In the United States Court of Federal Claims
No. 97-256C
(Filed May 9, 1997)
______________________________
)
GRAPHICDATA, LLC, )
) Contracts; post-award bid
Plaintiff, ) protests; 28 U.S.C.A. ยง 1491(b)
) (West Supp. 1997); scope of
v. ) review; summary judgment;
) effect of rejected contract
THE UNITED STATES, ) modification.
)
Defendant. )
)
and )
)
NEWS PRINTING CO., INC., )
)
Intervenor-Defendant. )
______________________________)
ORDER
Richard D. Lieberman, Washington, DC, for plaintiff. J. Randolph
MacPherson, Sullivan & Worcester, LLP, of counsel.
Robert E. Leidenheimer, Jr., Washington. DC, with whom was
Assistant Attorney General Frank W. Hunger, for defendant.
William J. Spriggs, Washington, DC, for intervenor-defendant.
Edward W. Gray, Jr., and Christopher E. George, Gray, Blount &
Associates, LLP, of counsel.
OPINION
MILLER, Judge.
This case is before the court after argument on defendant and
intervenor's Joint Motion for Summary Judgment. The protestor
initiated this post-award action seeking injunctive relief
restraining the Government from proceeding with performance of a
contract for printing patents. The issue is whether the
Government's providing the awardee with government-furnished
property not listed in the invitation for bids constitutes a
material modification requiring the termination and
resolicitation of the contract after the awardee returned the
government-furnished property to the Government and refused to
sign the proposed contract modification.
FACTS
Plaintiff, GraphicData, LLC ("plaintiff" or "GraphicData"), is a
limited- liability company that provides printed products to
commercial and government customers. Since 1987 plaintiff has
printed patents for the Patent and Trademark Office (the "PTO")
pursuant to a series of contracts with the Government Printing
Office (the "GPO").1 Plaintiff's most recent contract with the
GPO expired on April 22, 1997. The gravamen of plaintiff's cause
of action is that the GPO violated its own regulations and basic
principles of fair bidding when it provided the awardee,
intervenor News Printing Company, Inc. ("NPC" or "intervenor"),
with an electronic file that was not listed in the invitation for
bids (the "IFB") as government-furnished property. The court
first discusses the patent printing process and next the
procedural history of this case. Unless otherwise noted, the
facts are not disputed.
1. The patent printing process
Pursuant to the terms of the GPO Program D306S, patents are
printed in weekly "issues." Each issue contains approximately
2,400 patents. A printed patent is made up of three types of
pages: (1) a cover/title page(s), which contains an abstract of
the patent; (2) a drawing page(s), which contains a drawing(s) of
the invention; and (3) a text page(s), which contains a fill
description of the patented device. Program D306S contractors
print patents in two different formats referred to, respectively,
as "soft copy" and "hard copy." Patents in soft copy format are
printed on standard 8.5" by 11" paper, and patents in hard copy
are printed on paper that is longer, narrower, thicker, and
stiffer than standard 8.5" by 11" paper. The pages of a soft copy
patent are printed on both sides.2 The title page(s) and drawing
page(s) of a hard copy patent only are printed on one side.3 For
each patent the PTO typically orders 33 soft copies and eight
hard copies.
The D306S contractor does not use a conventional printing press
to meet the PTO duplication requirements. Instead, the contractor
receives, on a weekly basis, an 8mm tape(s) that contains in
postscript format each of the patents included in that week's
issue. The printer uses Xerox equipment to print the patents
contained in the 8mm tapes on the appropriate size paper.
At the same time as the contractor receives the weekly 8mm
tape(s), the contractor also receives a paper document known as a
"Patent Issue Master Closeout List" (a "PIMCL"). The PIMCL
informs the contractor, by patent number, of certain patent
format information such as the number of (1) title pages, (2)
drawing pages, and (3) text pages. The contractor uses the PIMCL
to produce the "invoice support listing." The invoice support
listing is a report that the contractor is required to produce on
a weekly basis detailing the types and quantities of patents that
were printed in a given week. The contractor does not produce the
invoice support listing until after the printing of the weekly
issue is completed.
The patent format information contained in the PIMCL also can be
stored in computer format. The parties refer to the computerized
patent format information as the "electronic file." Plaintiff
contends that the electronic file allows the contractor to
greatly streamline the printing process and to reduce its costs
of performing the contract with the GPO. While conceding that the
patent format information contained in the electronic file may be
relevant to printing hard copy patents, defendant and intervenor
counter that "[r]eceipt of the 'Electronic File' does not by
itself permit the automation of the printing process because the
'patent format information' on the 'Electronic File' cannot
simply be fed into the Xerox printers." Def's & Int's Br. filed
Apr. 18, 1997, at 8-9. They explain that, before the electronic
file can automate the printing process, the contractor first must
write two computer programs, one that extracts the patent format
information from the electronic file and one that connects the
patent format information with the 8mm tapes.
2. History of the solicitation
The instant dispute arose from a solicitation for the printing of
patents issued by the GPO on July 24, 1996. At the time of the
solicitation, plaintiff was the incumbent contractor for Program
D306S. The solicitation, issued in the form of an invitation for
bids, provided for a bid opening date of August 24, 1996. IFB(I)4
stated that the patents would be furnished to the contractor on
8mm exabyte tapes and that the low bidder, as a prerequisite to a
responsibility determination, would be required to produce copies
of 100 patents from a government-furnished tape.
