Court Releases Redacted Version of Ruling Against Rivada

March 31, 2017–The U.S. Court of Federal Claims today released a redacted version of its recent ruling (TRDaily, March 17) in favor of the U.S. government in litigation filed by Rivada Mercury LLC against the First Responder Network Authority (FirstNet) over its procurement process, which cleared the way for FirstNet to announce an award yesterday with AT&T, Inc., (TRDaily, March 30). The opinion showed that FirstNet was concerned that Rivada would not be able to fulfill a contract due to a “lack of financial stability” and it was worried about the company’s wholesale business model.

“Rivada claims that the agency erred in two ways in its evaluation of the proposals. First, it contends that despite the agency’s attempt to limit the scope of its early exchanges with the offerors, it in fact permitted them to revise their offers during the evaluation and thus entered into discussions before it formally established the competitive range,” Judge Elaine D. Kaplan said in her opinion in “Rivada Mercury LLC v. United States of America”; no. 16-1559C. “Further, in its view, those discussions were misleading and not meaningful. See id. Second, it argues that the agency unreasonably assigned numerous deficiencies and weaknesses to its proposal while often overlooking equivalent flaws in AT&T’s proposal.”

“The common thread stringing these arguments together is that the agency had an unstated preference for awarding the contract to a large, established wireless carrier,” the judge continued. “Thus, Rivada posits that the agency permitted AT&T to revise its proposal during the pre-competitive range exchanges and assumed AT&T could correct other deficiencies through discussions, while denying Rivada the same opportunity. … And it complains that the agency applied various unstated evaluation criteria to its proposal; that those criteria would have knocked out any proposal other than one submitted by a nationwide wireless carrier; and that, based on its unstated preference, the agency unjustifiably treated AT&T’s proposal more favorably than Rivada’s even when the proposals shared substantially equivalent weaknesses.”

“For the reasons discussed below, the Court concludes that Rivada’s arguments lack merit,” the ruling said. “The pre-competitive range exchanges were not ‘discussions’ because the exchanges were reasonably limited in scope given the complexity of the procurement, and because the agency neither intended to allow proposal revisions nor effectively accepted revised proposals. Further, the agency assessed the proposals thoroughly and evenhandedly against criteria set forth in the solicitation. Those criteria made clear that minimizing the risk of non-performance was of tantamount importance to the agency—a position that is fully justified by the crucial role the NPSBN will play in responding to emergencies of national importance. Accordingly, the fact that the agency included only AT&T’s proposal in the competitive range does not demonstrate that the government applied an unstated preference for a large carrier; it merely reflects the agency’s reasonable determination that Rivada’s proposal carried too much risk.”

The opinion detailed the scores that AT&T and Rivada received for business management, coverage and capacity, products and architecture, past performance, and value proposition. Each of the first three included several sub-components.

AT&T overall was deemed “acceptable” in the first three categories and “highly acceptable” in the fourth, while Rivada received unacceptable in the first and third and acceptable in the second and fourth. AT&T was deemed stronger in value proposition.

“Based on its evaluation, the SSA established a competitive range containing only AT&T’s proposal,” the opinion noted. “He observed that ‘[a]lthough each Offeror’s proposed solution contain[ed] unacceptable ratings[] at the subfactor level, only AT&T[’s] is considered acceptable (or higher) across all factors.’ … Further, he noted that ‘[a]lthough AT&T’s proposed solution contain[ed] a few significant weakness and deficiencies, none of them would introduce excessive, increased risk that would result in unsuccessful performance.’ … Those weaknesses ‘would potentially only require minor corrections to AT&T’s proposed solution,” which could be accomplished through discussions. Id. By contrast, the SSA found that the ‘substantial number of significant weaknesses and deficiencies’ in Rivada’s proposal ‘introduce[d] excessive, increased risks’ that might ‘result[] in [its] inability to perform.’ Id. Addressing these weaknesses would, in the SSA’s view, ‘essentially require a complete revision of [Rivada’s] business model[].’ Id. For example, Rivada ‘would have to identify and secure additional debt to proceed,’ and, ‘[i]n many cases, the Government would require [Rivada’s] teaming agreements, some completely nascent, to be finalized.’ Id. Thus, conducting discussions with Rivada would be ‘costly and time consuming, and would place a financial and scheduling burden on both the Government and all Offerors.’ Id. And ‘[e]ven with substantial changes to [its] proposal[] . . . Rivada[’s offer] would not be considered among the most highly rated offers.’ Id. Accordingly, the SSA eliminated Rivada’s proposal from the competitive range.”

The opinion also noted that Rivada claimed “that the competitive range determination was flawed because the government ‘unreasonably focused’ on just one aspect of its plan to sell excess spectrum capacity—namely, its [ . . . ]. Pl.’s Mem. at 34. As noted above, the SSA concluded that Rivada’s plan to sell excess capacity ‘create[d] a significant risk of unsuccessful performance under the contract.’ … The SSA observed that ‘[u]nder the Rivada model, Rivada requires a robust, wholesale market in which customers will purchase FirstNet’s Band 14 excess spectrum capacity.’ Id. Thus, if the ‘wholesale marketplace, coupled with Rivada’s [ . . . ], fail[ed] to gain traction with wholesale customers,’ then ‘Rivada’s proposed business plan for the contract will fail.’ Id. In the SSA’s view, however, ‘Rivada’s proposal did not adequately demonstrate that its proposed wholesale marketplace or [ . . . ] would be adopted by potential customers.’ Id. Thus, Rivada’s approach ‘create[d] a significant risk of unsuccessful performance under the contract.’”

“In sum, Rivada’s claims of error in the agency’s evaluation all lack merit,” Judge Kaplan said. “Accordingly, the Court lacks any basis for disturbing the conclusions reached by the SSA. Whether subject to ‘close scrutiny’ or some more deferential standard, Rivada’s exclusion from the competitive range was not arbitrary, capricious, or contrary to law.”

In announcing its ruling earlier this month, the court did not release a public version of the opinion, and most major filings in the proceedings were sealed. “This Opinion was originally issued under seal, and the parties were given the opportunity to request the redaction of competitively sensitive information,” it said in the opinion released today. “The Opinion is now reissued with redactions indicated by brackets containing ellipses. The Court has accepted the majority of the parties’ proposed redactions. It rejected the parties’ proposals where it concluded that the information sought to be redacted was not proprietary or competition sensitive or where it determined that redaction of the information would preclude the reader from fully understanding the Court’s reasoning.”

“FirstNet is pleased the court was able to quickly release the reasoning of its decision,” FirstNet Chief Executive Officer Mike Poth said today. “It clearly validates our thorough and quality acquisition process, which was designed and implemented to provide FirstNet and public safety with the best value, most sustainable, and lowest risk approach to deploying the nationwide public safety broadband network. FirstNet is pleased to be moving forward with AT&T to build this world class network for public safety.”

Brian Carney, a spokesman for Rivada Networks LLC, which led the Rivada Mercury consortium, said, “I would note that the ruling appears to confirm that we offered better coverage, better monetization, and more value to public safety than the winning bid.”- Paul Kirby, paul.kirby@wolterskluwer.com

Courtesy TRDaily