Ariz. Dep't of Econ. Sec. v. Wormuth

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Arizona Department of Economic Security, Plaintiff, v. Christine Wormuth, Defendant.

No. CV-23-00250-TUC-LCK

United States District Court, D. Arizona

September 11, 2023

ORDER

Honorable Lynnette C. Kimmins, United States Magistrate Judge.

Pending before the Court is Plaintiff's Motion for Preliminary Injunction. (Doc. 22.) Defendant filed a response (Doc. 30) and Plaintiff replied (Doc. 32). The Court held an evidentiary hearing on August 15, 16, 17, and 29, 2023, and took the matter under advisement. (Docs. 34, 36, 38, 50.) The Court finds there are serious questions going to the merits and the balance of hardships tips sharply in Plaintiff's favor. Therefore, the Court grants Plaintiff's request for a preliminary injunction.

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff alleges that Defendant violated the Randolph Sheppard Act (RSA). Under the RSA, blind persons are given a priority for the operation of cafeterias on federal property. 20 U.S.C §§ 107(b), 107e(7). The RSA is carried out through state licensing agencies (SLA) in cooperation with the Secretary of the United States Department of Education (DOE). 20 U.S.C. § 107b. In Arizona, the SLA is Plaintiff Arizona Department of Economic Security (ADES). (Doc. 22, Ex 1 ¶¶ 2, 3.) ADES, through a licensed blind vendor, has operated the food services at the Army's Fort Huachuca since 2004. (Id. ¶ 4.) The current blind vendor, Scott Weber, has been operating those services since December 2013. (Id.)

The Army issued Solicitation Number W9124J21R0027, on March 25, 2022, seeking proposals to provide food services at Fort Huachuca. (Doc. 30, Ex. A, Attach. 1 at 3.) The Army stated that it would evaluate proposals on three factors, technical capability, past performance, and price, and it would employ a five-step process:

STEP 1. After initial evaluation of timely received proposals in accordance with (IAW) the evaluation criteria specified in this solicitation and based on those initial evaluations, to include the total evaluated price (TEP), a Competitive Range (CR) will be established from proposals evaluated as "Acceptable". If the contracting officer determines that a proposal should be excluded from the CR, the contracting officer will provide written notice of the exclusion to that offeror. If the SLA's proposal is excluded from the CR, the SLA may file a complaint with the secretary of Education under the provisions of 34 CFR § 395.37.

STEP 2. In accordance with Army Regulation 210-25 (Vending Facility Program for the Blind on Federal Property), the Government shall enter into discussions/negotiations with all offerors whose proposals have been determined to be in the CR established in Step 1, above. If, after discussions have begun, the Government determines that an offeror's proposal should no longer be included in the CR, the proposal will be eliminated from consideration for award. Written notice of the exclusion from the CR will be provided to unsuccessful offerors. If the SLA is removed from the CR at this time, the SLA may file a complaint with the Secretary of Education under the provisions of 34 CFR § 395.37.

STEP 3. The Government will request Final Proposal Revisions (FPRs) at the conclusion of discussions with the offerors remaining within the CR. The FPRs will be evaluated IAW the evaluation criteria specified in this solicitation. The Government does not intend to conduct further discussions after receipt of the FPRs. As such, offerors in the CR are cautioned to submit their best offer for the FPRs. However, if the contracting officer determines it necessary, the Government may establish a revised CR, reopen and conduct discussions again after receipt of FPRs, and then call for new FPRs.

STEP 4. After evaluation of the FPRs has been completed, the offeror with a technically acceptableproposal with the lowest evaluated reasonable price and acceptable past performance will be the offer that represents the LPTA offer for the Government. The LPTA evaluation process stops at this point. Subject to a determination of contractor responsibility, that offeror will receive award unless preempted by application of the SLA priority in accordance with SLA Priority (STEP 5), below.

STEP 5. If the LPTA offer, as determined under STEP 4 above, is not the SLA, the Government will determine if award to the SLA shall preempt the LPTA offeror using the following criteria in accordance with the R-SA:

(i) If the SLA's proposal was included in the CR, found to be technically acceptable with acceptable past performance and the SLA demonstrates through its proposal that it can provide such an operation at a fair and reasonable price as determined by the Government after applying the source selection criteria contained in the solicitation and provide food of high quality comparable to what is currently provided to service members, then priority/award will be given/made to the SLA subject to a determination of contractor responsibility and consultation with the Secretary of Education (IAW 34 CFR § 395.33(b).

