Free Motion for Judgment on the Administrative Record - District Court of Federal Claims - federal

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS Bid Protest

Agreed-to Public Version

Savantage Financial Services, Inc.,

Plaintiff,
v.
)

No. 1:08-cv-21 (Judge Futey)

THE UNITED STATES,

Defendant.

PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT ON THE ADMINISTRATIVE RECORD

Timothy Sullivan 1909 K Street, N.W., 6th Floor Washington, D.C. 20006 (202) 585-6930 (tel.) (202) 508-1028 (fax)
Attorney of Record for Plaintiff Savantage Financial Services, Inc. Of Counsel:

Katherine S. Nucci Thompson Coburn LLP 1909 K Street, N.W., 6th Floor

Washington, D.C. 20006
(202) 585-6900 (tel.) (202) 585-6969 (fax)

Dated: February 8, 2008
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TABLE OF CONTENTS
I.

FACTUAL BACKGROUND

2

II.

THE COURT HAS JURISDICTION TO DECIDE, AND PLAINTIFF HAS STANDING TO BRING, THIS CASE
DEFENDANT'S PROCUREMENT ACTION VIOLATED STATUTORY AND REGULATORY REQUIREMENTS AND WAS ARBITRARY AND CAPRICIOUS
A.

7

III.

12 12

Standard of Review

B.

DHS's Selection Of The Oracle And SAP Systems For Migration Throughout The Agency Constituted An Improper Sole-Source Procurement
DHS Failed To Comply With Applicable Law With Respect To Its Brand Name Justification
1.

13

C.

19

Statutory And Regulatory Requirements Regarding Sole-Source Awards And Brand Name Justifications

19 21

2.

DHS's Brand Name Justification

D.
IV.

DHS's Justification Was Arbitrary And Capricious

24 33

CONCLUSION

EXHIBIT A, Second Declaration of Michael Handberg

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TABLE OF AUTHORITIES
CASES AND GAO DECISIONS

Advanced Systems Technolo,gy, Inc. v. United States, 69 Fed.Cl. 474 (2006)

7-8

Aero Corporation v. Department of the Navy, 540 F. Supp. 180 (D.D.C. 1982)

16, 17
9 16 18
8, 9, 10
9

Am. Fed'n of Gov't Employees v. United States, 258 F.3d 1294 (Fed. Cir. 2001)
ATA Defense Industries, Inc. v. United States, 38 Fed. Cl. 489 (1997)

Audio Intelligence Devices, B-224159, Dec. 12, 1986, 86-2 CPD ¶ 670
CCL Inc. v. United States, 39 Fed. Cl. 780 (1997)

Chapman Law Firm v. United States, 63 Fed. Cl. 25 (2004)

CW Gov't Travel, Inc. v. United States, 61 Fed. Cl. 559 (2004), aff'd,
163
Fed.Appx. 853 (2005)
Inc. v. United States, 264 F.3d 1071
11

10

Emeiy Worldwide Airlines, (Fed. Cir. 2001)

Info. Tech. & Applications Corp. v. United States, 316 F.3d 1312 (Fed. Cir. 2003)
KSD, Inc. v. United States, 72 Fed. Cl. 236 (2006)

11

12

Meyers Investigative & Security Servs., Inc. v. United States, 275 F.3d 1366 (Fed. Cir. 2002)

10 10

Northrop Grumman Corp. v. United States, 50 Fed. Cl. 443 (2001)
OTI America, Inc. v. United States, 68 Fed. Cl. 108 (2005)
Public Warehousing Company K. S.C. v. Defense Supply Center Philadelphia, 489 F.Supp.2d 30 (D.D.C. 2007)

8, 13, 14
14, 15

RAMCOR Services Group, Inc. v. United States, 185 F.3d 1286 (Fed. Cii. 1999)

8

Sturm, Ruger & Company, Inc., B-235938, Oct. 25, 1989, 89-2
CPD Ii 375
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STATUTES AND REGULATIONS
10 U.S.C. §2304(f)(4)
21

28 U.S.C. § 1491(b)(1) 31 U.S.C. § 3551(2) 41 U.S.C. § 253(a)(1) 41 U.S.C. § 253(c)(1) 41 U.S.C. § 253(f)(3)(B) 41 U.S.C. § 253(f)(3)(C) 41 U.S.C. § 253(f)(3)(D) 41 U.S.C. § 253(f)(3)(E) 41 U.S.C. § 253(f)(4)

passim
9

19

15-16, 20

21-22
22
23

22
21
8

41U.S.C.403
FAR, 48 C.F.R. § 2.101 FAR, 48 C.F.R. § 5.102(a)(6)

15

5, 23
20
15

FAR, 48 C.F.R. § 6.302-1 FAR, 48 C.F.R. § 6.302-1(c) FAR, 48 C.F.R. § 6.303-1
FAR, 48 C.F.R. § 6.303-2 FAR, 48 C.F.R. § 6.303-2(a) (3) and (4)

20

21, 22
21

FAR, 48 C.F.R. § 6.303-2(a)(5) FAR, 48 C.F.R. § 6.303-2(a)(6)
FAR, 48 C.F.R. § 6.303-2(a)(7)

22
22 22
23

FAR, 48 C.F.R. § 6.303-2(a)(8)
FAR, 48 C.F.R. § 6.305
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FAR 48 C.F.R. Subpart 6.3
FAR, 48 C.F.R. § 10.002

.20
23
15

FAR148C.F.R.11.105
FAR, 48 C.F.R. § 11.105(a) FAR, 48 C.F.R. § 16.505(b)(1)

21 21

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS Bid Protest

Agreed-to Public Version Savantage Financial Services, Inc.,

Plaintiff,
V.
)

No. 1:08-cv-21 (Judge Futey)

THE UNITED STATES,

Defendant.

PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT ON THE ADMINISTRATWE RECORD
Plaintiff Savantage Financial Services, Inc. ("Savantage") hereby submits its motion for

summary judgment on the Administrative Record ("AR"). As established below, Plaintiff is

entitled to judgment in its favor on the grounds that the Department of Homeland Security
("DHS") violated both statute and regulation in connection with Solicitation No. HSHQDC0 8-Q-000 18 ("TASC solicitation") when it failed to conduct a competitive procurement for

purposes of selecting the financial management software system(s) to be used by all DHS

components as a result of DHS's consolidation initiative. Rather than conduct a competitive procurement for a single financial management
software application as has been done in recent years by the U.S. Army, U.S. Air Force, U.S.

Department of Labor, U.S. Department of Agriculture, and U.S. Department of Justice,' DHS
secretly chose systems currently provided by Oracle Corporation ("Oracle") and SAP AG ("SAP") to replace Savantage's system now used by six components of DHS via the TASC
See Exhibit A hereto, Second Declaration of Michael Handberg, ¶ 13, attached hereto ("Second Handberg Declaration")
1

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solicitation for support services to implement DHS's consolidation initiative. The TASC solicitation incorporated DHS's secret decision, memorialized in an unpublished brand name
justification dated July 27, 2007 ("Justification"), to select the Oracle and SAP systems as the

shared baseline systems throughout the agency. Although Savantage has successfully provided its financial management software system to six DHS components for nearly a decade, DHS's
actions effectively shut out any opportunity for Savantage, through a proper competitive

procurement, to demonstrate that its system will best meet DHS's need for an agency-wide

financial management software system. Plaintiff therefore seeks a ruling from this Court that
Defendant's actions were arbitrary and capricious, an abuse of discretion, and contrary to
applicable law.
I.

FACTUAL BACKGROUND

The DHS was created in January 2003 from 22 separate agencies. AR, p. 103. Five
different financial systems application software solutions are currently in use among the DHS's
22 components:
Savantage's Federal Financial Management System ("FFMS") (used by Immigration and Customs Enforcement ("ICE"), U.S. Citizenship and Immigrations Services ("USCIS"), National Protection and Programs Directorate ("NPPD"), Science & Technology Directorate ("S&T"), Office of Health Affairs("OHA") and Office of the Secretary & Under Secretary for Management ("DHS HQ"));
a.

b.

Oracle Corporation's Federal Financials Core Accounting System (used by U.S. Coast Guard ("USCG" or "Coast Guard"), Transportation Security Administration ("TSA"), U.S. Secret Service ("USSS" or "Secret Service") and the Domestic Nuclear Detection Office ("DNDO"))
c.

Systems Applications Products ("SAP") software used by Customs & Border Protection ("CBP");

Integrated Financial Management Information System used by the Federal Emergency Management Administration ("FEMA"); and
d.
e.

Momentum used by the Federal Law Enforcement Training Center ("FLETC").
AR, 104-105.
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In 2003, DHS began implementation of the Electronically Managing Enterprise
Resources for Government Effectiveness and Efficiency ("eMerge2") program by awarding a

contract to integrate financial management systems across the entire department and to address the department's financial management weaknesses. AR, p. 774. The DHS decided to
abandon the eMerge2 project because of the contractor's failure to build a usable system that

provided value beyond what was already in place at the DHS. AR, p. 783. After the failure of the eMerge2 project, the DHS determined that rather than build a new system from scratch (the
eMerge2 strategy), it would "leverage" existing financial system application software. This

effort, called the Transformation and Systems Consolidation ("TASC") initiative, proposed to consolidate financial systems application software by "migrating" DHS components to a shared baseline using the Oracle or SAP systems. AR, p. 775. In testimony before the U.S. Senate on June 28, 2007, DHS's Chief Financial Officer and Chief Information Officer stated that "rather

than pursue the acquisition, configuration, and implementation of a new system within DHS,
we will leverage our existing investments by continuing the migration of Components to these

two proven financial management systems." AR, p. 775.
On July 26, 2007, a DHS contracting officer,
,

signed a "Brand

Name Justification" document determining that the Oracle and SAP financial management systems provided the DHS"
." The

document concluded by stating, ·

,,

________________________________________

determination was accompanied by the certification of

,

the Director of the

agency's Resource Management Transformation Office ("RMTO"). The head of the DHS

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contracting activity did not sign the document, but there is an indication that her signature
was "not required." AR, pp. 746-47.
The Justification was accompanied by a package of information called "Enterprise

Architecture Board Technology Insertion Supporting Documentation." AR, p. 748. This
package included a document entitled 'OCIO/OCFO Business Case for Transformation and
Systems Consolidation," AR, pp. 749-7 72 ("Business Case"), and a document entitled "Analysis of Alternatives For Transformation and Systems Consolidation (TASC)." AR, pp.

780-87 ("Alternatives Analysis"). While these documents contain a significant amount of analysis relating to the agency's alternatives, none of that information was derived through the
competitive process required by the Competition in Contracting Act ("CICA") and the Federal
Acquisition Regulation ("FAR"). Id.

The Business Case contained the following explanation for selecting the Oracle and SAP
systems:

The agency then noted that Oracle and SAP"

"and listed
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754-55. The DHS did not make the Justification and its supporting documentation available
for public inspection as required by FAR 6.305.

Having determined that the DHS would migrate to Oracle and SAP without having

conducted a competitive procurement to support that determination, the agency then issued
the Solicitation No. HSHQDC-07-Q-00294 on August 22, 2007. The solicitation was designed to select a company among Functional Category 4 contractors under DHS's Enterprise
Acquisition Gateway for Leading-Edge Solutions ("EAGLE") contracts to manage the migration

process to the Oracle and SAP systems, but no offeror submitted a proposal by the September

7, 2007 deadline. The DHS then began a series of information-sharing activities with industry, and, based on those activities, decided to cancel the solicitation on October 4, 2007. AR, p.
802.