According to plaintiff, IFB(I) indicated that the GPO would make
available to the awardee the following government-furnished
property ("GFP"): (1) "Camera Copy" for Certificates of
Correction, Dedications, Disclaimers, Adverse Actions and Special
Certificates; (2) Opaque overlay copy; (3) on occasions, some
camera copy for reprints; (4) photoprints; (5) preaddressed
mailing label sets; (6) two computer-generated lists for each
patent issue, one for hard copies (printed on 25% Rag Ledger) and
one for soft copies (printed on white offset book and also
furnished on 3.5" disk); (7) subscription list on 3.5" disk; (8)
computer generated list of the copy for all Certificates of
Correction; and (9) notices of withdrawn patents by telefax.
The GPO opened the bids for IFB(I) on August 21, 1996. The GPO
identified NPC as the low bidder with a bid of $2,977,731.00, and
plaintiff as the second low bidder with a bid of $3,064,439.00.
On August 22, 1996, Jack Marken, the contracting officer,
received two letters from plaintiff. The first letter requested
that the GPO allow plaintiff to correct a mistake in its bid
concerning plaintiff's prompt payment discount. The second letter
requested the GPO to increase the amount that the GPO had added
to NPC's bid for evaluating travel and per diem costs for an on-
site government representative and for evaluating the cost of
delivering government-furnished materials. Mr. Marken informed
plaintiff by letter dated September 18, 1996, that he was denying
all of plaintiffs requests. Plaintiff subsequently filed a
protest with the Government Accounting Office (the "GAO") on
September 26, 1996. See GraphicData, L.L.C., B-2744773.1 (Sept.
26, 1996). The protest reiterated the same objections that
plaintiff had made to Mr. Marken. Pursuant to 3 1 U.S.C. 3553
(1994), the GPO stayed award of the contract while plaintiff's
protest was pending.
On September 26, 1996, the GPO conducted a pre-award survey of
NPC. According to plaintiff, Gerry Groeber, one of the members of
the pre-award survey team and a PTO Quality Assistance
Specialist, took exception to NPC's pre-award test due to the
fact that employees of the Xerox Corporation, a subcontractor for
NPC. rather than employees of NPC, performed the pre-award test.
IFB(I) specifically prohibited the use of subcontractors.
Plaintiff contends that, upon realizing that NPC employees had
not performed the pre- award test, Mr. Groeber advised the GPO
survey team members that NPC had not proved that it was a
responsible contractor. Despite Mr. Groeber's alleged comments,
the GPO found NPC to be responsible on October 3, 1996.
On October 23, 1996, the GPO advised bidders that it was
canceling the solicitation opened on August 21, 1996, and that it
would issue a new solicitation. The GPO cited significant changes
in the PTO's requirements as the reason for the cancellation.
Because the GPO canceled IFB(I), the GAO dismissed GraphicData's
September 26, 1996 protest as moot. On November 4, 1996, the GPO
issued a new solicitation for Program D306S with a bid opening
date of November 27, 1996 (IFB II). Although the new solicitation
contained revised requirements for the number of patents to be
printed, the specifications in the new solicitation were quite
similar to the specifications in IFB(I). IFB(II) required the
low, bidder to complete satisfactorily a pre- award test,
identical to the test set forth in IFB(I), prior to a
responsibility determination. Like IFB(I), IFB(II) stated that
the GPO would provide the awardee with 8mm exabyte tapes
containing the patents in electronic form and with other GFP that
was identical to the GFP to be provided in IFB(I).
On November 18, 1996, NPC filed a protest with the GAO contending
that some of the terms in IFB(II) were unsatisfactory. On
November 27, 1996, R.R. Donnelley Co., a printer that had not
submitted a bid in response to IFB(I), also filed a protest
claiming that the terms of IFB(II) were overly restrictive. Under
the sponsorship of the GAO, an Administrative Dispute Resolution
conference was held on December 19, 1996, in an attempt to
resolve the pending, protests. Representatives of plaintiff, NPC,
R.R. Donnelley, the GPO, and the PTO attended the conference. The
conference resulted in Mr. Marken's amending, IFB(11) to address
the respective concerns of the parties. Subsequently, NPC and
R.R. Donnelley withdrew their GAO protests.
The GPO extended the bid opening date of IFB(II) from November
27, 1996, to January 23, 1997. Upon opening the bids oil January
23, 1997, the GPO determined that NPC was the low bidder with a
bid of $2,173,605.00 and that plaintiff was the second low bidder
with a bid of 2.364,324.00.
Beginning on January 27, 1997, plaintiff filed three new protests
with the GAO. Plaintiff's protests claimed that (I) the
contracting officer had waived the pre-award test requirement in
IFB(II) for NPC, and the GPO intended to award the contract to
NPC, despite the fact that NPC could not pass the pre- award
test; (2) NPC's inability to comply with the IFB(I) pre-award
test on September 26, 1996, in combination with the GPO's
approval of that test, constituted an act of bad faith that
extended into IFB(II); (3) the GPO had attempted to influence the
IFB(II) responsibility determination by excluding Mr. Groeber,
who had alerted his fellow IFB(I) pre-award survey team members
of NPC's deficiencies, and all other PTO employees from the
IFB(II) pre-award survey team; and (4) GPO's pre-award survey
team for IFB(II) was not qualified. The GAO dismissed all three
of plaintiff's protests on February 25, 1997. The GAO found that
1) the GPO invited the PTO to participate in the IFB(II) pre-
award survey and therefore the GPO did not exclude the PTO from
the pre-award survey; 2) the record "unequivocally" demonstrated
that NPC successfully completed the IFB(II) pre-award test; and
3) the selection of the pre-award test review panel was within
the discretion of the GPO. GraphicData, L.L.C., B-274773.5;
B-274773.6; B-274773.7 (Feb. 25, 1997).