(ii) If the SLA proposal does not meet all criteria listed in the RFP and in paragraph (i) above, the SLA priority will not apply and award will be made to the LPTA offeror subject to a determination of contractor responsibility. If the SLA is dissatisfied with an action taken relative to its proposal, it may file a complaint with the Secretary of Education under the provisions of 34 CFR § 395.37.

(Id. at 104-08 ¶¶ a(3), c.) On May 13, 2022, ADES submitted a proposal in response to the Solicitation. (Doc. 22, Exs. 3, 7, 9.)

On January 20, 2023, the Army notified ADES that it had been excluded from the Competitive Range (CR) and was out of consideration for the contract because it had been rated unacceptable in its technical capability. (Id., Ex. 10.) Upon request, the Army provided a debriefing letter to explain the basis for ADES's exclusion. (Id., Ex. 12.) The Army rated ADES unacceptable solely as to its staffing plan, sub-factor 2 under the technical capability category, which required the following:

To be considered acceptable, the Offeror shall clearly demonstrate that their staffing is appropriate to successfully perform the [performance work statement] PWS requirements. Appropriate staffing includes the number of personnel and the labor mix to successfully perform the PWS requirements. The offeror's staffing and rationale shall clearly demonstrate (1) that the number of staff and the associated labor type outside of serving times is appropriate to clearly demonstrate successful completion of the PWS requirements; and (2) the staffing will ensure successful continuous operations of all PWS tasks during the feeding times (to include as patrons/units rotate through the facility). Additionally, the offeror's staffing shall clearly demonstrate they can accommodate fluctuating workloads within a band of meals, minimize personnel turnover, and allow for crosstraining and cross-utilizing of personnel to perform the requirements of the

(Id. at 3-4.) The letter went on to list several ways in which ADES's staffing plan had been deemed unacceptable to meet the Solicitation requirements. As to the Thunderbird dining facility (Building 52107): for 1-750 meals (3 times per day), cashiers were understaffed 21-100%; and for the options of 1-250 meals (2 times per day) and 1-750 meals of 100% take-out (three times per day), no staffing was included. (Id. at 7.) As to the Weinstein dining facility (Building 85202): for 1-2250 meals (three times per day), cashiers were understaffed more than 101%; for 2251-4500 meals (three times per day) and 1-1500 meals (two times per day), food sanitation specialists (FSSs)/dining facility attendants (DFAs) were understaffed 1-21%; and for 2251-4500 meals of 100% take-out (three times per day), cashiers were understaffed 21-100%. (Id. at 7-8.)

ADES responded to the debrief letter and challenged the reasons it had been found technically unacceptable. (Doc. 22, Ex. 13.) ADES explained that it had included sufficient cashier staffing, but it had labeled them "admin/cashier" in the written technical proposal and "office clerk" in the staffing matrix. (Id. at 1.) With respect to the FSS/DFA positions, ADES argued that a discrepancy of up to 21% was not a sufficient basis to exclude its proposal, and ADES had used its experience to quantify the staffing numbers, which the Army had found adequate in the past. (Id. at 2.) It also noted that the FSS and DFA positions were cross-utilized to promote efficiency and savings, as it had explained in its proposal. (Id.) Finally, ADES stated that neither brunch/supper, nor take-out, were conducted at Thunderbird; however, ADES stated that it had included those scenarios in its pricing matrix. (Id.) Although not included in its staffing matrix, those numbers easily could have been provided upon request. (Id.)

After two specialists conducted a secondary review of ADES's staffing proposal, the Army still found it to be technically unacceptable. (Doc. 22, Ex. 14.) With respect to designating the cashier positions as "admin/cashier," the Army noted that the administrative person typically issued the change fund to the cashier and received it back to account for those funds. (Id. at 1.) By designating cashier and admin as the same position, it failed to provide a safeguard for those funds. (Id.) Also, the reviewers found there were enough hours designated for admin/cashier but the hours needed to be rearranged and Plaintiff needed to provide an explanation to meet the requirements. (Id.) Next, the Army noted that the Solicitation included brunch/supper and take-out scenarios for Thunderbird, regardless of whether currently offered, and ADES's failure to provide staffing for those scenarios was...