On November 20, 2007, DHS issued the TASC solicitation as a Task Order Request
under the EAGLE contract, functional category Four (FCO4) Software Development. The

purpose of the solicitation is to support RMTO in pursuing the TASC initiative to consolidate DHS's financial management software systems to the Oracle and SAP systems. AR, Tab 4. The solicitation proposes to "migrate" six DHS components that are currently using
Savantage's FFMS system (ICE, USCIS, NPPD, S&T, OHA and DHS HQ), to the Oracle

system. AR, p. 78. Amendment 0003 to the solicitation provided that Technical and Price

Quotations were due not later than 2:00 p.m. on January 15, 2008. AR, Tab 8. Neither the
solicitation nor any amendment thereto included the Justification and supporting documents
as required by FAR 5.102(a)(6).

Savantage's FFMS is a Financial System Integration Office (FSIO)-certified financial

system and meets all of the performance objectives for a financial systems application software

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solution stated in the solicitation. It is an Oracle-based commercial off-the-shell ("COTS") software system that contains integrated, real-time modules, including Cost management,
Receipts Management, Funds Management, Payments Management, General Ledger Management and Reports Management, which are functions that a Federal agency needs to manage the financial and budgetary aspects of its business operations. Savantage has regularly maintained and upgraded the FFMS software, including both customer-specific enhancements to core software and upgrades to remain current with technology advancements and changing

government regulations and system requirements. In addition to DHS, Savantage customers
include the Department of Labor, Department of Treasury, Department of Defense, Architect
of the Capitol, Federal Retirement Thrift Investment Board, U.S. House of Representatives, and many others. The DHS owns a paid-up, department-wide license for Savantage's FFMS.
Savantage's support of the application software used by the six DHS agencies constitutes one-

half of Savantage's annual revenues. Exhibit 1 to Plaintiff's Appendix in Support of its Motion for Preliminary Injunction and Application for Temporary Restraining Order ("Plaintiff's
Appendix").

No competition of any kind was conducted for the selection of the financial

management software system for implementation of DHS's consolidation initiative. Instead,
the DHS based its selection decision on the Justification package described above. AR, pp. 746-

91. On information and belief, the cost of software license fees alone for the Oracle system to be migrated to the six DHS components (ICE, USCIS, NPPD, S&T, OHA and DHS HQ) will exceed $25,000,000 in initial license fees and $75,000,000 over a ten-year period.

Implementation costs are even higher. Exhibit 1, 'J

6,

to Plaintiff's Appendix. The costs for

additional Oracle systems, expanded licensing of the Oracle system, and/or expanded

maintenance of the Oracle system were not discussed in the DHS's Business Case; however,
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Savantage estimates that the proposed TASC migration will increase DHS's costs by over $159
million over the next ten years. Second Handberg Declaration, ¶1
9,

and Attachment 1 thereto.

The DHS components supported by the Oracle Federal Financials Core Accounting System, the Coast Guard, TSA and the Secret Service, were cited in the DHS Office of the Inspector General Independent Auditor's Report on DHS's FY2007 Financial Statements as

having material deficiencies related to the financial systems application software. The
components supported by Savantage's FFMS did not have such material deficiencies. Exhibit 1,
¶116, and Exhibit 7 to Plaintiff's Appendix.

II.

THE COURT HAS JURISDICTION TO DECIDE, AND PLAINTIFF HAS STANDING TO BRING, THIS CASE
The Tucker Act, as amended by the Administrative Dispute Resolution Act of 1996

("ADRA"), Pub. L. No. 104-320, §

12(a),

(b), 110 Stat. 3870 (Jan. 3, 1996), gives the Court

jurisdiction to "render judgment on an action by an interested party objecting to a solicitation
by a Federal agency for bids or proposals for a proposed contract or to a proposed award or the

award of a contract or any alleged violation of statute or regulation in connection with a procurement or a proposed procurement." 28 U.S.C. § 1491(b)(1).

The statute's use of the conjunction "or" makes it clear that the Court has jurisdiction over each of the three identified types of
actions:

1) an action objecting to a solicitation by a Federal agency for bids or proposals for a proposed contract or to a proposed award of a contract, i.e., a pre-award protest, or

2) an action objecting to the award of a contract, i.e., a post-award protest, or
3) an action objecting to any alleged violation of statute or regulation in connection with a procurement or a proposed procurement.

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Advanced Systems Technology, Inc. v. United States, 69 Fed.Cl. 474, 482 (2006). The
language of § 1491(b) does not require an objection to the actual contract procurement, but

oniy to the "violation of a statute or regulation in connection with a procurement or a proposed procurement." The operative phrase "in connection with" is "very sweeping in scope. As long
as a statute has a connection to a procurement proposal, an alleged violation suffices to supply
jurisdiction." RAMCOR Services Group, Inc. v. United States, 185 F.3d 1286, 1289 (Fed. Cir.
1999).

Congress defined the term "procurement" to include "all stages of the process of
acquiring property or services, beginning with the process for determining a need for property or

services and ending with contract completion and closeout." 41 U.S.C. § 403. "Furthermore,
when Congress enacted the ADRA in 1996, adding subsection (b) to the Tucker Act, its goal

was to grant this court jurisdiction 'over the full range of procurement protest cases.' H.R. CONF. REP. 104-841, at 10 (1996)." OTI America, Inc. v. United States, 68 Fed. Cl. 108, 114
(2005).

