Glob. K9 Prot. Grp. v. United States

Walter Brad English, Maynard Nexsen PC, with whom were Jon D. Levin, Emily J. Chancey, and Nicholas P. Greer, all of Huntsville, AL, for plaintiff Global K9 Protection Group LLC.

Ryan Christopher Bradel, Ward &Berry PLLC, of Tysons, VA for plaintiff Michael Stapleton Associates, LTD.

Steven Gillingham, Assistant Director, with whom were Reginald T. Blades, Assistant Director, Patricia M. McCarthy, Director, and Brian M. Boynton, Principal Deputy Assistant Attorney General, Civil Division, Department of Justice, all of Washington, DC, for defendant.

Daniel Jonathan Strouse, Cordatis LLP, with whom were Joshua D. Schnell, all of Arlington, VA, for defendant-intervenor.

Tanya M. Salman, Michael Best &Friedrich LLP, with who was Nicole A. Vele, of Madison, WI and Washington, D.C., for movant-intervenor K2 Solutions, Inc.

OPINION AND ORDER

RYAN T. HOLTE Judge

On 22 September 2020, the United States Postal Service (USPS) issued Solicitation No. 2B-20-A-0087 to procure third-party canine mail screening for cargo on passenger airlines. Two months later, on 18 November 2020, American K-9 Detection Services (AMK9), now an awardee and defendant-intervenor but at that time a plaintiff, filed a protest before this court. See AMK9 2020 Compl., ECF No. 1, Am. K-9 Detection Servs., LLC v. United States, No. 201614 (Fed. Cl. Nov. 18, 2020). Now, after four years, two remands with related remand extensions,^[1] two formal re-solicitations,^[2] two injunctions,^[3] three re-awards splitting the contract into two

procurements,^[4] and approximately 34 total dog years,^[5] this case has finally reached its end.

On 22 October 2021, following the second formal remand of this case, see supra note 1, Contracting Officer (CO) Franklin filed a 20-page report on the "reopen[ing] [of] the [organizational conflict of interest (OCI)] investigation into [Michael Stapleton Associates (MSA)] . . . according to the guidelines provided by the [USPS Supplying Principles and Practices (SP&Ps)] and [provided] a complete and documented review of the OCI in light of the Court's findings," Am. K-9 Detection Servs., LLC v. United States, 155 Fed.Cl. 248, 312 (Aug. 2021). See 2020 AR at 3665-84 (CO Franklin's 22 October 2021 Decision Following Second Remand), ECF No. 125-5 (internal quotations omitted). CO Franklin found "it is impossible to conclude, looking back, that no OCIs existed" because "MSA had unequal access to information and possibly benefitted from biased ground rules." CO Franklin's 22 October 2021 Decision Following Second Remand at AR 3680-82; see Michael Stapleton Assocs., Ltd v. United States, 163 Fed.Cl. 297, 323, 328 (2022). CO Franklin reviewed in depth the actions of "Mr. X," a USPS Aviation Mail Specialist on the USPS technical evaluation committee, who sent "an internal presentation to . . . [an] Executive Vice President . . . at MSA during the 2020 solicitation process." Michael Stapleton Assocs., Ltd, 163 Fed.Cl. at 319-20. Specifically, Mr. X shared competitively useful information regarding "USPS' expected savings related to the 3PK9 program, expected costs, and planned order of rollout of airports." Id. at 320 (citing CO Franklin's 22 October 2021 Decision Following Second Remand at 3677). CO Franklin explored the potential motivation for Mr. X to impermissibly share such competitive materials, and noted the explanations provided by the government and MSA-the most likely of which, according to the government, was Mr. X was "under the 'mistaken impression' the contract following MSA's 2019 pilot program was sole-source." See id. CO Franklin also reviewed MSA employee Mr. Shelton's involvement with the TSA Mail Amendment and pilot program; specifically, that Mr. Shelton "manage[d] MSA's air cargo business line and, while [previously] at TSA, was closely involved in the development of TSA's canine screening program." See id. at 308, 323 n.8 (discussing why Mr. Shelton was walled off given his "continued inclusion" in the disputes surrounding these contracts). While CO Franklin did "not f[i]nd evidence of any OCIs that MSA had through Mr. Shelton, as he was [voluntarily] walled off from the proposal process" by MSA, CO Franklin recommended, in light of the "unequal access to information and biased ground rules" "the Postal Service [] end the MSA contract early and conduct a new competition to fulfill the requirement for canine screening services," largely due to Mr. X's involvement. CO Franklin's 22 October 2021 Decision Following Second Remand at 3682-83 (discussing corrective action to be taken by USPS: "modify the MSA contract so that the base term expires on November 6, 2023, instead of November 6, 2024, [] not [] exercise any renewal options under the contract [and] . . . conduct a new competition so that a new contract to fulfill the 3PK9 requirements will be in place at the conclusion of the 3-year term."); see Michael Stapleton Assocs., Ltd, 163 Fed.Cl. at 312, 323 n.8, 349 n.21. CO Franklin concluded Mr. X

"should not be permitted to participate on the next technical evaluation team for the follow-on contract" given his sharing of competitive information was a potentially unmitigated OCI. CO Franklin's 22 October 2021 Decision Following Second Remand at AR 3683; see Michael Stapleton Assocs., Ltd, 163 Fed.Cl. at 319.