The GPO awarded a contract to NPC on February 26, 1997. NPC was
to receive its first 8mm tapes and begin its printing production
cycle for the April 29, 1997 issue of patents on April 10, 1997.
3. Facts concerning the electronic file
On March 24, 1997, Mr. Groeber, the PTO in-house liaison at the
Program D306S contractor, suggested to Leroy Daniel Corbin, the
Vice President of Digital Services for NPC, that the GPO might be
able to supply NPC with an electronic file detailing the number
of title pages, illustration pages. and text pages per patent.
Mr. Groeber mentioned the possibility of NPC's obtaining the
electronic file after he learned that the hard copy/advance order
list supplied by the GPO contained errors. Acting upon Mr.
Groeber's suggestion, Mr. Corbin wrote to Richard Weiss, the GPO
Contracting Officer's Technical Representative, on March 24,
1997. Mr. Corbin's letter stated, in pertinent part:
While discussing some data issues related to the 306S, we have
come to realize that the PTO may be able to forward an additional
electronic file that would prove to be beneficial for NPC. This
file could contain additional information and be more accurate
than Currently being supplied. The additional file would contain
the following data:
Patent Number
Number of cover pages
Number of text pages
Number of drawing pages
Mr. Groeber suggested that NPC make a formal request to you for
this electronic file. Assuming this file is something that PTO
will be able to supply, the file should be supplied in ASCII text
format and be received by NPC on or before PWD [Prior Workday]
14.[5]
On March 27, 1997, Mr. Groeber asked Al LePera, plaintiff's D306S
Program Manager, why plaintiff had never made a request to the
GPO for the electronic file. Lorenzo T. Berry, plaintiff's
Director of Information Services, replied on March 28, 1997,
telling Mr. Groeber that plaintiff had requested the electronic
file in 1995 when the GPO first began using 8mm exabyte tapes for
furnishing patents to the D306S contractor. Mr. Berry explained
that the GPO had prohibited plaintiff from requesting the
electronic file from Reed Technology and Information Services
("RTIS"), the PTO contractor that prepares the 8mm tapes. During
his conversation with Mr. Groeber, Mr. Berry asked whether the
GPO now intended to provide NPC with the electronic file. Mr.
Groeber told Mr. Berry that RTIS was awaiting an official request
for the tape before proceeding any further.
On April 2, 1997, 35 days after contract award, the GPO drafted a
second modification to its contract with NPC ("Mod 2"), which
states, in pertinent part:6
3. On page 15 of 32, under GOVERNMENT TO FURNISH, add the
following: The Government shall provide the following patent
print information in an electronic file: Patent Number; Number of
cover pages; Number of text pages; and Number of drawing pages.
The file will be supplied in an ASCII text format. It will be
available along with the paper copy on the same day that the
patent print tape is picked up.
Mod 2 contains the signature of Jack Marken, the D306S
Contracting Officer. Although NPC had not signed the
modification, NPC gave no indication during the hearing on
plaintiffs application for a temporary restraining order that the
modification would be rejected.
4. Summary of litigation in the United States Court of Federal
Claims
On April 7, 1997, plaintiff filed an application for a temporary
restraining order and a motion for a preliminary injunction with
the Court of Federal Claims. Plaintiff sought to enjoin the GPO
from acquiring printing services from any bidders other than
GraphicData. Plaintiff's request for injunctive relief was based
on two counts: 1) By providing NPC with the electronic file after
the award of the contract, the GPO did not treat all bidders
fairly7; and 2) the GPO improperly excluded Mr. Groeber from the
IFB(II) pre- award survey.8 On the same day NPC filed a Motion To
Intervene pursuant to RCFC 24. The court granted NPC's motion on
April 7, 1997.
On April 8, 1997, the court held a hearing on plaintiff's
application for a temporary restraining order. The court took
testimony from three witnesses, Messrs. Berry and Corbin and
Kenneth Margulies, the Chief Executive Officer of GraphicData.
See infra pp. 12-14 (discussing propriety of holding evidentiary
hearing under Tucker Act bid protest jurisdiction). Mr. Berry
testified that had the GPO listed the electronic file as GFP in
IFB(II), plaintiff would have lowered its bid significantly.
According to Messrs. Berry and Margulies, the electronic file
would have allowed plaintiff to use three, instead of five,
DOCUTEC machines9 and to reduce its work force by 40-50%. Mr.
Berry explained:
But I'm telling you now on this witness stand under oath that if
I were armed with that information [the electronic file], I could
take that tape, feed that tape directly into one of the new model
DOCUPRINTS which have succeeded the DOCUTEC and I could then feed
that directly into that machine.
I could then use a piece of firmware, which is a combination of
hardware and software. That's why it's called firmware. And
utilizing something called XGF, I could feed to the printer that
electronic file which is simply an ASCII, for American Standard
Code Information Interchange, and ASCII is simply binary numbers,
zeros and ones.
I could feed that information to the printer of the DOCUTEC. And
as I'm feeding that postscript tape in, I now tell the printer of
the DOCUTEC which pages I want to be one sided and which pages I
want to be two sided. And I'm off and running with no special
process for what we call "McLedger."
Mr. Corbin disagreed with Mr. Berry's assessment of the
electronic files. He testified that the electronic file, as
provided to NPC by the GPO, would not facilitate significantly
the automation of the patent printing process. He explained that
the patent format information contained in the electronic file
was not in a workable ASCII format. To take advantage of the
information provided in the electronic file, a programmer must
write an extraction program. Mr. Corbin also indicated that NPC
currently was not using the electronic file and had not signed
the GPO's proposed modification that would include the electronic
file as GFP.
