Fans of the classic 1960s cartoon series Rocky and Bullwinkle may recall two minor characters, Chauncey and Edgar, who commented on the action by saying something like this: “Now there’s something you don’t see every day, Edgar.” “What’s that, Chauncey?” And then Chauncey would tell the joke, such as it was. (It usually wasn’t much.)
The U.S. Court of Federal Claims (COFC), however, has just given us, in all seriousness, one of those something-you-don’t-see-every-day moments by letting a subcontractor intervene in a bid protest in Mitchco International, Inc. v. United States. Although the decision probably will apply narrowly because of its unique facts involving the Randolph-Sheppard Act, its rarity merits a closer look, and the reasoning might offer opportunities for resourceful counsel in the future.
Randolph-Sheppard Act Overview
The Randolph-Sheppard Act (RSA), which governs the Mitchco procurement, “establishes a priority for blind persons represented by state licensing agencies (SLA)” for “the award of contracts for . . . the operation of cafeterias in federal buildings” (Ga. Bus. Enter. Program-Vocational Rehab. Agency). When a federal agency uses the RSA to procure cafeteria operations services from blind vendors, the agency invites the SLA to respond to the solicitation (34 C.F.R. § 395.33). If the SLA submits a competitive offer, the procuring agency will contract with the SLA after negotiations, and the SLA will “identify and assign qualified blind vendors to operate the facilities” (Colo. Dep’t of Human Servs., Div. of Vocational Rehab. v. United States).
Background of the Mitchco International Case
Mitchco, the incumbent contractor, recently filed a bid protest at COFC, challenging the award of an Army contract under the RSA to the Kentucky Office of Vocational Rehabilitation (KOVR), a Kentucky state agency, and its teaming partner, Southern Foodservice Management, Inc. The contract is for food services at the Fort Knox dining facilities. The Government Accountability Office already dismissed a protest by Mitchco of that award (Mitchco Int’l, Inc. ). Among other counts, Mitchco alleges possible violations of the Procurement Integrity Act by KOVR and Southern. In an unusual move, Southern moved to intervene in Mitchco’s COFC case.
How Does a Party Normally Intervene at the COFC?
The Rules of the Court of Federal Claims (RCFC) allow for “Intervention of Right” and “Permissive Intervention” (RCFC 24). Intervention of Right applies when the prospective intervenor has an unconditional right under the law or claims an interest in the matter that requires its participation to protect (RCFC 24(a)). Permissive Intervention, on the other hand, applies to parties having only a “conditional right” to intervene under the law or that have “a claim or defense that shares with the main action a common question of law or fact” (RCFC 24(b)). Southern sought to intervene under the second option, Permissive Intervention.
COFC’s Order on Southern’s Motion to Intervene
Normally in a bid protest, the intervener is the awardee of the contract being challenged. The gist of Southern’s argument, however, was that although the contract awardee was KOVR (the SLA), KOVR had proposed Southern to perform the work with KOVR’s blind vendor, meaning that Southern was not a typical subcontractor. In addition, Southern argued that the complaint in a separate state-level lawsuit was “brimming with allegations directed at Southern,” including that KOVR and Southern had “colluded to misappropriate Mitchco’s proprietary and trade secret information about cafeteria services at Fort Knox.” Thus, Southern argued, the COFC complaint was just a repackaged version of the state-level allegations. According to Southern, it was impossible for COFC to resolve the bid protest without addressing “at least some of Mitcho’s allegations against Southern – which overlap Mitchco’s state court allegations substantially.”
The COFC granted Southern’s motion, stating, in part:
If plaintiff is correct, Southern violated procurement law and committed fraud, in collusion with KOVR, when KOVR was tentatively awarded the contract. Who better and with more at stake to deal with these accusations than Southern?
* * *
Our review is thus limited to the propriety of the federal government’s actions or inactions in awarding this contract, but Southern may be able to shed light on the question by explaining its own conduct in response to the allegations brought by plaintiff. In that sense, Southern has a defense that shares a common question of law and fact with the government’s and KOVR’s defense of the Army’s decision to award to KOVR (and to Southern as the subcontractor).
The COFC was also persuaded by the fact that the contract was awarded under the RSA because, in that case, KOVR was only a nominal awardee as SLA. The real party that stands to win or lose economically is Southern. Thus, Southern has an interest “beyond that of a normal subcontractor.” Lastly, the COFC found that no other party could adequately represent Southern’s interests.
Takeaways
In any future protests at the COFC where a subcontractor tries to intervene, the opposing parties will probably try to rely on the unique facts of the Mitchco case to oppose the attempt. Nevertheless, it is likely that practitioners who represent subcontractors that want to participate in bid protests will focus on the language in the order, which is already on Westlaw, regarding a subcontractor’s ability to protect its interests when it is being accused of wrong-doing in a bid protest. Thus, we can expect to see more of these arguments, perhaps making them something not that unusual at all.
Bradley will continue to monitor updates regarding bid protest cases involving subcontractors at the COFC.
