Earlier this month, the Court of Federal Claims (COFC) released the public version of its December 2021 decision in the protest of CACI, Inc.-Federal (CACI) of its exclusion from the award of a $774.3 million Army contract for an encryption device. COFC dismissed CACI's protest on standing grounds, finding that CACI had an unmitigable organizational conflict of interest (OCI) that rendered it ineligible for award — even though the agency had not raised the OCI issue until after CACI filed its bid protest in court. The decision, CACI, Inc.-Federal v. United States, No. 21-1823 (Jan. 13, 2022), serves as a reminder that in the heat of litigation, the government can assert new arguments that go to a protester's standing which, if accepted, can defeat a protest regardless of the merits of the underlying issues. The decision is also the latest in a string of protest dismissals based on standing from both COFC (see Aero Spray Inc. d/b/a Dauntless Air v. United States, No. 21-1079 (Oct. 28, 2021)) and the Government Accountability Office (GAO) (see AIS Engineering, Inc., B-420431.2 (Jan. 19, 2022) and Favor TechConsulting, LLC, B-420279, B-420279.3, B-420279.6 (Jan. 7, 2022)).

Summary of Decision

On November 16, 2020, the Army issued a Request for Proposal (RFP) for the "design, development, and production of the [Next Generation Load Device Medium (NGLD-M)]," a device used on battlefields to encrypt and decrypt sensitive information. CACI was one of five offerors who submitted proposals in response to the RFP and remained within the competitive range after the first round of proposal submissions, despite the Army finding a deficiency in CACI's technical proposal that earned it a rating of "Unacceptable." In the second round, CACI once again received an "Unacceptable" rating on its revised technical proposal, and as a result was not one of the two final awardees. The Army did not, however, assert that CACI was ineligible for award due to any OCI issue.

On September 8, 2021, CACI filed a post-award bid protest arguing that the Army unreasonably assigned the deficiencies that led to the "Unacceptable" rating. Subsequently, the Army and the Defendant-Intervenor Sierra Nevada Corporation (SNC) argued that, regardless of whether those deficiencies were improperly assigned, CACI's protest should be dismissed because CACI had an "unmitigable, biased ground rules OCI" that meant it could not be eligible for award and so lacked standing to protest. In support of this argument, the Army submitted a declaration from the contracting officer (CO). In that declaration, the CO—for the first time—asserted this OCI, based upon CACI's involvement (which CACI had disclosed in its proposal) in the development of technical and operational requirements relating to the NGLD-M. 

In response to the newly asserted OCI, CACI did not (according to the Court) address the merits of the new OCI allegation, and instead focused on "alleged procedural deficiencies with, perceived terminology issues in, and the timing of, the CO's declaration." The Court found that, while it would normally need to address how much weight, if any, to award to the CO's declaration, CACI's alleged failure to respond to the merits of the OCI issue meant that CACI had not met its requirement to prove it had standing to protest the award. As the Court summarized it, "once the OCI issue was raised, it was [CACI's] burden to affirmatively demonstrate that there was no OCI and that it was thus eligible for award." 

Takeaways 

• The CACI decision is important, as it confirms that standing issues (even when based on never-before-raised OCIs) can be raised at any point, even after the initiation of litigation. To be prepared for this possibility, it may be advisable for disappointed offerors to assess any OCI issues, and to prepare a merits-based defense to those issues, as early in the procurement process as possible.
• The decision also continues the more general trend in dismissals based on standing at both COFC and GAO. This highlights that, when making the decision to protest, contractors should be giving careful attention to standing issues, taking into account the developing caselaw in this area.

If you have questions about the CACI decision, standing issues, or the impact of OCIs on procurement and litigation, please contact one of the Miller & Chevalier attorneys listed below:

Jason N. Workmaster, jworkmaster@milchev.com, 202-656-5893

Alex L. Sarria, asarria@milchev.com, 202-626-5822

Sarah Barney*

*Former Miller & Chevalier attorney

The information contained in this communication is not intended as legal advice or as an opinion on specific facts. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. For more information, please contact one of the senders or your existing Miller & Chevalier lawyer contact. The invitation to contact the firm and its lawyers is not to be construed as a solicitation for legal work. Any new lawyer-client relationship will be confirmed in writing.

This, and related communications, are protected by copyright laws and treaties. You may make a single copy for personal use. You may make copies for others, but not for commercial purposes. If you give a copy to anyone else, it must be in its original, unmodified form, and must include all attributions of authorship, copyright notices, and republication notices. Except as described above, it is unlawful to copy, republish, redistribute, and/or alter this presentation without prior written consent of the copyright holder.