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Award Enjoined Despite Claim of Military Necessity

A delivery order was enjoined by the Court of Federal Claims, notwithstanding the government's assertion of military necessity, because the government did not consider alternative sources and methods for obtaining the required items and the relevant factors favored prohibiting further performance. After the protest of the contract award for water and fuel systems was filed, the government took corrective action canceling the solicitation and the award. However, citing "military necessity," the government allowed the awardee to partially perform an order for fuel systems that had been issued under the contract. The corrective action notice was supported by the declaration of a government program manager, which indicated the inventory for fuel storage systems and components was "critically low" and that "[s]everal Marine Corps units ... h[e]ld stocks below the 85% of required wartime quantities ... and [we]re at substantial risk of being unable to perform their operational missions."

Protest Sustained

The protester prevailed on the merits. First, the awardee misrepresented the role a firm would play in contract performance. In its proposal, the awardee stated it would use a particular firm as a supplier, but in size proceedings before the Small Business Administration, the awardee stated it was using the firm as a "technical reference point." The awardee's communications with the SBA indicated the awardee proposed the firm as a means to secure a high past performance rating. Further, based on the technical evaluation team's narrative evaluation, the government relied on the misrepresentation in the award decision. The government placed great emphasis on the fact the firm's involvement was delineated in the awardee's proposal, and, consequently, the evaluators gave the awardee high marks for the two most important evaluation factors. The material misrepresentation constituted a "clear" violation of FAR 52.212-2. Second, the price evaluation was unreasonable and irrational. The solicitation instructed offerors to complete spreadsheets by entering a price for every item that potentially could be ordered under the contract, at different quantity tiers, and the government was to "calculate an evaluated price for each [o]fferor's proposal by adding together all contract line item numbers (CLINs) against an evaluated quantity." But under the methodology actually used, it was clear the government did not use an evaluated quantity to evaluate the proposals.

Factors Favored Injunction

In considering whether to issue an injunction, the court found the awardee's continued performance would cause the protester irreparable harm in the form of economic loss and monetary damages for lost profits, and recovery of bid and proposal costs would do little to compensate for the loss. In balancing the relative harms, the government knew about the material misrepresentation issue when it allowed the awardee to continue performance, so the government and the awardee readily assumed the risk of harm from a permanent injunction. Finally, the SBA's size determination required termination of the contract, and the government allowed performance to continue, so halting performance promoted the public interest. Under 28 USC 1491(b)(3), the court was also required to "give due regard to the interests of national defense and national security and the need for expeditious resolution of the action." Nevertheless, the government's declaration did not justify withholding injunctive relief. The only alternatives the government considered were "[s]cavenging [for] parts" and procuring the items from another agency, and other procurement vehicles, such as a sole source contract, could be used. Based on the record, the interests of national defense and national security did not prevail over upholding the integrity of the procurement process to redress a material misrepresentation. (GTA Containers, Inc. v. U.S., et al., FedCl, 56 CCF 79,749)




(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )


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