The court denied plaintiff's application for a temporary
restraining order, finding that plaintiff had not established a
substantial likelihood of success on the merits, because either
the regulation requiring the GPO to list all GFP in the
solicitation, Government Printing Office Printing Procurement
Regulation ch. I, 6(2)(b) (Oct.1990), was not violated, as it was
not intended to address this situation, or, if it was, plaintiff
had not shown that the use of the electronic file would afford
the awardee an advantage, such that plaintiff was prejudiced.
Pursuant to RCFC 65(a)(2), the court consolidated plaintiff's
motion for preliminary injunction and complaint for a permanent
injunction. By order entered on April 9, 1997, as amended on
April 10, 1997, trial was scheduled.
On April 16, 1997, counsel for defendant and intervenor announced
their intention to file a joint motion for summary judgment,
arguing that plaintiff's cause of action was moot because NPC had
never signed the modification which included the electronic file
as GFP. The parties agreed that the best course for resolving the
issue raised by movants would be to postpone trial and to put in
place an expedited summary judgment briefing schedule.
DISCUSSION
1. Standard and scope of review
In 1996 Congress amended the Tucker Act, 28 U.S.C. 1491 (1994),
to grant the Court of Federal Claims jurisdiction to entertain
post-award bid protest actions. See 28 U.S.C.A. 1491(b) (West
Supp.1997). Prior to the amendment, the Court of Federal Claims
had jurisdiction to decide pre-award bid protest actions under
the theory that by soliciting bids the Government impliedly
promises to consider all bids in a fair.and honest manner. New
Am. Shipbuilders v. United States, 871 F.2d 1077, 1079
(Fed.Cir.1989); NKF Eng'g, Inc. v. United States, 805 F.2d 372,
375-76 (Fed.Cir.1986); National Forge Co. v. United States, 779
F.2d 665, 667 (Fed.Cir.1985). Jurisdiction over post-award bid
protests, however, had been exclusively in the hands of the
United States district courts. The district courts premised their
jurisdiction over post-award bid protest actions on section 10 of
the Administrative Procedure Act (the "APA"), 5 U.S.C. 702
(1994). See Scanwell Labs., Inc. v. Shaffer, 424 F.2d 859, 872
(D.C.Cir.1970).
The 1996 amendment to the Tucker Act gives the Court of Federal
Claims and the district courts concurrent jurisdiction to decide
both pre-award and post-award bid protest actions. The amendment
directs the courts to apply the standard of review set forth by
the APA:
(b)(1) Both the Unite[d] States Court of Federal Claims and the
district courts of the United States shall have jurisdiction to
render judgment on an action by an interested party objecting to
a solicitation by a Federal agency for bids or proposals for a
proposed contract or to a proposed award or the award of a
contract or any alleged violation of statute or regulation in
connection with a procurement or proposed procurement. Both the
United States Court of Federal Claims and the district courts of
the United States shall have jurisdiction to entertain such an
action without regard to whether suit is instituted before or
after the contract is awarded.
(2) To afford relief in such an action, the courts may award any
relief that the court considers proper, including declaratory and
injunctive relief except that any monetary relief shall be
limited to bid preparation and proposal costs. ....
(4) In any action under this subsection, the courts shall review
the agency's decision pursuant to the standards set forth in
section 706 of title 5.
28 U.S.C.A. 1491(b).
While the amendment to the Tucker Act presents the Court of
Federal Claims with post-award bid protest actions for the first
time, it does not change judicial review of a bid protest action.
Under its prior pre-award bid protest jurisdiction, the Court of
Federal Claims, per the direction of the Federal Circuit, found a
breach of implied contract, and thus a violation of the
procurement process, where "the contracting agency acts in an
arbitrary and capricious, i.e., irrational or unreasonable,
manner in rejecting the bid." NKF Eng'g, 805 F.2d at 376; CACI,
Inc.-Fed. v. United States, 719 F.2d 1567, 1573 (Fed.Cir.1983).
In order to obtain injunctive relief, a frustrated bidder was
required to establish. by a preponderance of the evidence, that
the agency's actions 1) were without a reasonable basis, or 2)
violated an applicable procurement statute or regulation. See
CACI Field Servs., Inc. v. United States, 854 F.2d 464, 466
(Fed.Cir.1988) (per curiam); National Forge, 779 F.2d at 668;
Logicon, Inc. v. United States, 22 Cl.Ct. 776, 782-83 (1991)
(citing Tackett & Schaffner, Inc. v. United States, 224 Ct. Cl.
530, 536, 633 F.2d 940, 942 (1980)). Under its new jurisdiction
to hear both pre-award and post-award bid protest actions, the
Court of Federal Claims can hold unlawful and set aside agency
actions that are "arbitrary, capricious, an abuse of discretion,
or otherwise not in accordance with law; ..." 5 U.S.C. 706(b);
see 28 U.S.C.A. 1491(b)(4).
The standard of review applied by the Court of Federal Claims in
pre-award bid protests cases is identical to the standard now
imposed on the court by the amendment to the Tucker Act. This is
not surprising given that the Federal Circuit has found that
"Congress intended the Claims Court [now the Court of Federal
Claims] to have the same authority over suits by unsuccessful
bidders (brought before the contract was awarded, Grimberg, 702
F.2d at 1369) that the district courts had under Scanwell." CACI
Inc.-Federal, 719 F.2d at 1573 (citing S.Rep. No. 275, 97th
Cong., 2d Sess. 23 (1981), reprinted in 1982 U.S.C.C.A.N. 11, 33,
and H.R.Rep. No. 312, 97th Cong., 1st Sess. 43 (1981)).
Just as the 1996 amendment to the Tucker Act does not change the
standard of review to be applied to bid protests, the amendment
does not alter the scope of the Court of Federal Claims' inquiry.
