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KPMG LLP v. United States, 166 Fed.Cl. 588

Facts

KPMG was the incumbent contractor for the CFSS II contract and submitted a proposal for the follow-on CFSS III contract. The National Reconnaissance Office (NRO) initially awarded the contract to KPMG, but after a protest from Sehlke Consulting, the Government Accountability Office (GAO) recommended that NRO reevaluate KPMG's proposal without considering a key personnel member, Mr. H, who had announced his resignation. NRO subsequently disqualified KPMG, leading to the award of the contract to Deloitte, prompting KPMG to file a protest.

KPMG was the incumbent contractor for the CFSS II contract and submitted a proposal for the follow-on CFSS III contract.

Issue

Whether the NRO's decision to disqualify KPMG from re-evaluation based on the unavailability of key personnel was arbitrary and capricious.

Whether the NRO's decision to disqualify KPMG from re-evaluation based on the unavailability of key personnel was arbitrary and capricious.

Rule

The court evaluates bid protests under the Administrative Procedure Act's standard of review, which allows agency procurement actions to be set aside if they are arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.

The court evaluates bid protests under the Administrative Procedure Act's standard of review, which allows agency procurement actions to be set aside if they are arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.

Analysis

The court found that the NRO's reliance on the GAO's recommendation to deem Mr. H unavailable was irrational, as KPMG had a reasonable belief that Mr. H would be available to perform the contract at the time of the award. The court noted that KPMG had communicated with Mr. H to persuade him to stay and that he was still employed by KPMG at the time of the award. Therefore, the NRO's decision to disqualify KPMG was deemed arbitrary and capricious.

The court found that the NRO's reliance on the GAO's recommendation to deem Mr. H unavailable was irrational, as KPMG had a reasonable belief that Mr. H would be available to perform the contract at the time of the award.

Conclusion

The court granted KPMG's motion for judgment on the administrative record and denied the motions of the defendants, ordering NRO to provide KPMG with the opportunity to compete fairly for the CFSS III contract.

The court granted KPMG's motion for judgment on the administrative record and denied the motions of the defendants, ordering NRO to provide KPMG with the opportunity to compete fairly for the CFSS III contract.

Who won?

KPMG prevailed in the case because the court found that the NRO's disqualification of KPMG was arbitrary and capricious, depriving KPMG of a fair opportunity to compete for the contract.

KPMG prevailed in the case because the court found that the NRO's disqualification of KPMG was arbitrary and capricious, depriving KPMG of a fair opportunity to compete for the contract.

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