from the United States Court of Federal Claims in No.
1:16-cv-00044-EGB, Senior Judge Eric G. Bruggink.
Eric Anderson, Odin, Feldman & Pittleman, PC, Reston, VA,
argued for plaintiff-appellee. Also represented by Shiva S.
Hamidinia; James Y. Boland, Venable LLP, Tysons Corner, VA.
J. Echols, Commercial Litigation Branch, Civil Division,
United States Department of Justice, Washington, DC, argued
for defendant-appellant. Also represented by Chad A. Readler,
Robert E. Kirschman, Jr., Douglas K. Mickle.
O'Malley, Linn, and Hughes, Circuit Judges.
O'MALLEY, CIRCUIT JUDGE.
sole issue in this appeal is the meaning of the term
"special factor" in 28 U.S.C. § 2412(d)(2)(A),
a subsection of the Equal Access to Justice Act
("EAJA"). When a trial court finds that a
"special factor" exists, it is authorized to
increase the statutory attorney fee rate in certain cases
brought by or against the government.
case, the United States Court of Federal Claims ("Claims
Court") entered judgment in favor of Plaintiff-Appellee
Starry Associates, Inc. ("Starry") on its bid
protest claim, concluding that the Department of Health and
Human Services ("HHS") acted arbitrarily and
capriciously in cancelling its solicitation seeking to
procure certain business operations services. Starry
Assocs., Inc. v. United States (Merits
Decision), 127 Fed.Cl. 539 (2016). The Claims Court
thereafter awarded Starry attorney fees at the rates actually
billed to Starry by its counsel, finding that the
"extreme measures that [Starry] was forced to pursue to
vindicate its right to a rational and lawful federal
procurement process, combined with the shocking disregard of
the truth by" HHS, constituted a "special
factor" justifying an award of fees above the EAJA's
"default rate" of $125 per hour. Starry
Assocs., Inc. v. United States (Fees Decision),
131 Fed.Cl. 208, 215 (2017).
that the Claims Court erred as a matter of law in holding
that an agency's improper or dilatory conduct during the
administrative process that gave rise to the litigation
between the parties can constitute a "special
factor" under § 2412(d)(2)(A). Accordingly, we
vacate the Claims Court's fee award and remand for
the material facts are in dispute. On November 13, 2014,
HHS's Program Support Center ("PSC") issued a
Request for Quotations ("solicitation" or
"RFQ"), seeking to procure business operations
services that would support PSC's implementation of
HHS's Unified Financial Management System
("UFMS"). Merits Decision, 127 Fed.Cl. at
540. The RFQ was set aside for small businesses and was to be
awarded to the lowest priced, technically acceptable offeror.
Id. Starry was the incumbent provider of on-site
operational support for UFMS. Id.
UFMS is built on Oracle software, the RFQ required key
personnel to have experience with that software, as well as
with UFMS. Id. HHS was also looking for expertise
regarding several of its other systems that worked in
coordination with UFMS: the Managing Accounting and Credit
Card System ("MACCS"), a system for accounting
purchases made by government credit card holders, and
GovNet-NG, a reporting system used to distribute operational
reports. Id. Both are proprietary systems developed
by Starry. Id. at 540-41.
companies timely submitted quotations, with Defendant
Intellizant, LLC ("Intellizant") offering the
low-priced bid. Id. at 541. It was therefore
evaluated for technical acceptability along with past
performance and certain statutory compliance. Id.
HHS thereafter convened a three-person Technical Evaluation
Panel ("TEP") which, after reviewing
Intellizant's proposal for only two or three days,
reached a mixed evaluation. Id. at 541-42. Two of
the three members found Intellizant acceptable for all
factors, while the third rated the company technically
unacceptable. Id. at 542. Of the two members who
found the proposal acceptable, one noted that several pieces
of information were missing, while the other "found no
problems with Intellizant's proposal" and expressly
relied on "[p]revious experience with the
contractor" in making her determination. Id.
The Contracting Officer ("CO") then evaluated the
proposal and determined that Intellizant was technically
which submitted a more expensive proposal that was not
evaluated, was notified of the award, and filed its first
protest at the Government Accountability Office
("GAO"). Id. at 544. It alleged that
HHS's evaluation of Intellizant was unreasonable because
of the company's lack of experience with the contract
requirements and lack of qualified key personnel. HHS
thereafter informed GAO and Starry of its intent to take
corrective action, explaining that it did "not intend to
reevaluate the requirement or solicit new proposals."
Id. Instead, it intended to thoroughly review the
file and ensure the evaluation was complete and accurate.
Id. GAO dismissed Starry's protest as academic,
and Starry, believing the scope of this corrective action was
insufficient, sent a letter to the clerk of court for the
Claims Court, stating it intended to file a bid protest.
