CO's Determination of TAA Compliance Was Arbitrary and Capricious Says the Court of Federal Claims
The Court of Federal Claims issued a permanent injunction prohibiting purchase by the Marine Corps System Command of up to 300 Large Field Refrigeration Systems (“LFRS”) from Sea Box, Inc. (“Sea Box”) finding that the agency’s determination that the LFRS’ were compliant with the Trade Agreements Act (“TAA”) was arbitrary and capricious. After GAO denied its protest, Sea Box filed a motion in the Court of Federal Claims (“CFC”) to enjoin the agency from proceeding with the procurement. The agency agreed to voluntarily stay the procurement pending the CFC protest. The CFC entered a permanent injunction, finding that the award to Sea Box was “arbitrary, capricious, and not in accordance with the law.”
Reasonableness of Award Decision is Based on Proposals as They Stood at Time of Award
The CFC agreed with Klinge that in a bid protest, proposals must be evaluated as they stood on the day of award. It rejected Sea Box’s offer to alter its method of manufacture after the filing of the protest and in response to the CFC’s remand order seeking clarification of the place of manufacture of the LFRS proposed by Sea Box. The CFC held that a contractor could not turn a clarification into a modification of its proposal and rejected Sea Box’s offer to attempt to cure the deficiencies in its original proposal as submitted.
Matters of Contract Administration Are Protestable When a Patent Deficiency Exists
In a footnote, the CFC rejected the government’s argument that the protest should be dismissed as a matter of contract performance. Here, the government argued that the indicators of non-compliance were insufficient to create a protestable issue. The CFC rejected this argument holding: “[w]e agree with the government that certification issues are typically matters of performance…however, an exception arises when the deficiency is patent.”
Agency Has Duty to Inquire if There is Reason to Believe the Contractor Will Provide Non-Compliant Products
The CFC noted several inconsistencies in Sea Box’s proposal regarding the place of manufacture of the LFRS. Notably, Sea Box’s original proposal identified China as the final place of assembly and testing. In its discussion questions, Sea Box explained that the refrigeration unit was shipped from Singapore to China where it was “mechanically and electrically” integrated into the container. Finally, Sea Box refused to unequivocally state that it intended to supply 100 percent compliant replacement parts. Instead it stated that “substantially every one” of the replacement parts were manufactured in the United States. In a situation like this, “where an offeror’s submission contains information that calls into question its TAA compliance, the agency has a duty to make reasonable inquiry and satisfy itself that the product offered meets the terms of the act. Failure to do so in the face of clear indications of non-compliance would be arbitrary and capricious and not in accordance with law.”