The Court of Federal Claims in CCL Inc. v. United States, 39 Fed. Cl. 780 (1997), held that it had jurisdiction to review a protest which challenged an agency's decision not to conduct

a procurement to obtain certain services, but instead to obtain those services by modifying an existing contract. The protester in CCL was awarded an indefinite quantity/indefinite delivery
contract to provide computer maintenance services at an Air Force facility in Denver for five

years, including option years. Two years after award, the Air Force decided not to renew CCL's

contract. Instead, the Air Force issued a task order under a contract with a different firm,
BDM, to obtain the services previously performed by CCL. CCL protested the decision to modify the BDM contract, arguing that the Air Force had violated CICA. Before granting

injunctive relief for the protester, the court first held that it had jurisdiction to hear the case,

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despite the absence of a solicitation or the submission of proposals: "The new language [from
1491(b)] permits both a suit challenging government action which is self-consciously a

competitive procurement as well as what CCL is claiming here: that [the government] is procuring goods and services through a process that should have been the subject of

competition; and that the failure to compete the procurement is in violation of law. The
statute is therefore plainly invoked." Id. at 789 (emphasis in original). Accord, Chapman Law
Firm v. United States, 63 Fed. Cl. 25, 33 (2004) (recognizing that this court has jurisdiction over a protest premised on an alleged violation of statute or regulation by the SBA "in

connection with a procurement").
In this case, Savantage alleges violation of CICA and various FAR provisions relating to

sole-source or brand name determinations "in connection with" the TASC solicitation. The
DHS actions that are being protested by Savantage are "connected with" the TASC solicitation because the solicitation embodies and documents the illegal DHS decision to select the Oracle

and SAP systems without the benefit of competition. Accordingly, the Court has jurisdiction

in this matter.
In addition, Plaintiff has standing to bring this action. The Tucker Act creates
jurisdiction in the Court over bid protest actions brought by an "interested party." 28 U.S.C. §
1491(b) (1).

The Tucker Act, however, does not define the term "interested party." The United

States Court of Appeals for the Federal Circuit has adopted CICA's definition of "interested
party," namely, "an actual or prospective bidder or offeror whose direct economic interest

would be affected by the award of the contract or by failure to award the contract." Am. Fed'n
of Gov't Employees v. United States, 258 F.3d 1294, 1300-02 (Fed. Cir. 200 1)(citing 31 U.S.C.
§

3551(2). The CICA definition establishes a two-part test to determine whether a party

qualifies as an interested party. First, the plaintiff must be "an actual or prospective bidder or

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offeror." In addition, the plaintiff must show that a "direct economic interest would be affected by the award of the contract or by failure to award the contract." 31 U.S.C. § 3551(2). In a situation where a solicitation or award is not being challenged, but the protest concerns a "violation of statute or regulation in connection with a procurement", standing will be determined "based on whether the protesting contractor could compete for the new contract

work and whether it has an economic interest in such work, unhindered by the restrictions
applicable when a bidder protests a solicitation that has already taken place." Northrop

Grumman Corp. v. United States, 50 Fed. Cl. 443, 456 (2001). It is sufficient that plaintiff

stands "in some connection to the procurement." CCL supra,, 39 Fed. Cl. at 790. The Court
has held that "where a claim is made that the government violated CICA by refusing to engage

in a competitive procurement, it is sufficient for standing purposes if the plaintiff shows that it
likely would have competed for the contract had the government publicly invited bids or

requested proposals." Id. see also CW Gov't Travel, Inc. v. United States, 61 Fed. Cl. 559, 570
(2004), aff'd, 163 Fed.Appx. 853 (2005); Northrop Grumman, supra, 50 Fed. Cl. at 456. In CW

Gov't Travel, CCL, and Northrop Grumman, the protestor had not bid on the original contract,

yet the court found that the protestor had standing in each case. The court in CCL explained
the rationale as follow:

CCL did have a connection with the procurement. The work that it contends should have been competed was work that it wanted to do. Not only has CCL stated it would likely have submitted a proposal, but it was performing the very work that it alleges DISA illegally diverted to BDM. By not being able to compete, it potentially lost a contract. As the court held in ATA Defense Industries v. United States, 38 Fed. Cl. 489, 495 (1997), judicial review of procurement methods should not be thwarted through the wooden application of standing requirements. CCL has standing.
39 Fed.Cl. at 790.

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In addition to being an actual or prospective bidder, to have standing a plaintiff must
show prejudice. Meyers Investigative & Security Sews., Inc. v. United States, 275 F.3d 1366, 1370 (Fed. Cir. 2002) (Prejudice (or injury) is a necessary element of standing). In Emeiy Worldwide Airlines, Inc. v. United States, 264 F.3d 1071 (Fed. Cir. 2001), the Court held:

When a party contends that the procurement procedure in a solesource case involved a violation of a statute, regulation, or procedure, it must establish prejudice by showing that it would have had a substantial chance of receiving the award, see Statistica, 102 F.3d at 1582. A disappointed party can establish prejudice either by showing: (1) proceeding without the violation would have made the procurement official's decision to make a sole-source award rather than to conduct a competitive bidding process irrational, see 5 U.S.C. § 706; Bowman Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 281 (1974), and in a competitive bidding process, the complaining party would have a substantial chance of receiving the award, see Alfa-Laval, 175 F.3d at 1367; or (2) proceeding without the violation, the complaining party would have a substantial chance of receiving the sole-source award, see id.

Id. at 1086. The Federal Circuit has held that a protester need not show that "but for the
alleged error, the protester would have been awarded the contract;" rather, it must be

demonstrated that "the protester's chance of securing award must not have been
insubstantial." Info. Tech. & Applications Corp. v. United States, 316 F.3d 1312, 1319 (Fed.

Cir. 2003). In cases where, as here, the protester is not an actual disappointed bidder, the
necessary showing of prejudice was explained as follows:

In Impresa [Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324, 1333 (Fed. Cir. 2001),] we considered the standard to be applied where the plaintiff claims that the government was obligated to rebid the contract (as contrasted with a situation in which the plaintiff claims that it should have received the award in the original bid process). (citations omitted). To have standing, the plaintiff need only establish that it 'could compete for the contract' if the bid process were made competitive. [Plaintiff] need not show that it would have received the award in competition with other hypothetical bidders, [but rather] must show that it would have been a qualified bidder.
.
. .