Under its pre-award bid protest jurisdiction, the Court of
Federal Claims generally limited its review to the facts before
the administrative agency at the time the contested action was
taken. See Stapp Towing Inc. v. United States, 34 Fed. Cl. 300,
307 (1995) (citing Florida Power & Light Co. v. Lotion, 470 U.S.
729, 743 (1985)). However, the Court of Federal Claims did not
apply an iron-clad rule automatically limiting its review to the
administrative record. Instead, the court permitted
supplementation of the administrative record:
(1) when the agency action is not adequately explained in the
record before the court;
(2) when the agency failed to consider factors which are relevant
to its final decision;
(3) when an agency considered evidence which it failed to include
in the record;
(4) when a case is so complex that a court needs more evidence to
enable it to understand the issues clearly;
(5) in cases where evidence arising after the agency actions show
whether the decision was correct or not; ...
(8) in cases where relief is at issue, especially at the
preliminary injunction stage.
Stapp Towing, 34 Fed. Cl. at 307-08 (quoting Esch v. Yeutter, 876
F.2d 976, 991 (D.C.Cir.1989)); see IMCO, Inc, v. United States,
33 Fed. Cl. 312, 317 (1995) (containing similar language), aff'd,
97 F.3d 1422 (Fed.Cir.1996); Bradley v. United States, 26 Cl.Ct.
699, 701 (1992) (same), aff'd, I F.3d 1252 (Fed.Cir.1993)
(Table); Simons v. United States, 25 Cl.Ct. 685, 694 n. 17 (1992)
(same), aff'd, 17 F.3d 1444 (Fed.Cir.1994) (Table). In post-award
bid protest cases governed by Scanwell and the APA, federal
district courts have taken the same approach as the Court of
Federal Claims with regard to the scope of their review of agency
actions. See Esch, 876 F.2d at 991.
No reason exists to presume that Congress, in granting the Court
of Federal Claims jurisdiction to entertain post-award bid
protest actions, intended to impose upon the court an absolute
rule limiting review to the administrative record. The 1996
amendment to the Tucker Act, for example, does not preclude the
Court of Federal Claims from deciding post-award bid protest
cases where the alleged improper agency conduct either occurred
after the award of the contract or where the agency relied on
materials not in the administrative record. While a disappointed
bidder does not have the right to have a federal court substitute
its judgment for that of the administrative agency, the bidder
does have the right to introduce appropriate evidence to allow
the court to determine whether the agency action was "arbitrary,
capricious, an abuse of discretion, or otherwise not in
accordance with law." 5 U.S.C. 706.
With this understanding of the APA in mind. a judge confronted
with a bid protest case should not view the administrative record
as a immutable boundary that defines the scope of the case.
Initially, the judge should determine whether the agency action
before the court is susceptible to a record review. If the answer
is yes, the judge must limit review to the record. If the answer
is no, however, the judge should recognize the long lineage of
cases recognizing the need to supplement the administrative
record in certain circumstances. As Judge Bruggink explained in
Cubic Applications, Inc. v. United States, 37 Fed. Cl. 345, 349
(Fed.Cl.1997) (citation omitted) (emphasis added):
[T]he primary focus of the court's review should be the materials
that were before the agency when it made its final decision. This
is a presumption necessitated by the limited nature of the
court's inquiry. As a practical matter, however, in most bid
protests, the "administrative record" is something of a fiction,
and certainly cannot be viewed as rigidly as if the agency had
made an adjudicative decision on a formal record that is then
certified for court review. This is true in the contract award
context if for no other reason than that. due to the absence of a
formal record, the agency has to exercise some judgment in
furnishing the court with the relevant documents. In order to
preserve a meaningful judicial review, the parties must be able
to suggest the need for other evidence. and possibly limited
discovery aimed at determining, for example, whether other
materials were considered, or whether the record provides an
adequate explanation to the protester or the court as to the
basis of the agency action, It follows that discovery as well as
the breadth of the court's review has to be tailored in each
case, Whether testimony is needed to frame the issues is likewise
dependent on the particular circumstances. Consequently, this
court has adopted a flexible approach both in putting together
the evidence that will be considered and in discovery, balancing
the limited nature of the court's review with the competing need
to recognize potential exceptions to treating the agency's
submission as the four corners of the inquiry.
The facts of the case at bar illustrate why the Court of Federal
Claims and the district courts have allowed for supplementation
of the administrative record. Plaintiffs complaint alleged that
the GPO violated its own procurement regulations and basic
principles of fair solicitation when, after awarding NPC the
contract, it provided NPC with the electronic file, which was not
listed as GFP in IFB(II). Limiting the court to the
administrative record effectively would prevent the court from
determining whether the GPO's actions were "arbitrary,
capricious, an abuse of discretion, or otherwise not in
accordance with law." 5 U.S.C. 706(b). To rule on plaintiffs
request for temporary injunctive relief. the court had to inquire
into the utility of the electronic file. The response to this
question would not be contained in any administrative record.
2. Summary judgment standards
Summary judgment is appropriate when there are no genuine issues
of material fact in dispute and the moving party is entitled to
judgment as a matter of law. RCFC 56(c); Seal-Flex, Inc. v.
Athletic Track and Court Const., 98 F.3d 1318, 1321
(Fed.Cir.1996) (citing Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 251-52 (1986)). The moving party bears the initial burden of
establishing the absence of any disputes of material fact. Id.
(citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)).
