Written By Wojciech Kornacki
The Competition in Contracting Act, 41 U.S.C. 253, promotes full and open competition, and unsuccessful bidders may recover their preparation costs when the Government’s decisions result in a prejudicial error or are otherwise unlawful. In Hyperion Inc., v. United States, No. 14-870C (Filed: March 18, 2015), the U.S. Court of Federal Claims examined whether the decision to use the sole-source ‘international agreement’ exception to the Competition in Contracting Act resulted in a prejudicial error.
In Hyperion Inc., v. United States, the company contested the Army’s renewed award of a contract to Technical Communications. This case stemmed from Hyperion, Inc. v. United States, 115 Fed. Cl. 541, 557 (2014) (“Hyperion I”) where Hyperion was successful in obtaining injunctive and declaratory relief and set aside a contract awarded by the U.S. Army to Technical Communications for installation and infrastructure upgrades to fiber option cable networks in Jordan.
After Hyperion I, the Kingdom of Jordan submitted a letter of request directing a sole-source procurement to Technical Communications, and the U.S. Government approved this request. Hyperion sued the U.S. Army in the U.S. Court of Federal Claims requesting bid preparation and proposal costs incurred in connection with the procurement.
Judge Lettow recognized that an unsuccessful competitor “may recover the costs of preparing its unsuccessful proposal if it can establish that the [g]overnment’s consideration of the proposals submitted was arbitrary or capricious.” E.W. Bliss Co. v. United States, 77 F.3d 445, 447 (1996) (quoting Lincoln Servs., Ltd. v. United States, 678 F.2d 157, 158 (1982)). The three necessary conditions are: “(i) the agency has committed a prejudicial error in conducting the procurement; (ii) that error caused the protester to incur unnecessarily bid preparation and proposal costs; and (iii) the costs to be recovered are both reasonable and allocable, i.e.[,] incurred specifically for the contract in question.” Insight Sys., 115 Fed. Cl. at 738-39 (citing Reema Consulting Servs., Inc. v. United States, 107 Fed. Cl. 519, 532 (2012));
Recognizing that Jordan has discretion to direct sole-source awards without the full and open competition, and that the U.S. Government followed its procurement process otherwise, Judge Lettow held that the sole-source request was proper under the International Agreement exception to the Competition in Contract Act, Hyperion assumed the risk, and the end result did not constitute a prejudicial error.