Myers, supra, 275 F.3d at 1370 (emphasis added).
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Savantage has standing because it is Savantage's financial management software system

that DHS plans to replace without any sort of competitive process. This demonstrates
Savantage's connection with the procurement at hand because the TASC solicitation requires
the winning support services contractor to replace Savantage's FFMS system at the six DHS

components with the Oracle system. Savantage is significantly prejudiced by DHS's actions because provision of its FFMS to the six DHS components constitutes a significant part of
Savantage's current business. Moreover, Savantage would submit a bid or offer for DHS

financial services applications software if such a competition were held. See Exhibit 1, 1[ and 18, to Plaintiff's Appendix. Finally, Savantage is a responsible contractor that is fully

7

capable of meeting all of DHS's needs in connection with the TASC initiative, and it would have a substantial chance of receiving an award based on a competitive procurement for the financial management software system. Indeed, Savantage's FFMS system has been selected
for award by other Federal agencies in procurements where Oracle was a disappointed offeror.
See Second Handberg Declaration, ¶114.

III.

DEFENDANT'S PROCUREMENT ACTION VIOLATED STATUTORY AND REGULATORY REQUIREMENTS AND WAS ARBITRARY AND CAPRICIOUS
A.

Standard of Review

Pursuant to the Tucker Act, as amended by the Administrative Dispute Resolution Act,
this Court reviews bid protest actions under the Administrative Procedure Act ("APA")

standards. See 28 U.S.C. § 1491(b)(1)-(4) (2000). As explained by the Court:
Agency procurement actions should be set aside when they are "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law," or "without observance of procedure required by law." 5 U.S.C. § 706(2)(A), (2)(D) (2000); see also Bannum, Inc. v. United States, 404 F.3d 1346, 1351 (Fed. Cir.
2005).

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KSD, Inc. v. United States, 72 Fed.Cl. 236, 250 (2006). Moreover, as stated in the preceding

section, a protester must establish prejudice as a result of the government's actions. Id. at 254.
The identical review standards apply under the APA in the context of sole-source awards. Id. at
255.
As evidenced by the AR and the parties' submissions, there can be no question that

DHS's selection of the Oracle and SAP financial management software systems for migration

to other DHS components, without competition and to the exclusion of the Savantage system,
was arbitrary and capricious, was not in accordance with law, and was not in accordance with
procedures required by law. Savantage is clearly prejudiced by DHS's improper actions because,
as the provider of a superior -- or at a minimum comparable -- financial management software

system to six DHS components and to numerous other federal agencies, Savantage would have

had a substantial chance that its system would have been selected for migration to other DHS
components as a result of a competitive procurement.
B.

DHS's Selection Of The Oracle And SAP Systems For Migration Throughout The Agency Constituted An Improper Sole-Source Procurement

When DHS determined that it was in the agency's best interests to reduce the number
of financial management software systems used by DHS's many components, which determination culminated in the selection of the Oracle and SAP systems, DHS was

conducting a procurement without the benefit of competition. In connection with
jurisdictional challenges under § 1491(b) (1) of the Tucker Act, this Court and others have

addressed the meaning of the statutory language "any alleged violation of statute or regulation in connection with a procurement or a proposed procurement" for purposes of deciding

whether the action at issue constituted a "procurement" or "proposed procurement." In OTI
America, Inc. v. United States, 68 Fed.Cl. 108 (2005), the protester challenged a decision of the
Government Printing Office to cease further orders of samples or product from the contractor
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(i.e., the "deselection" of OTI America to participate in the next stages in the development of

electronic passport covers), and the Government argued that the Court lacked subject matter

jurisdiction because the "deselection" decision did not constitute a procurement. The Court's
disagreement with the Government's position was prefaced with the following:
The third, concluding prong of paragraph (1) has been given a broad interpretation. See RA1VICOR, 185 F.3d at 1289 ("The operative phrase 'in connection with' [a procurement or a proposed procurement] is very sweeping in scope.") Moreover, Congress has defined the term "procurement" to include "all stages of the process of acquiring property or services, beginning with the process for determining a need for property or services and ending with contract completion and closeout." 41 U.S.C. § 403. Furthermore, when Congress enacted the ADRA in 1996, adding subsection (b) to the Tucker Act, its goal was to grant this court jurisdiction "over the full range of procurement protest cases." H.R. CONF. REPP. [sic] 104-841, at 10 (1996).

Id. at 114. DHS's Justification clearly falls within Congress's definition of the term
"procurement" inasmuch as it reflects the agency's determination of a need to consolidate its
financial management software systems and a decision to select the Oracle and SAP systems to fulfill that need, to the exclusion of Savantage's FFMS system. Indeed, DHS's decision to
proceed with the existing systems provided by Oracle and SAP, rather than with Savantage's existing system, is comparable to the "deselection" decision in OTI America that this Court

determined was a procurement.

In a recent decision of the U.S. District Court for the District of Columbia, the Court
dismissed an action by a government contractor claiming that the Defense Supply Center had
wrongfully refused to disclose to other government agencies its reviews of the contractor's

performance under existing contracts on the grounds that jurisdiction for such an action was
vested in the Court of Federal Claims by the Tucker Act, as amended by the Administrative
Dispute Resolution Act. Public Warehousing Company K. S.C. v. Defense Supply Center

Philadelphia, 489 F.Supp.2d 30 (D.D.C. 2007). The Court determined that the requirement in
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the FAR for agencies to provide contractors with performance evaluations is encompassed by

contract "closeout" and "fits comfortably within the body of regulations that are 'in connection

with a procurement or a proposed procurement", id. at 39, based upon its interpretation of the

term "procurement" in the statute:
Much depends, however, on the meaning of the term "procurement" -- a term not defined in the ADRA. The Court of Federal Claims has construed "procurement" as used in section 1491(b) (1) to encompass "all stages of the process of acquiring property or services, beginning with the process for determining a need for property or services and ending with contract completion and closeout," borrowing from Congress's definition of the term procurement at 41 U.S.C. § 403(2). OTI America, 68 Fed.Cl. at 114; Labat -Anderson, Inc. v. United States, 50 Fed.C1. 99, 104 (Fed.Cl. 2001); accord Labat-Anderson, 346 F.Supp.2d at 151 (applying this definition in construing section 1491(b) (1)). Thus, a "statute or regulation in connection with a procurement or a proposed procurement" includes, by definition, a regulation in connection with any stage of the federal contracting acquisition process, including "contract completion and closeout." Id. at 38-39. The same rationale applies to brand name justifications, which are governed by
regulation (FAR 6.302-1(c) and 11.105), that occur during the planning stage of an acquisition.2

