Space Mark, Inc. v. United States

The United States Air Force (defendant) issued a public-private solicitation for a communications contract at Los Angeles Air Force Base. The solicitation involved a two-step process: (1) the Air Force would evaluate all proposals submitted by private contractors to determine which was the lowest-priced, technically-acceptable proposal; and (2) the Air Force would conduct a cost-comparison between the lowest-price private proposal and the proposal submitted by the most-efficient, cost-effective organization (MEO). If the private contractor could perform the contract work more cost-effectively, then the Air Force would award the contract; otherwise, the Air Force would perform the work itself. Space Mark, Inc. (SMI) (plaintiff) submitted the lowest-cost, technically-acceptable private proposal. The Air Force submitted its initial MEO proposal, which was provided to SMI, and then subsequently revised the MEO proposal. The revised proposal was not provided to SMI. During the cost-comparison phase, the Air Force adjusted SMI’s proposal, in accordance with the Office of Management and Budget’s (OMB) A-76 requirements, to include (a) the cost of three quality-assurance evaluators (QAE), who would perform both quality-assurance and contract administration functions; and (b) the cost to relocate 13 Air Force employees. After the A-76 adjustments were made to SMI’s proposal, the Air Force compared SMI’s adjusted proposal to the Air Force’s MEO proposal; the Air Force determined that the MEO proposal was more economical. SMI unsuccessfully appealed the Air Force’s cost-comparison decision to both the Air Force’s contracting officer and to Air Force Material Command (AFMC), arguing that the Air Force violated A-76 regulations by adding the QAE and relocation costs to SMI’s proposal. SMI then filed a motion in the Court of Federal Claims for a temporary restraining order (TRO) barring the Air Force from implementing the MEO.