in a manner designed to promote competition to the maximum extent possible, with due regard to the nature of the goods or services to be procured.”⁹ Any specifications that the agency ultimately decides to include in its RFP “shall state only the District's actual minimum needs,”¹⁰ must “reflect ... the market available to meet those needs,”¹¹ and may include “restrictive provisions and conditions only to the extent necessary to satisfy the minimum needs of the District, or as authorized or required by law.”¹²

If a prospective offeror believes that an agency has failed to adhere to the above-described statutory and regulatory provisions promoting competition, and wishes to challenge the specifications of an RFP as unduly restrictive, the PPRA directs the offeror to seek relief from the Contract Appeals Board.¹³ The Board is an independent, neutral, executive-branch entity, comprised of administrative law judges who are licensed attorneys with, inter alia, “no less than 5 years experience in public contract law.”¹⁴

The PPRA authorizes the Board, after hearing from both the protestor and the District,¹⁵ to resolve disputed issues of fact.¹⁶ The PPRA also directs that “the Board shall decide whether the solicitation ... was in accordance with the applicable law, rules, and terms and conditions of the solicitation.”¹⁷ The statute provides that the Board's review “shall be de novo,” and “[a]ny prior determinations by administrative officials shall not be final or conclusive.”¹⁸ If the Board sustains the protest, it has broad remedial power, including the power to order the District to terminate any contract awarded under the challenged solicitation and to issue a new RFP.¹⁹

II. Facts and Procedural History

In 2012, the Office of Contracting and Procurement issued an RFP on behalf of the DMV, RFP No. Doc62682, for a “Centralized Security Credentialing System” to produce driver's licenses and ID cards equipped with “the most secure credentialing features.” In order to “improve and increase card security to deter fraud and deter attempts to illegally duplicate identity credentials,” the RFP called for the system to “use the latest technology” and to manufacture cards that would “be tamper proof to the highest extent possible.”

The RFP set forth numerous specifications. Particularly with respect to the driver's licenses that would be manufactured under the contract, the RFP listed seventeen particular features that would, “at minimum,” be required, including a solid polycarbonate card base and four laser-engraved details.²⁰ In addition, the RFP listed particular security requirements for the facility where the cards would be manufactured, among them “outside security to include fences, distance from entrance to parking[,] etc.” The District made clear that these specifications were nonnegotiable.²¹

Before a contract was awarded, MorphoTrust filed a formal protest with the Board, challenging the specifications of a solid polycarbonate card base, the four laser-engraved details, and outdoor fencing.²² MorphoTrust produces driver's licenses and ID cards for 41 states and, prior to this litigation, the District of Columbia. MorphoTrust's ID cards, however, are made from Teslin, as opposed to polycarbonate, and they are not laser-engraved.²³ MorphoTrust's production facility is also not secured by outdoor fencing. MorphoTrust asserted that the challenged specifications in the RFP far exceeded the “actual minimum needs of the District” for secure digitized driver's licenses and facility security, and that they were therefore unduly restrictive, improperly narrowed competition, and violated the District's procurement regulations. MorphoTrust further claimed its Teslin cards were just as durable and tamper-proof as laser-engraved cards made from polycarbonate, and its production facilities had security comparable (if not superior) to outdoor fencing. MorphoTrust asked the Board to recommend that the District amend the RFP and eliminate these requirements.

In response to MorphoTrust's protest, the District filed an Agency Report, defending the contents of the RFP. Repeatedly asserting without explanation the District's “singular security needs” as the nation's capital, the District argued that the “DMV [had] established a minimum need for the most secure credentials possible.”

The District preliminarily claimed that “DMV experts” had “engaged in an extensive three-year market study to develop specifications that met the need.” To support this latter assertion, the District cited to a single-page declaration submitted by DMV's Chief Information Officer, Mr. Amit Vora. Mr. Vora's declaration in turn adopted as “accurate” a four-page, undated, anonymous “summary of steps taken by the Department of Motor Vehicles to Develop Secure Credentialing RFP” (“summary attachment”).

The undated, anonymous summary attachment briefly addressed the actions taken by the DMV prior to issuing the RFP. It stated that unidentified individuals at unidentified times had “[a]ttend[ed] [c]onferences and research[ed] new technology and trends surrounding secure identification cards,” but did not state what the DMV had learned. The summary stated that “DMV also gathered information by visiting and contacting the Department of Motor Vehicles in other jurisdictions,” but likewise failed to detail any information the DMV had acquired.²⁴ The summary also listed “[r]ecent network opportunities that the Director of DMV and DMV's Driver's Services have attended for...