Thus, DHS's decision, via the Justification, to acquire financial management software
systems for use agency-wide through the continuation and expansion of its contracts with

Oracle and SAP, which will result in the termination or discontinuance of DHS's contractual relationship with Savantage for its system, clearly constitutes a procurement. It is Savantage's
The definition section of the FAR, 2.101, includes the term "procurement" by referring to the defined term "acquisition," which is as follows: "Acquisition means the acquiring by contract with appropriated funds of supplies or services (including construction) by and for the use of the Federal Government through purchase or lease, whether the supplies or services are already in existence or must be created, developed, demonstrated, and evaluated. Acquisition begins at the point when agency needs are established and includes the description of requirements to satisfy agency needs, solicitation and selection of sources, award of contracts, contract financing, contract performance, contract administration, and those technical and management functions directly related to the process of fulfilling agency needs by contract." As a result of its selection decision, DHS has acquired, or will acquire, with appropriated funds expanded licensing to use the Oracle system within the six DHS components designated for the migration effort at a substantial cost to the Government. Exhibit 1, ¶11 46, to Plaintiff's Appendix. Clearly, DHS's selection decision falls within this definition as well.

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contention that the DHS Justification is tantamount to an improper sole-source procurement that must be enjoined by the Court. Because a brand name justification is encompassed within
the FAR section (6.302-1(c)) implementing the "only one responsible source" exception to the

Competition in Contracting Act's requirements for full and open competition, 41 U.S.C. §
253(c) (1), Savantage assumes that is the competition exception invoked by DHS even though

the Justification, as discussed below, failed to cite its statutory authority.

InATA Defense Industries, Inc. v. United States, 38 Fed.Cl. 489 (1997), this Court held
that a sole-source justification under the "only one responsible source" exception was legally flawed because the products and services included in the challenged purchase order were readily

available from the protester and other sources on the open market. Id. at 50 1-502. Regarding
the particular competition exception, the Court made the following observations:
Where in fact "the property or services needed . . are available from only one responsible source," and the seffing party knows that it is the only source, then this exception is hardly a significant departure from full and open competition. In such a case, if the agency used competitive procedures and solicited offers or bids from other sources, that act would be futile because the supplier would be aware, in setting its price, that it was not bidding against any competition. As to the use of sole source procurement where there is more than one but only a limited number of responsible sources, FAR 6.30 1 still requires that "the contracting officer. solicit offers from as many potential sources as is practicable under the circumstances."
.

.

.

Id. at 500. Here, assuming the reasonableness of DHS's desire andlor need to migrate its
components to a system already in use at the agency rather than purchasing an entirely new
system, there are several responsible sources, including Savantage, Oracle and SAP, with

compliant systems in use at DHS from which offers can be solicited. DHS's Justification, and
thus its sole-source procurement of the Oracle system3, is not legally justified.

Although the Justification authorizes a shared baseline using both the Oracle and SAP systems, in fact the TASC solicitation only provides for the migration of the Oracle system to the DHS components that
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It is not sufficient that the Oracle system may be superior in DHS's view or that it is the preferred system. InAero Corporation v. Department of the Navy, 540 F.Supp. 180
(D.D.C. 1982), the District Court rejected a sole-source justification even where there was no

doubt about the selected contractor's technical and administrative superiority to overhaul C130 airplanes because there were other responsible sources, including the protester, that could

provide the services. The Court held that "the technical and administrative superiority of a
given firm over all other possible sources has never been accepted as a justification for sole-

source procurement from that firm." Id. at 208. Moreover, even recognizing the discretion and
flexibility allowed procurement officers to define their own needs, the Court stated that that
flexibility "has never been extended to approval of sole-source procurement where the facts

show the company selected was not the only one competent to perform the contract," and
concluded:

Implicit in that firm principle is an assumption that a procurement officer has not discharged his obligation to pursue competition if, before competition could have been begun, he peremptorily selects the "best" company. If there is more than one merely competent firm, then a hard look at the competition may substantially improve the result obtained by the government. (citations omitted).
Id. The following observation by the Court is particularly apt here: This case illustrates well the legitimacy of the ComptrollerGeneral's distinction between findings that a sole-source awardee was superior and that such an awardee was solely qualified to do the work. The particular technical advantages of LGC are important, and should play a critical role in evaluation of proposals. The Acting Comptroller-General's opinions in this case recognized that point. All his rule would have required in
are currently using the Savantage system. The SAP system is only used by Customs & Border Protection, and DHS ultimately plans to consolidate to a single Baseline. AR, Tab 13, p. 800. By the time the migration services being procured through the TASC solicitation are completed, U% of the DHS components will be using the Oracle system (AR, Tab 13, p. 756, Figure 1.1), so it is highly probable DHS intends that the single Baseline will be the Oracle system.

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this case would have been solicitation of proposals, followed by fair consideration of those received. As the Acting ComptrollerGeneral noted, "(t)he place where. differences (in technical merit) appropriately should be considered is in evaluating proposals in connection with a negotiated procurement."
.
.

Id. at 208-209. The Court has described all that Savantage is seeking here, namely, a
competitive procurement and the opportunity to have its proposal to provide the shared
baseline financial management software system given fair consideration by DHS. Indeed, as

noted by the Court, competition may substantially improve the result, from both a technical
and cost standpoint, for DHS.

