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STRATEGIC ANALYSIS, INC. v. UNITED STATES DEP'T OF

August 29, 1996

STRATEGIC ANALYSIS, INC., Plaintiff,
v.
UNITED STATES DEPARTMENT OF THE NAVY, Defendant.



The opinion of the court was delivered by: FRIEDMAN

 This is a disappointed bidder case challenging the award of a contract to Management Resources, Inc. ("MRI"), by the United States Department of the Navy. The disappointed bidder, Strategic Analysis, Inc. ("SAI"), seeks a declaratory judgment that the contract was awarded in violation of the applicable law and regulations in an arbitrary and capricious fashion and that the contract therefore is void. In the alternative, plaintiff seeks injunctive relief to terminate the contract, award the contract to SAI or reopen the procurement process, in which case plaintiff asks that MRI be disqualified from further participation in this procurement. The case is before the Court on cross-motions for summary judgment and defendant's motion to dismiss.

 I. FACTUAL BACKGROUND

 On March 21, 1995, the Office of Naval Research (the "Navy") issued a Request for Proposals for the provision of management, administrative and technical support to the Joint Directors of Laboratories, a planning and coordination arm of the Department of Defense. Solicitation No. N00014-95-R-0001 ("RFP") at 2-3, Administrative Record ("A.R."), Vol. A, Tab 1. The RFP required offerors to provide key personnel in four categories: Supervisory Scientist/Engineer, Senior Analyst, Mid-Level Analyst, and Graphics/Clerical. Offerors were required to provide a resume for each of the proposed key personnel and, if the key personnel were not currently employed by the offeror, a signed letter of intent. RFP at 58-59. The RFP also required conference space within five miles of Arlington, Virginia, with a minimum of 400 square feet, viewgraph capacity and the ability to accommodate approximately 50 people. RFP at 5. In assessing the proposals, the Navy assigned the following weights to the various criteria: Technical Approach (55%), Personnel Qualifications (15%); Corporate Resources (15%), Corporate Experience (15%). Technical Evaluation Team Report at 5 (Aug. 25, 1995), A.R., Vol. A, Tab 18.

 After both SAI and MRI submitted their proposals, the Navy issued letters to each requesting "clarification to resolve minor irregularities and/or clerical mistakes." A.R., Vol. A, Tabs 11 and 12. The letter to SAI requested explanation of its response to the "Small Business Concern Representation" question. SAI responded by letter of July 27, 1995, explaining that it had "inadvertently omitted filling out" that section and enclosing a completed version of the section. A.R., Vol. A, Tab 13.

 The letter to MRI requested explanation of three items, two of which are the focus of this action: (1) MRI's response to the "Small Business Concern Representation" question (the same question asked of SAI); (2) the rough square footage of MRI's 50-person conference room; and (3) "the employment status of your proposed Supervisory Scientist/Engineer, Mr. Raymond F. Siewert." A.R., Vol. A, Tab 11.

 By letter of August 2, 1995, Patricia Coleman, President and CEO of MRI, responded as follows: She sent a completed version of the Small Business Response section, just as SAI had done. She provided a fuller description of MRI's conference room and included a floor plan. Finally, she described Mr. Siewert as "a part time employee [who] works an average of 32 hours per week. . . . Upon award of this contract, Mr. Siewert will immediately become available to work when, where and how ever long it takes to complete all associated tasks. A copy of his signed agreement letter is attached." A.R., Vol. A, Tab 14. The signed agreement letter offered Mr. Siewert employment as a "part-time employee" in the position of "Scientist/Engineer." The letter to Mr. Siewert was dated April 7, 1995; Mr. Siewert's signature, acknowledging acceptance of the position, is also dated April 7, 1995. Plaintiff asserts that this letter was backdated, that MRI forged Mr. Siewert's signature and that at the time Mr. Siewert was a consultant to MRI, not an employee. *fn1"

 On August 10, 1995, the Navy again wrote to MRI, this time asking it to "explain/substantiate . . . the employment status of your proposed Mid-level Analyst, Mr. Thomas P. Reidy, Jr." A.R., Vol. A, Tab 16. MRI, again through Ms. Coleman, responded on August 17 by sending a copy of Mr. Reidy's contingent employment letter which MRI stated was "inadvertently left out of our proposal." A.R., Vol. A, Tab 17.

