Call Henry v. U.S.: Pension Withdrawal Costs Not Reimbursable

In Call Henry, Inc. v. United States, the U.S. Court of Appeals for the Federal Circuit addressed a dispute concerning a government services contract, focusing on issues of termination, contractual obligations, and the bid protest process. The 2017 decision examines the dispute over contract termination and the bid protest process.

Case Background

Call Henry, Inc., a federal contractor, had a longstanding agreement with the National Aeronautics and Space Administration (NASA) to provide maintenance and operations support at a NASA facility. The company had successfully performed its contractual duties for years, demonstrating its ability to meet performance standards. However, after a competitive bidding process for a renewed contract, the government opted to award the contract to a competing firm.

Call Henry, Inc. challenged the contract award, arguing that NASA’s evaluation process contained errors that violated federal procurement regulations. The company asserted that the agency’s decision-making was arbitrary and capricious, resulting in an unfair denial of the contract renewal. The dispute escalated into a formal bid protest and ultimately reached the Federal Circuit.

Key Legal Issues

1. Was the termination of Call Henry, Inc.’s contract lawful under federal procurement regulations?
2. Did the government conduct a fair and transparent bid evaluation process?
3. Were the procedural requirements for a bid protest adequately followed?
4. Did Call Henry, Inc. sufficiently demonstrate that NASA’s evaluation criteria and decision-making process were flawed?

Government's Justification and Court's Ruling

The Federal Circuit ruled against Call Henry, Inc., holding that:

• The contract termination was justified, as the government followed proper regulatory procedures in awarding the contract to a competing firm.
• The bid evaluation process met federal standards, and there was no evidence of arbitrary or capricious decision-making.
• The bid protest procedures were properly observed, and Call Henry, Inc. failed to demonstrate procedural violations that would warrant reversing the award decision.
• NASA’s selection process, including its evaluation of technical and cost criteria, was conducted in compliance with federal acquisition regulations.

The court emphasized that federal agencies have broad discretion in assessing proposals and selecting contractors based on their internal evaluations of cost-effectiveness and qualifications.

Final Ruling and Legal Precedent

The Federal Circuit upheld NASA’s decision, finding that the agency had followed its established procurement procedures and provided reasonable justification for awarding the contract to another firm. The court emphasized that NASA adhered to established procurement procedures, including a full evaluation of cost-effectiveness and technical capability. Call Henry, Inc.'s claims of arbitrary decision-making failed to provide sufficient legal or procedural grounds for overturning the contract award.

• A successful bid protest requires compelling evidence that the agency engaged in misconduct or misapplied procurement rules.
• Contractors should maintain comprehensive documentation of their contract performance and ensure strict compliance with procurement procedures to strengthen their position in potential disputes.
• Engaging in pre-award debriefings and submitting timely, well-supported bid protests is essential for contractors seeking to challenge an adverse award decision.

Legal Support for Government Contractors

Government contracting disputes require a thorough understanding of federal procurement laws, contract termination rights, and bid protest strategies. If your business is facing challenges related to a government contract, legal guidance can help ensure compliance and protect your interests. At Whitcomb, Selinsky, PC, we assist businesses with government contracting matters, including bid protests and contract disputes. Contact us for experienced legal counsel in federal procurement issues.