In connection with the Drug Enforcement Agency's "standardization program" to limit the number of approved manufacturers of 9mm semi-automatic pistols, the GAO rejected the agency's "brand name" documentation as a proper sole-source justification and sustained the protester's challenge to its exclusion from a competition for such pistols. Sturm, Ruger &
Company, Inc., B-23 5938, Oct. 25, 1989, 89-2 CPD ¶[ 375. Like the situation here, the

protester was never given the opportunity to demonstrate to the agency that its pistols satisfied the agency's minimum needs, a fact which GAO found to be contrary to the requirements of
CICA:

As a general matter, we have held that the existence of procedures which are reasonably calculated to provide potential offerors with an opportunity to demonstrate that their products meet an agency's minimum needs at some stage of the planning process or of the procurement process itself is a necessary precondition to the valid imposition of solicitation restrictions which limit the extent of competition to the products of one manufacturer or a group of manufacturers. (citation omitted).
Id. at 2; see also Audio Intelligence Devices, B-224159, Dec. 12, 1986, 86-2 CPD 11670 (holding that sole-source award was improper where agency failed to adequately consider

whether protester's products will meet agency's minimum needs and the sole-source justification failed to comply with procedural requirements under CICA to demonstrate the
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rationale for agency's conclusion that only the proposed awardee can provide the required
products).

In this case, DHS's Justification violates every precept of fairness embodied in CICA, FAR and decisions interpreting the statutory and regulatory framework governing agency

acquisitions. Savantage has been serving DHS for many years with a financial management software system that fully meets DHS's minimum needs and, in fact, has performed better
than other systems in use at DHS. Plaintiff's Appendix, Exhibit 1, 1flJ 15 and 16. Yet, DHS has unfairly and improperly deprived Savantage of the opportunity through a competitive

procurement to demonstrate from a technical and cost standpoint why its system should be
selected for the DHS shared baseline. As demonstrated above, DHS's sole-source procurement

utterly fails to comply with statutory and regulatory requirements. Additionally, as discussed
below, the Justification does not comply with the procedural requirements dictated by CICA
and the FAR.
C.

DHS Failed To Comply With Applicable Law With Respect To Its Brand Name Justification

Unbeknownst to Savantage when it filed this action, DHS executed the Justification on July 26, 2007 and explained its decision to standardize the financial management software systems used by agency components to the Oracle and SAP systems. AR, Tab 13, pp. 746-47. The Justification was accompanied and supported by the Business Case, dated April 25, 2007,

AR, Tab 13, pp. 749-772, and the Alternatives Analysis, dated April 17, 2007. Id. at pp. 780-

787. While other documents are included within Tab 13 in support of the Justification, it is
the Justification, the Business Case, and the Alternatives Analysis that comprise DHS's
substantive rationale for standardizing to the shared baseline system and for selecting the

Oracle and SAP systems, to the exclusion of the Savantage system. DHS's conduct, which
culminated in the issuance of the TASC solicitation for a support services contractor to
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implement the migration to the Oracle system, was contrary to law and procedural
requirements.
1.

Statutory And Regulatory Requirements Regarding Sole-Source Awards And Brand Name Justifications

The Competition in Contracting Act, 41 U.S.C. § 253(a)(1), requires that "an executive
agency in conducting a procurement for property or services. .
.

shall obtain full and open

competition through the use of competitive procedures in accordance with the requirements of
this title and the Federal Acquisition Regulation;
.
.

.." The statute provides for the use of

noncompetitive procedures under certain limited circumstances. 41 U.S.C. § 253(c) (1)- (7).
Subsection (f) of the statute sets forth the requirements for a justification for use of

noncompetitive procedures. FAR Subpart 6.3 implements the statutory requirements and
"prescribes policies and procedures, and identifies the statutory authorities, for contracting without providing for full and open competition."
FAR 6.302-1, entitled "Only one responsible source and no other supplies or services

will satisfy agency requirements," implements one of the exceptions to competition delineated
at 41 U.S.C. § 253(c)(1). Subsection (c) of that FAR provision addresses brand name
justifications and provides as follows:

(c) Application for brand name descriptions. An acquisition that uses a brand name description or other purchase description to specify a particular brand name, product, or feature of a product, peculiar to one manufacturer does not provide for full and open competition regardless of the number of sources solicited. It shall be justified and approved in accordance with FAR 6.303 and 6.304. The justification should indicate that the use of such descriptions in the acquisition is essential to the Government's requirements, thereby precluding consideration of a product manufactured by another company. See FAR 5. 102(a)(6) for the requirement to post the brand name justification. (Brand name or equal descriptions, and other purchase descriptions that permit prospective contractors to offer products other than those specifically referenced by brand name, provide for full and open

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competition and do not require justification and approvals to support their use.) FAR 6.303-1 and 6.303-2 set forth the requirements related to, and the requisite contents of, justifications for using other than competitive procedures. As noted above, agencies must comply with these provisions with respect to brand name justifications. DHS did not fully
comply with FAR 6.303-2, as shall be discussed below.

As a preliminary matter, FAR 6.305, "Availability of the justification," states that "[t]he justifications required by 6.303-1 and any related information shall be made available for public

inspection as required by 10 U.S.C. 2304(f)(4) and 41 u.s.c. 253(f)(4)," and further provides
that contractor proprietary data shall be removed from such justifications prior to public

disclosure. DHS did not comply with this requirement.
2.

DHS's Brand Name Justification

DHS's Justification is prefaced with the statement that "this acquisition" (presumably
referring to the TASC solicitation) is conducted under the authority and requirements of FAR 16.505(b)(1) and FAR 11.105(a). AR, Tab 13, p.746. FAR 16.505(b)(1) addresses the fair

opportunity requirements with respect to orders issued under multiple award contracts.4 FAR
11.105 provides that "agency requirements shall not be written so as to require a particular

brand-name, product, or a feature of a product, peculiar to one manufacturer". . unless-.

