Rivada Mercury Sues Over ‘Wrongful Exclusion’ from FirstNet Procurement

December 2, 2016–Rivada Mercury LLC has filed a lawsuit against the U.S. government over what it  says is the illegal and “wrongful exclusion” of the consortium from the First Responder Network Authority’s (FirstNet) procurement process for a partner to build and maintain a nationwide public safety broadband network. The lawsuit will delay an award of the contract until March 1, 2017.

The consortium wants a federal court to grant declaratory and permanent injunctive relief blocking the Interior Department, which is handling FirstNet’s procurement, from awarding a contract without “including Rivada Mercury in the competitive range, conducting discussions with Rivada Mercury in accordance with FAR 15.306(d), and evaluating Rivada Mercury in accordance with the Solicitation.”

The court also should rule “that the exclusion of Rivada Mercury from the competitive range was arbitrary and capricious, an abuse of discretion, and not in accordance with procurement law and regulation,” according to the complaint, which also sought any other relief that the court deems is appropriate.

Rivada Mercury filed a sealed complaint (“Rivada Mercury LLC v. United States of America” no. 16-1559C) in the U.S. Court of Appeals of Federal Claims on Nov. 21 and submitted a heavily redacted version of its filing on Nov. 30.

The consortium is led by Rivada Networks LLC, although Rivada and the following four partners each have a 20% stake in the enterprise: Black & Veatch, Fujitsu Network Communications, Harris Corp., and Nokia, Inc.

FirstNet had planned to announce an award of its contract by Nov. 1, but it said in late October that it was still working on the procurement (TRDaily, Oct. 27).

The Rivada Mercury complaint said that its counsel and the Department of Justice’s counsel “have agreed that Interior will not make an award under the RFP until March 1, 2017. Therefore, Rivada has not applied for a Temporary Restraining Oder.”

The only other publicly known entity that is still in the running for the FirstNet contract is AT&T, Inc.  Rivada said in its complaint that “[b]ased on industry intelligence,” it understands that the number of entities still in the “competitive range” of those that might have a chance of being selected for the award has been reduced to one.

AT&T had no comment today on Rivada Mercury’s lawsuit, but the company said in a successful motion to intervene in the case that it “is within the competitive range and stands a substantial chance of receiving the award in this procurement.”

The carrier also said in a Securities and Exchange Commission filing today that it “is not aware of any other bidders who remain within the ‘competitive range’ of the First Responder Network procurement.”

The 45-page complaint said that “Interior’s wrongful exclusion of Rivada Mercury from the competition eliminated a strong, viable competitor from this important procurement and reduced the field to a single remaining competitor. In doing so, Interior failed to make any reasoned or explicit determination that Rivada Mercury had no reasonable chance of being selected for award following discussions. In fact, Interior failed to conduct proper discussions as it was required to do. If Rivada Mercury had properly been allowed to remain in the competition, FirstNet, the Nation’s first responders who will eventually be using the NPSBN, and the taxpayer would benefit from the better value gained through robust competition.”

The complaint argued that “Interior’s exclusion of Rivada Mercury from the competitive range was arbitrary and capricious, an abuse of discretion, and violated procurement law and regulation for four independent reasons.”

Rivada Mercury said that after entities submitted their proposals, “Interior conducted an extraordinary number of exchanges with Rivada Mercury, and likely had similar exchanges with the other offerors.” While Interior argued that the exchanges, which occurred before it determined which entities were in the competitive range, “were mere ‘clarifications,’” the lawsuit said that “many of the exchanges fell into the category of discussion, i.e., exchanges that an agency may have with offerors after a competitive range decision is made and that can result in changes to an offeror’s proposal.”

The complaint added, “The FAR [Federal Acquisition Regulation] requires an agency conducting discussions to identify each deficiency and significant weakness it has identified … The discussions conducted by Interior were not meaningful, because they did not identify or allow Rivada Mercury to respond to many of the deficiencies and significant weaknesses that apparently then formed the basis for Interior’s decision to eliminate Rivada Mercury from the competition. In addition, the exchanges that Interior had with Rivada Mercury were misleading because they did not address the actual concerns that evaluators had with Rivada Mercury’s proposal and that, apparently, resulted in its wrongful exclusion from the competitive range.

“Had Rivada Mercury had an opportunity to respond to these concerns, or had these concerns been appropriately identified, Rivada Mercury could have explained its proposal, or changed aspects of it, to resolve these evaluation concerns,” the complaint added. “Interior could have thus kept its competitive procurement viable by retaining Rivada Mercury in the competition.”