"When the movant has met its initial burden, the non-movant must
respond with sufficient evidence to show that there is a material
factual dispute and that, on the non-movant's evidence, the
movant is not entitled to judgment as a matter of law." Id. The
Supreme Court has emphasized that the "[s]ummary judgment
procedure is properly regarded not as a disfavored procedural
shortcut but, rather as an integral part of the Federal Rules as
a whole, which are designed 'to secure the just, speedy and
inexpensive determination of every action....' " Celotex, 477
U.S. at 327 (citation omitted).
3. Contract modifications and their effect on the competitive
bidding process
Generally, disappointed bidders asking a federal court to enjoin
performance of a contract base their request on some action of
the procuring agency or the awardee that occurred during the
solicitation process. Plaintiff, however, does not take issue
with the GPO's decision to award the D306S contract to NPC.
Instead, plaintiff challenges the GPO's post-award offer to
modify the contract to include the electronic file as GFP. To
resolve plaintiff's claim, the court must consider to what extent
the federal policy of competitive bidding limits an executive
agency's ability to modify a procurement contract.
The Competition in Contracting Act (the "CICA") requires
executive agencies procuring property or services to "obtain full
and open competition through the use of competitive procedures."
41 U.S.C. 253(a)(1)(A)(1994). In AT & T Communications, Inc. v.
Wiltel, 1 F.3d 1201 (Fed.Cir.1993), a disappointed bidder
challenged a bilateral modification to a telecommunications
contract between the General Services Administration and the
awardee, contending that the modification violated the CICA's
competition requirement. Id. at 1202- 03. The Federal Circuit
explained that the "CICA ... does not prevent modification of a
contract by requiring a new bid procedure for every change.
Rather, only modifications outside the scope of the original
competed contract fall under the statutory competition
requirement." Id. at 1205; see Executive Bus. Media, Inc. v.
United States, 3 F.3d 759, 764 (4th Cir.1993); Cray Research,
Inc. v. Department of Navy, 556 F.Supp. 201, 203 (D.D.C.1982);
American Air Filter Co., 57 Comp. Gen. 285, 286 (1978).
Because the CICA does not contain a standard for determining
whether a modification falls within the scope of the original
contract, the Federal Circuit drew an analogy to the "cardinal
change" doctrine. See AT & T, 1 F.3d at 1205. Under the cardinal
change doctrine, a contractor is not bound by an agency's
unilateral modification to a procurement contract where the
modification "effects an alteration in the work so drastic that
it effectively requires the contractor to perform duties
materially different from those originally bargained for." Id.
(quoting Allied Materials & Equip. Co. v. United States, 215 Ct.
Cl. 406, 409, 569 F.2d 562, 563-64 (1978)). Just as the cardinal
change doctrine prohibits an agency from compelling a contractor
to perform contract terms that are not within the scope of the
original bargain, the CICA prevents an agency from modifying a
contract to such an extent that the modified contract is
"materially different" from the contract for which a competition
was held:
The cardinal change doctrine asks whether a modification exceeds
the scope of the contract's change clause; this case [involving
CICA] asks whether the modification is within the scope of the
competition conducted to achieve the original contract. In
application, these questions overlap. A modification generally
falls within the scope of the original procurement if potential
bidders would have expected it to fall within the contract's
change clause.
AT & T, 1 F.3d at 1205 (citation omitted).
Whether the CICA's competition requirement prohibits the
modification of a procurement contract depends on whether the
original contract and the modification call for "essentially the
same performance." Executive Bus. Media, 3 F.3d at 763 n. 3. If
so, the disappointed bidder has suffered no harm because the
awardee is not receiving any benefits without fair competition.
If, however, the modification materially changes the scope of
performance, the disappointed bidder has a legitimate grievance
because the agency is awarding a new and different contract
without allowing the disappointed bidder to compete. See American
Filter Co., 57 Comp. Gen. at 286.
4. Actual modification requirement
Defendant and intervenor argue that they are entitled to judgment
as a matter of law because NPC did not accept the GPO's proposed
modification, did not use the electronic file to print patents,
and returned the electronic file to the GPO. The maintain that no
material change to the original competed contract can occur
unless the original contract is modified:
The existence of a contractual modification providing the
"Electronic File" to NPC is a threshold issue in this case.
Plaintiff does not cite, and we are unaware of, any case holding
that a contract must be rebid where a modification was considered
but rejected. Plaintiff cites a number of cases that stand for
the proposition that rebidding is required where a post-award
material modification amounting to a "cardinal change" in the
contract occurs.... Absent such a modification, however, the
winning bidder is simply performing the contract as bid and there
has been no disadvantage to anyone. As demonstrated below, no
modification with respect to the "Electronic File" occurred.
Accordingly, there is no possibility that "cardinal change" has
occurred, and plaintiff--under the precedent it relies upon--has
no cause of action.
Def's & Int's Br. filed Apr. 18, 1997, at 13-14 (citation and
footnote omitted).
Plaintiff counters that whether or not an actual modification to
the original contract occurred is not dispositive:
The Government reaches for a basis for summary judgment, and
latches on to the legal status of the modification. This entire
approach misses the point. The issue is that NPC wanted the
Electronic File, NPC requested the File, and the Government
(i.e., the Contracting Officer) went to great lengths to draft
and sign a modification that provided the Electronic File to NPC.
The Government and NPC were so certain that they would issue this
modification that they provided a "test" Electronic File at NPC's
request so that NPC could use it. Why was all this happening? The
reason can only be that both NPC and the Government believed the
Electronic File was useful, helpful, and would make NPC's
production more efficient--precisely why GraphicData wanted the
file, and precisely why it should have been called out as GFP in
the IFB. The issue for trial is why did NPC request the
Electronic File, why did GPO and PTO provide it to NPC and how
would this file aid in printing patents, not whether or not the
Contract with NPC was formally modified and signed by NPC.