 In assessing the proposals, the Navy found that MRI and SAI were technically the top two offerors. The Contracting Officer, Anna M. Weston, noted that "SAI appears to be slightly better than MRI in both areas [of risk and potential disruption]. But this difference is so minimal as to be insignificant in practice." Cost/Technical Tradeoff Analysis and Source Selection at 3, A.R., Vol. A, Tab 19. MRI's proposed costs were $ 74,000 per year less than SAI's, for a total of $ 370,000 over five years; Ms. Weston therefore concluded that "MRI's proposal is the clear better value over SAI's." Id. MRI was awarded the contract on September 25, 1995.

 On October 4, 1995, Ms. Coleman sent a letter to the Navy offering "further clarification regarding Mr. Siewert's employment status." A.R., Vol. A, Tab 27. According to this letter, Mr. Siewert initially was a consultant with MRI and verbally committed to become an employee and to serve as the Supervisory Engineer if MRI were awarded the Navy contract. Ms. Coleman also stated that Mr. Siewert did not personally sign the April 7 part-time employment letter of agreement but had authorized MRI to sign on his behalf. Id. Attached to the October 4 letter was a copy of a Professional Services Agreement ("PSA"), dated April 17, 1995, between MRI and Mr. Siewert, in which Mr. Siewert agreed to serve as an Independent Contractor to MRI. Id. at 2-4. The PSA was signed by Mr. Siewert and Paul Jacobs, Executive Vice President of MRI. *fn2" Also attached were copies of the April 7 part-time employment letter of agreement with Mr. Siewert's name signed by MRI (allegedly on Mr. Siewert's behalf), and an identical part-time employment letter of agreement signed by Mr. Siewert and dated October 3, 1995. Id.

 On October 5, 1995, SAI protested the award to MRI. A.R., Vol. A, Tab 30.

 On November 6, 1995, Ms. Coleman sent a letter to the Navy further explaining Mr. Siewert's employment status. In this letter she stated that Mr. Siewert had agreed to be the supervisory engineer on the Navy contract on April 3, 1995, and that the Professional Services Agreement had been sent to him by mistake instead of an employment letter of agreement. When Ms. Coleman discovered the mistake she asked Mr. Siewert to become an employee and he agreed. Ms. Coleman stated that the part-time employment letter of agreement "was meant to take the place of the PSA; however, the date was typed incorrectly." A.R., Vol. A, Tab 34 at 2. Attached to this letter was a letter from Mr. Siewert, dated November 4, 1995, addressed to the Navy contracting officer, Ms. Weston. Id. at 3-4.

 In this November 4 letter, Mr. Siewert stated that he had signed the PSA on April 17, 1995, and that he had agreed on May 4, 1995 to serve as Supervisory Scientist/Engineer if MRI was awarded the contract. He further stated that "on or about August 1, 1995 during a telephone conversation with Ms. Coleman I agreed to become a part time employee of MRI. At this time I verbally agreed that Ms. Coleman could inform your office of my change in employment status." A.R., Vol. A., Tab 34 at 3. Mr. Siewert added that "while there may have been confusion over my employment status, I have been and remain committed to work on this project with MRI. I believe my integrity is being questioned through [SAI's] protest, and I must state that at no time was there any attempt to deceive the government regarding my commitment to the project." Id. at 4.

 On November 21, 1995, the Navy submitted an Agency Report setting forth the Navy's position with respect to SAI's protest. A.R., Vol. A, Tab ii at 10. The Navy concluded that MRI had adequately represented the employment status of Mr. Siewert, noting in particular that "great credence should be given to the [November 4] statement of Mr. Siewert," and that "binding bilateral agreements between an offeror and its key personnel are not required so long as the awarding agency is reasonably assured that the personnel are committed to the offeror." Id.

 On February 5, 1996, the GAO found (1) that MRI did not intentionally misrepresent Mr. Siewert's employment status, and (2) that the Navy improperly held discussions with MRI but that SAI had not demonstrated any prejudice. It denied SAI's protest. A.R., Vol. A, Tab iii.

 During this same period, SAI also protested MRI's small business status to the Small Business Association. On September 27, 1995, MRI filed its protest. A.R., Vol. B, Tab 1. On October 25, 1995, the SBA issued a size determination finding MRI to be a small business concern. A.R., Vol. B, Tab 4. SAI appealed this determination to the Office of Hearing and Appeals. A.R., Vol. B, Tab 5 at 2-3. On January [ILLEGIBLE WORD], 1996, Hearing ...


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