The complaint suggested that many deficiencies and weaknesses that Interior concluded that the Rivada Mercury bid had “were the result of an arbitrary and capricious evaluation that did not conform to the Solicitation requirements or procurement laws and regulations. Interior’s identification of perceived deficiencies and significant weaknesses was, in some cases, the result of applying unstated evaluation criteria, making unwarranted assumptions, misreading Rivada Mercury’s proposal, or arbitrarily increasing the risk associated with a particular concern.”

The complaint argued that “Rivada Mercury would be irreparably harmed if its improper exclusion from the competitive range were allowed to stand,” while it said that “Interior, and FirstNet, in contrast, would not be harmed by a permanent injunction that required Rivada Mercury to be included in the competitive range and afforded the opportunity to resolve any evaluation concerns during discussions.”

Details of Rivada Mercury’s bid are blacked out, as are specific Interior questions and conclusions about the proposal.

The complaint said that Rivada Mercury was notified by the contracting officer on Oct. 17 “that its proposal had been excluded from the competitive range because it was not among the most highly rated proposals.” The consortium got a written debriefing on Oct. 21.

A status conference on the case was held Nov. 29. Judge Elaine D. Kaplan set a schedule for cross-motions for judgment on the administrative record. Oral arguments on cross-motions will be scheduled in a future order. Judge Kaplan also said she would not recuse herself from the case even though Teri Caswell, a member of the Source Selection Board, “considers herself to be a ‘personal friend’” of the judge. The judge said she does not consider Ms. Caswell a personal friend, although she said they had “brief conversations” one or two times at social events that were hosted by a mutual friend.

Brian Carney, senior vice president-corporate communications for Rivada Networks LLC, told TRDaily today that Rivada Mercury believes that the decision to exclude it from further participation in the procurement “was erroneous as a matter of fact and of law.”

A legal challenge of the FirstNet contract has been expected by many observers after the award is announced.

Rivada Networks is also challenging in court a decision by Mexican regulators to disqualify it from bidding for that country’s nationwide wholesale wireless network project (TRDaily, Nov. 7).

In response to the Rivada Mercury lawsuit, a FirstNet spokesperson said in a statement today, “The Department of Justice’s Commercial Litigation Branch, Civil Division has assigned counsel to defend against Rivada’s protest and is the counsel that will represent the interests of FirstNet and the federal government in this case.  FirstNet program counsel, along with DOI and DOC counsel will support DOJ’s efforts. We have no further comment as the matter is pending litigation.”

“The Justice Department is reviewing the complaint and will respond to the Court. We have no further comment on this pending litigation,” said Nicole Navas, a DoJ spokeswoman.

pdvWireless, Inc., which had also submitted a bid to FirstNet on behalf of the Code3 Broadband consortium, has said it was notified Oct. 17 that it was no longer in the running for the contract (TRDaily, Oct. 18). But pdvWireless Vice Chairman Morgan O’Brien recently praised FirstNet representatives for the way the procurement process was run.

“Over the course of our pursuit of this objective, I’ve often been asked for my evaluation of the RFP process and how I would extrapolate from that process to predict the likely outcome. It’s no secret that many observers would have liked nothing better than to have had me corroborate their own view that FirstNet is a disaster in the making and that nothing good will come of it,” he said in a column for “IWCE’s Urgent Communications.” “To those doubters, let me repeat here what I’ve been saying: I was impressed by the caliber of the team that was fielded by FirstNet and by their professionalism in digging into the intentions, qualifications and composition of the Code3 Broadband consortium. I can only assume that the same thoroughness was employed in the analysis of our competition, even though I remain convinced that selecting Code3 would have been a superb choice for public safety. I think the potential users of this network—the intended beneficiaries of a novel approach to making communications safer and better—are in good hands with FirstNet.”

Andy Seybold, a wireless industry consultant and public safety advocate, said today that it’s “a shame that the process to award a contract for the FirstNet network as a result of the RFP process which adhered to the FAR rules completely, looks as if it is going to get delayed. Public Safety has waited long enough for this contract to be awarded, and I hope that it can be resolved quickly so that the network build can proceed as planned.”

Meanwhile, in a research note today, analysts at New Street Research LLC suggested that AT&T could now decide to bid less in the ongoing incentive auction. “With AT&T gaining access to 20MHz of low-band spectrum via FirstNet, we suspect that their interest in similar low-band spectrum in the 600MHz auction will now be diminished,” they said. “We had expected AT&T to bid for 20MHz of spectrum in the auction which, at a price of $1.25-$1.50 / MHz-POP, implies a total spend of $8-9BN. AT&T may still participate, but we doubt they will bid as aggressively as they otherwise would have in the absence of FirstNet. This may result in lower auction prices overall and allow other participants (TMUS, CMCSA) to acquire spectrum at more attractive values.” – Paul Kirby, paul.kirby@wolterskluwer.com

Courtesy TRDaily