Plf's Br. filed Apr. 24, 1997, at 9-10.
Federal bid protest law strikes a balance between two
principles--an agency's autonomy in making procurement decisions
and the bidders' right to equal treatment by the procuring
agency. Federal agencies "are entrusted with a good deal of
discretion in making procurement decisions." Grumman Data Sys.
Corp. v. Widnall, 15 F.3d 1044, 1046 (Fed.Cir.1994) (citing
Lockheed Missiles & Space Co. v. Bentsen, 4 F.3d 955, 958-59
(Fed.Cir.1993), and Tidewater Management Servs. Inc. v. United
States, 216 Ct. CI. 69, 84, 573 F.2d 65, 73 (1978)). To ensure
that agencies do not abuse this discretion, Congress empowered
the Court of Federal Claims and federal district courts to
override the agency decision-making process when a disappointed
bidder proves that an agency action was unreasonable or in clear
and prejudicial violation of a statute. See 28 U.S.C.A. 1491(b)
(West Supp.1997).
Plaintiff essentially asks the court to view the D306S contract
as if it had been modified and to determine whether the
hypothetical modification prejudices plaintiff In the event the
court finds the hypothetical modification prejudicial, plaintiff
requests that the court enjoin the contract and require the GPO
to resolicit the contract. If plaintiff's suggested approach were
adopted, the court would exceed its limited review powers and
would tread into an area reserved for agency discretion. By
imposing a modification on the parties to a procurement contract,
the court substitutes it views of the agency's procurement needs
for that of the agency. If the Government and awardee actually
modify a contract, the court can review the modification to
ensure that it does not violate the CICA, see AT & T, 1 F.3d at
1205, but the court cannot rewrite a solicitation to include a
modification not agreed to by the parties to the original
contract. See Lockheed Missiles, 4 F.3d at 959; Data Gen. Corp.
v. United States, 915 F.2d 1544, 1551 (Fed.Cir.1990).
Consequently, the court upholds the position of defendant and
intervenor that a disappointed bidder protesting an alleged
modification must prove that an actual modification occurred.
Attempting to avoid this holding, plaintiff urges that, because
NPC did not reject the proposed modification until after
plaintiff filed an application for a temporary restraining order,
judicial review is warranted:
The Government's and NPC's actions subsequent to the filing of
GraphicData's Complaint and Application for a TRO ("to withdraw"
the modification) reflect poorly on both of those parties, for
they are an obvious attempt to erase without actually changing an
improper and unfair action by the GPO. The facts are that NPC
requested a modification and GPO issued one and signed it. Only
after,. GraphicData's action was instituted in this Court did the
Government and NPC decide to "negate" that modification in an
attempt to defeat GraphicData's claims.
Plfs Br. filed Apr. 24, 1997, at 9 n. 6. While the court agrees
with plaintiff that the GPO's issuance of the proposed
modification only 35 days after the contract was awarded and
NPC's rejection of the proposed modification only after plaintiff
filed its lawsuit create the appearance of impropriety, the facts
of the case at bar do not warrant judicial scrutiny of the
agency's decision-making process. Contrary to plaintiff's
argument, the proposed, but rejected. modification did not
prejudice plaintiff. An actual modification that exceeds the
scope of the original contract harms disappointed bidders because
the modification prevents the disappointed bidders from competing
for what is essentially a new contract. See AT & T, 1 F.3d at
1205. In this case plaintiff had a full and fair opportunity to
compete for the same contract that NPC currently is performing.
The court does not rule out the possibility that, in the future,
a case may arise where in justice requires creating an exception
to the actual modification requirement. Given the fact that the
proposal and subsequent rejection of the modification did not
prejudice plaintiff, the court does not believe the convenient
timing both of the proposed modification and NPC's rejection of
it justifies fashioning an exception that blurs the lines between
agency discretion and judicial review. As the United States
District Court for the District of Columbia Circuit explained, "
'Courts should be reluctant to intervene absent a clear showing
of illegality by the party attempting to overturn the agency
determination." ' Cray Research Inc., 556 F.Supp. at 203 (quoting
M. Steinthal & Co. v. Seamans, 455 F.2d 1289, 1303
(D.C.Cir.1971)).
5. Effect of proposed modification on the original contract
Assuming, arguendo, that an exception were recognized to the
actual modification requirement, plaintiff must prove that the
proposed modification was outside the scope of the original
contract. Defendant and intervenor contend that NPC requested the
electronic file to double check the accuracy of data contained in
the 8mm tape, not to automate its printing process:
9. News Printing has never used the "electronic file" in any way
in the production of patents. News Printing was, and is, printing
patents without use of the "electronic file."
10. Although News Printing did not need the "electronic file" to
print patents, we were interested in examining the file to
determine if it could be used as a quality control check on the
data being extracted from the 8mm tape. News Printing's interest
in quality control of the data stemmed from its being told that
the liard copy/advance file contained flawed data.
Second Declaration of Leroy Daniel Corbin, Apr. 18, 1997, PP
9-10. Defendant and intervenor also argue that the electronic
file would not allow a printer to automate its printing process.
Although plaintiff put forth a prima facie case that use of the
electronic file would enable significant cost savings, plaintiff
fails to raise a genuine issue of material fact concerning NPC's
ability to use the electronic file to automate its printing
process. Plaintiff apparently agrees that the electronic file
would not have altered NPC's method of printing patents:
The Court must conclude that NPC's bid on Program D306S would not
have been affected in any way by the inclusion of a statement in
the Solicitation that the Electronic File would be provided as
GFP. Mr. Leroy Corbin, the NPC Vice President in charge of D306S
testified at the TRO hearing that the Electronic File was of no
use whatsoever to NPC, and NPC had no intention of using it. TRO
Tr. at 100. This is NPC's view of the value of the Electronic
File after NPC had experimented with the printing of 200 Test
Patents, plus one complete issue of test patents. TRO Tr. at 116.