Id. In response, the CO sent Starry a letter
indicating that HHS would reevaluate proposals and make a new
award decision. Id. Starry subsequently withdrew its
notice of intent to protest. Id.
the TEP's second evaluation lasted months and culminated
in the issuance of a new report, virtually no contemporaneous
documentation of the panel's decision-making process
exists. Id. The panel was again unable to reach a
consensus, with the same member again rating Intellizant as
technically unacceptable. Id. The other panel member
who initially listed concerns with the proposal did not have
any reservations this go around. Id. And, again, the
CO agreed with the majority's evaluation and found
Intellizant to be technically acceptable, and notified the
relevant parties of that result. Id.
filed a second protest at the GAO, reasserting its prior
challenges and further claiming that John Davis, who served
as Accounting Services Division Manager at PSC, was biased in
favor of Intellizant due to his employment with the company
immediately prior to joining HHS, and tainted the procurement
by exerting undue influence over the TEP. Id. GAO
held a hearing, took testimony from Davis and the CO, and
sustained the protest in part and denied it in part, finding
that the CO failed to evaluate either whether
Intellizant's personnel could perform the relevant tasks
or whether Intellizant could provide the necessary personnel
to meet the solicitation's requirements. Id. at
545-46. GAO found that Starry's allegations of bias were
"without merit" based on Davis's sworn
testimony that he had recused himself from the procurement
process. Id. at 546. It recommended reevaluation of
the proposal and provided that, if HHS found Intellizant to
be lacking, it must terminate the award and evaluate the
next-in-line offeror. Id.
Joy, the interim head of contracting activity at PSC, later
testified that he was notified by HHS counsel after the
hearing that the agency was likely to lose the protest, and
that Davis "raised the possibility of revising the RFQ
to drop from the solicitation the awardee's need to
support GovNet and MACCS," the areas in which
Intellizant had been marked as deficient. Id.
According to this testimony, Joy instructed Davis not to take
any action with regard to the solicitation prior to a GAO
decision. Id. After GAO issued its decision, counsel
for HHS sent an email to Joy, the CO, and others, stating
that GAO's recommendations were not mandatory and that
alternatives included "canceling the solicitation and
competing under a new vehicle [or] amending the [request for
production] and soliciting new [offers] under the current
vehicle." Id. Email records and deposition
testimony revealed that Davis was involved in the
decision-making process, and that Joy left Davis the power to
decide whether to cancel the solicitation. Id. Davis
later emailed Joy with his decision to cancel the RFQ,
stating that he had instructed his staff to "review and
revise, where needed, a few of our support contracts"
for UFMS. Id. at 546-47. Throughout this process,
Davis provided conflicting accounts as to why he believed
that an RFQ calling for compatibility with GovNet and MACCS
was not required. Id.
days after Davis emailed Joy with his decision to cancel the
RFQ, counsel for HHS informed GAO and Starry that it intended
to cancel the solicitation rather than reevaluate
Intellizant, stating "it has been determined that two of
the three systems proposed to be supported under the instant
procurement were included in the solicitation by error."
Id. at 548. Starry then filed its third bid protest,
arguing that HHS's decision to cancel the solicitation
was merely a pretext so that Davis could secure future work
for Intellizant. Id. It claimed that Davis decided
to eliminate the requirements of the solicitation as to which
Intellizant was unqualified and later to re-solicit the
remaining work in order to avoid GAO's earlier
recommendation to reevaluate, which Starry believed would
have resulted in it winning the original procurement.
Id. GAO denied the protest by written decision,
finding that the agency's proffered rational for
cancellation was reasonable-even crediting the allegations of
bias, the result was not affected, in GAO's view, because
the "cancellation was otherwise reasonably
Claims Court's Merits Decision
filed suit against the government in the Claims Court on
January 11, 2016. On July 15, 2016, the Claims Court issued a
decision granting Starry's motion for judgment on the
administrative record. See generally id. at 539. It
concluded that HHS acted irrationally in its decision to
cancel the award based on its purported revision of its needs
vis-à-vis MACCS and GovNet support, as it did not
provide sufficient support for its decision. Id. at
548-49. The Claims Court did not reach the issue of whether
the procurement was prejudicially tainted by bias.
Id. at 548.
Claims Court did, however, express dissatisfaction with the
conduct of HHS and certain of its employees, including
statements such as (1) "[a]nother instance of a cavalier
disregard for the truth of representations made to the GAO
was Mr. Davis' assurance that he was recused from the
procurement process," id. at 549; (2) "Mr.
Joy and his colleagues accepted [Davis's] representation
at face value in short order and conducted no independent
analysis of the agency's needs," id.; and
(3) Davis's "deposition leaves no question, however,
that the rationale was completely illusory,"
id. The Claims Court determined that injunctive
relief was appropriate under this court's decision in
PGBA, LLC v. United States, 389 F.3d 1219, 1228-39
(Fed. Cir. 2008), set aside the cancellation of the RFQ, and
required HHS ...