A federal judge has ordered the U.S. Navy to halt execution of a $5-billion indefinite-delivery, indefinite-quantity contract for global construction work awarded in July 2021 to six contractors after an unsuccessful bidder, SLS Federal Services, challenged the service for not following federal contracting rules that it claims hurt its competitiveness.

The Naval Facilities Engineering Command “improperly analyzed price reasonableness when it failed to request or evaluate pricing information,” said the ruling by senior federal claims court Judge Eric Bruggink, which was released Jan. 10 after being under seal. The complaint by the firm, a unit of contractor SLSCO Ltd., is still under seal.

Under the contingency contract, units of contractors Jacobs, Aptim, CDM Smith, ECC, Gilbane Building Co. and Tutor Perini Corp. are eligible to bid on cost-plus-award-fee or fixed-price task orders that NAVFAC issues as needed. 

SLS filed a bid protest to the U.S. Government Accountability Office, claiming its not being included among the awardees stemmed from NAVFAC’s failure to include “price reasonableness” in its assessment and to discuss potential flaws in its bid, said the ruling. The protest was dismissed when the agency agreed to re-evaluate the SLS bid, but “nearly a year after the notice of corrective action,” the judge said, NAVFAC announced that the awards “would remain the same.” 

The firm filed a second GAO bid protest, but then opted to take its case to the federal claims court. 

“SLS complains that [NAVFAC] was incapable of evaluating price reasonableness because the agency never requested or considered any pricing information,”  the court ruling said. “At its core, [the firm’s] broader argument amounts to a challenge to the solicitation’s structure. SLS argues that the solicitation did not request enough information for the agency to perform its promised price reasonableness analysis.”

Jacobs Project Management Co., which filed a motion supporting NAVFAC, said the SLS protest is flawed because the firm should have noticed the solicitation “defect” and challenged it before the competition concluded. None of the other contractors that received awards filed similar court motions.

According to Judge Bruggink, NAVFAC “improperly analyzed price reasonableness when it failed to request or evaluate pricing information” and violated federal procurement rules when it awarded the contracts without adequately justifying its decision not to discuss issues with SLS. 

“Discussions ‘maximize the government’s ability to obtain the best value,” the ruling said. “The agency’s corrective action was unreasonable and failed to address the original impropriety.” He added: “Presumably, an agency’s price evaluation is harder with contingent or uncertain performance. But … difficult is different from impossible.” 

Bruggink concluded that NAVFAC’s actions failed to allow SLS to possibly “revise aspects of its offer … that could have kept [it] in the competition.”

As such, the judge denied the NAVFAC and Jacobs motions and “enjoined [the agency] from proceeding with performance of the contracts awarded.” Added Bruggink: “If the agency moves forward with the solicitation, it will do so in a manner consistent with this opinion.” 

Robert J. Symon, the Washington, D.C.-based attorney for Jacobs, told ENR the firm had no comment in response to whether it would appeal the order. 

A NAVFAC spokeswoman in its Norfolk, Va.-based command told ENR at press time that it could not comment on the ruling—or on how, or whether, the contract will be revised to include SLS or cancelled, citing still unclear guidance from the U.S. Justice Dept. 

She also said selected firms have not yet been awarded task orders under the contract.

Jimm Rich, a senior advisor at Washington-based federal policy consultant Dawson & Associates and a former contracting chief for three U.S. Army Corps of Engineers districts and for the $3-billion Pentagon renovation, told ENR that he does not see the court’s ruling as precedent setting, but it “reasserts unambiguously that source selection actions must fully comply with language” in federal procurement rules. 

Rich said NAVFAC’s assertion that worldwide task orders were impractical to price is both wrong and easy to disprove. Not only did the court give examples of how other federal agencies had solved the problem, but the Corps did price such contracts all the time, he said. 

“The use of hypothetical task orders that require a contractor to price a task order using the cost information it will submit with the proposal allows the government to compare prices submitted on an identical requirement and may be used to determine price reasonableness,” Rich said.

It also is not unusual to hold discussions on a $5-billion ID-IQ award, Rich said, supporting the court’s contention that they are generally held for federal contracts valued at more than $100 million, based on procurement guidance. The government can reserve the right not to hold discussions, but “It is not enough to say you do not have to enter discussion because regulations allow you that choice—you have to document and explain your decision as being in the best interests of all parties to include the taxpayer,” he said. 

Rich speculated that NAVFAC contracting officers may have been responding to pressure to accelerate award of the contract.