Because it rejects the Electronic File as not useful, it is
beyond cavil that NPC may not now claim that, had the Electronic
File been specified as GFP in the solicitation, it would have
factored in savings when preparing its bid.
Plf's Br. filed Apr. 17, 1997, at 2 n. 2.
"The basic standard [in a bid protest case involving a
modification] is whether the modified contract calls for
essentially the same performance by the contract when originally
awarded so that the modification does not materially change the
field of competition." Cray Research, Inc., 556 F.Supp. at 203;
see AT & T, 1 F.3d at 1205. The field of competition is changed
where the modification allows the awardee to perform the contract
in a manner that disappointed bidders could not have anticipated
from the terms of the solicitation. See Bangar Contractors Corp.,
B-24007 1. 90-2 CPD 295 (Oct. 16, 1990) ("To make such a
modification [that exceeds the scope of the original contract] to
a contract awarded to [the awardee] ... under the terms of the
IFB as Written would be prejudicial to the other bidders on the
IFB since it would be essentially a sole-source award of the new
requirements to the contractor, thereby circumventing the
competitive procurement statutes."). Where a modification does
not change how an awardee performs a contract, the modified
contract calls for the "same performance" as the original
contract and the disappointed bidder is not prejudiced.
The record on summary judgment reveals that NPC requested the
electronic file for a limited purpose--to ensure the accuracy of
the data in the 8mm tapes. Mr. Corbin testified, and plaintiff
did not dispute, that the electronic file did not affect
plaintiff's method of patent production. The modification
therefore did not change how NPC performed its contract. Short of
offering some evidence that the electronic file would allow NPC
to alter its printing process, plaintiff could not succeed at
trial. Plaintiff failed to proffer such evidence. Although
plaintiff may speculate about what its expert could establish at
trial, the non-moving party "may not rest upon mere allegation or
denials of his pleading," Anderson, 477 U.S. at 256; see Litton
Indus. Prods. Inc. v. Solid State Sys. Corp., 755 F.2d 158, 164
(Fed.Cir.1985), or on argument of counsel. Levi Strauss & Co. v.
Genesco. Inc., 742 F.2d 1401, 1403 (Fed.Cir.1984); see Barmag
Barmer Maschinenfabrik AG v. Murata Machinery, Ltd., 731 F.2d
831, 836 (Fed.Cir.1984) (noting that opponent of summary judgment
must point to evidentiary conflict on record by counterstatement
or affidavit).
CONCLUSION
Although the trajectory of this protest altered during the
proceedings when intervenor rejected the modification, the court
endorses a bright-line test rule that a modification must be
effective, i.e., signed by both the awardee and the contracting
officer, before a cause of action lies for breach of the duty of
fair dealing by materially modifying a contract after award.10
Accordingly, based on the foregoing, defendant and Intervenor's
Joint Motion for Summary Judgment is granted. The Clerk of the
Court shall enter judgment for defendant and intervenor.
IT IS SO ORDERED.
No costs.
___________________________________
Christine Odell Cook Miller
Judge
_______________
1 The GPO contracts with private parties in order to meet the
requirements of the PTO. The printing of U.S. patents is known as
Program D306S.
2 The printing profession refers to pages printed on both sides
as "duplexed" pages.
3 The printing profession refers to pages printed on only one
side as "simplexed" pages.
4 Because the GPO ultimately canceled the July 24, 1996 IFB and
issued a new IFB on November 4, 1996, the court refers to the
July 24, 1996 IFB as "IFB(I)" and the November 4, 1996 IFB as
"IFB(II)."
5 Prior Workday 14 is April 10, 1997, the day NPC received its
first 8mm tapes.
6 The first modification does not concern the electronic file
and therefore is not relevant to the case at bar.
7 In support of its unfair treatment count. plaintiff directed
the court's attention to the Government Printing Office Printing
Procurement Regulation ch. I, 6(2)(a)-(b) (Oct.1990), which
provides:
a. Definition of "Property." As used in this regulation
"Government- furnished property" is property in the possession
of the Government and subsequently delivered or made available
to the prime contractor performing under contract with GPO for
printing, binding, and related services. GFP includes, but is
not restricted to, binders, camera copy (including artwork,
reproduction proofs, etc.), negatives, printed matter, labels,
bills of lading, paper. book cloth, manuscript copy,
transparencies, type, and stored data on reels or disks.
b. Policy on furnishing material. It is PPD policy that-
excluding printing media such as copy, tapes, negatives, etc.-
contractors will furnish all material required for the
performance of GPO contracts for printing, binding, and
related services. However, the GPO shall furnish material to a
contractor when it is determined to be in its best interest by
reason of economy, standardization. availability, expediting
production, or other appropriate circumstances. Material to be
furnished by GPO shall be described in the solicitation in
sufficient detail to permit evaluation by bidders.
8 Plaintiff's pleadings actually contain three counts, although
the third count is identical to the first count. Plaintiff
voluntarily dismissed its second count on April 17, 1997, so only
Count I is before the court for consideration.
9 A DOCUTEC machine is a high-speed publication system
manufactured by the Xerox Corporation which prints copies at the
speed of 135 words per minute.
10 All other arguments made by plaintiff that are not discussed
specifically have been considered carefully and found to be
without merit.
Reported at 37 Fed. Cl. 771 (1997)