On 18 February 2022, USPS took corrective action to mitigate the OCI by shortening MSA's contract by one year and cancelling all renewal options for the contract, along with unbundling the new solicitations. See supra note 2. In response, on 16 March 2022, MSA filed various disagreements at the agency level related to USPS' decision to unbundle the contract. 31 Oct. 2022 Public Order at 3, Michael Stapleton Assocs., Ltd, No. 22-573 (Fed. Cl. 31 Oct. 2022), ECF No. 72. Also in March 2022, offerors Global K9 Protection Group, LLC (GK9) and AMK9 submitted business disagreements pertaining to USPS' 18 February 2022 corrective action, arguing the measures were insufficient given MSA was still allowed to compete despite allegedly having an unfair advantage. Id. (citing AR at 6326-43 (AMK9's Initial Business Disagreement), 6344-50 (GK9's Initial Business Disagreement)). In May and June 2022, respectively, AMK9 and GK9 filed similar challenges before the Court. See id. Upon filing its Motion for Judgment on the Administrative Record (MJAR) and reviewing the administrative record, AMK9 discovered Mr. X participated in a "lessons learned" consultation for the 2022 resolicitation. Michael Stapleton Assocs., Ltd, 163 Fed.Cl. at 319. Concerning Mr. X's participation, the Court noted: "[i]f Mr. Shelton was walled off by MSA, the USPS should have followed suit regarding" Mr. X because "[t]he 'lessons learned' consultation and the TET are overlapping enough in content (analyzing the SOW) and members (including at least three members of both entities) to 'indicate the existence or potential existence of a conflict' because of the violation of the CO's directive to avoid OCIs." Id. at 324 ("CO Franklin reported [Mr. X's] correspondence with MSA likely 'further compounded' MSA's competitive advantage because the same [USPS] people were 'materially involved in both the development of the program and on the [USPS evaluation team]."). The Court reasoned: "USPS'[] continued inclusion of [Mr. X] was irrational as well as arbitrary and capricious because the USPS objectively-and in spirit-violated the directions of its own CO." See id. at 325 (citing Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324, 1332-33 (Fed. Cir. 2001) (additional citations omitted)).

On 31 October 2022, in response to the Court's request for information regarding, among other things, "a timeline [for] replacement of [MSA] . . . given [its] potential exclusion," 31 Oct. 2022 Public Order at 5, Michael Stapleton Assocs., Ltd, No. 22-573, the government filed a report and declaration from CO Baker. See Sealed Resp., Michael Stapleton Assocs., Ltd, No. 22-573, ECF No. 71 (explaining transition of MSA's alarm resolution contract could take up to "a year and a half"); see also Amended Sealed Resp., Michael Stapleton Assocs., Ltd, No. 22573, ECF No. 77; Michael Stapleton Assocs., Ltd, 163 Fed.Cl. at 346-47 (discussing CO Baker's declarations). In its subsequent 23 November 2022 decision addressing GK9 and AMK9's challenges to USPS' alleged insufficient corrective action, the Court reviewed USPS' plan to phase out MSA due to OCIs, including the prohibition of ongoing involvement with Mr. X, as detailed in CO Franklin's 22 October 2021 report. Michael Stapleton Assocs., Ltd, 163 Fed.Cl. 297 (30 Nov. 2022); see CO Franklin's 22 October 2021 Decision Following Second Remand. After considering the CO's 22 October 2021 report finding OCIs, USPS' decision to slowly phase out MSA, and the 2022 ongoing involvement of Mr. X, the Court "discuss[ed]

whether the SP&Ps and FAR prescribe the same remedy of disqualification when biased ground rules OCIs exist." Id. at 334. Although "generally agree[ing] with the USPS' proposed plans to phase-out MSA and disqualify MSA from future performance as a result of OCI-tainted solicitations," the Court determined the SP&Ps required an immediate injunction so "ma[de] [an] equitable determination" disqualifying MSA. Michael Stapleton Assocs., 163 Fed.Cl. at 308, 323 n.8. The Court accordingly denied MSA's 14 July 2022 MJAR in case No. 22-573, which "contend[ed] [] USPS'[] 'decision to conduct separate solicitations for 3PK9 and Alarm Resolution services was arbitrary and capricious.'" Id. at 318, 363; see MSA Sealed MJAR at 2, Michael Stapleton Assocs., Ltd...