(a) (1) The particular brand name, product, or feature is essential to the Government's requirements, and market research indicates other companies' similar products, or products lacking that particular feature, do not meet, or cannot be modified to meet, the agency's needs;5

'

This FAR provision is cited because the TASC solicitation contemplates the award of a task order to a support services contractor that has one of the multiple Functional Category 4 EAGLE contracts awarded by DHS in 2006. The support services contractor will be tasked with migrating the six DHS components currently serviced by Savantage's FFMS system to the Oracle system.

As we shall demonstrate in the following section, Savantage's FFMS system çj meet, and can be further modified to meet, the agency's needs. Thus, DHS has improperly invoked FAR 11.105(a) (1).
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(a) (2) (i) The authority to contract without providing for full and open competition is supported by the required justifications and approvals (see 6.302-1);

The Justification then purports to follow the content requirements of FAR 6.303-2; however,

the document is missing many critical elements.
The Justification does not identify the estimated value of the supplies or services

required to meet the agency's needs and does not identify the statutory authority permitting other than full and open competition. FAR 6.303-2(a)(3) and (4) see also 41 U.S.C. §
253(f)(3)(B). Nowhere in the documents contained within Tab 13 does DHS mention the costs

of obtaining additional financial management software systems, expanded licensing of the
existing Oracle system or maintenance for expanded use of the Oracle system.

The Justification does not include a "demonstration that the proposed contractor's
unique qualifications
.
. .

requires the use of the authority cited." FAR 6.303-2(a)(5); see also

41 U.S.C. § 253(f)(3)(B). While the Justification lists reasons why the Oracle and SAP systems

provide DHS"

," the identified reasons are

not "unique" to Oracle or SAP because (with the exception of the

figure used in the first

bullet) the reasons apply equally to Savantage's system, which supports 22% of the DHS

budget. AR, Tab 13, p. 747; see also Plaintiff's Exhibit 1 (Declaration of Michael Handberg), and its Attachment 3, in Plaintiff's Appendix in Support of its Motion for Preliminary
Injunction and Application for Temporary Restraining Order ("Plaintiff's Appendix").

The Justification does not include "a description of efforts made to ensure that offers are solicited from as many potential sources as is practicable, including whether notice was or will
be publicized as required by Subpart 5.2 and, if not, which exception under 5.202 applies."
FAR 6.303-2(a)(6); see also 41 U.S.C. § 253(f)(3)(E). This is obviously because no such efforts

were made and no such notice was publicized. Savantage was never given the opportunity to
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submit an offer to demonstrate that the Savantage system will best meet DHS's needs from both a technical and cost standpoint. And, Savantage was never given the opportunity to
address and rebut the DHS rationale for selecting the Oracle and SAP systems as set forth in
the Justification and accompanying Business Case and Alternatives Analysis.

The Justification does not include "a determination by the contracting officer that the
anticipated cost to the Government will be fair and reasonable." FAR 6.303-2(a)(7); see also 41
U.S.C. § 253(f)(3)(C). In fact, while the Business Case accompanying the Justification provides nowhere does

the Justification or the Business Case identify the anticipated cost to DHS of acquiring
additional Oracle systems, licensing for expanded use of the Oracle system by other DHS

components or maintenance costs for expanded use of the Oracle system, much less any determination that the anticipated cost will be fair and reasonable. In addition, the Justification does not include "a description of the market research conducted (see Part 10) and the results or a statement of the reason market research was not
conducted." FAR 6.303-2(a)(8); see also 41 U.S.C. § 253(f)(3)(D). The Business Case only
addresses
"). FAR

10.002, setting forth market research

procedures, contemplates queries to and reviews from industry, acquisition personnel at other

agencies, and customers in addition to obtaining agency internal information. Clearly, DHS
conducted no market research and did not explain the reasons for not doing so.
Finally, DHS violated FAR 5.102(a) (6) by failing to include the Justification (even in

redacted form) with the pending TASC solicitation (AR, Tab 4, pp. 78-185), or with the prior Solicitation No. HSHQDC-07-Q-00294 for the same support services (AR, Tabs 26, pp. 11181119, and 30, pp. 1143-1198), dated August 22, 2007, which was cancelled on October 4,

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2007 (AR, Tab 18). DHS also violated FAR 6.305 by failing to make the Justification and
related information available for public inspection.

DHS's failure to comply with these FAR requirements regarding the publication and contents of the Justification, and accompanying Business Case and Alternatives Analysis, has
severely prejudiced Savantage, and perhaps other potential competitors, by depriving it of the

opportunity for the last six months to address and rebut DHS's rationale for selecting the
Oracle and SAP systems.
D.

DHS's Justification Was Arbitrary And Capricious

Savantage does not take issue with DHS's determination to consolidate from the five
separate financial management software systems currently in use at the agency to a shared --
and eventually a single -- baseline

system, and the rationale for that determination described in

the Justification and Business Case makes perfect sense. Rather, it is DHS's decision, through
an improper non-competitive process, to select the Oracle and SAP systems that Savantage

disputes. As demonstrated below, the reasons described in the Justification, Business Case,
and Alternatives Analysis for eliminating Savantage's FFMS system from consideration as one

of the two systems in the shared baseline are, to put it simply, inaccurate and wrong.
On pages 752 and 753 of the Justification (AR, Tab 13), DHS addressed some of the
reasons for selecting the Oracle and SAP systems:

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The Justification then listed
and
754.

agencies using the Oracle system
). AR, Tab 13, p.

agencies using the SAP system (

All of the reasons cited by DHS are equally applicable to the Savantage system. It is a standards-based software application that meets financial business requirements, is scalable,

and proven within the DHS operating environment. See Exhibit 1, ¶111, to Plaintiff's Appendix; Second Handberg Declaration, ¶ 6-12. Moreover, the Savantage system is auditcompliant and has already been proven to provide clean audit opinions. In fact, audits have
resulted in fewer findings, weaknesses and deficiencies at DHS components using the

Savantage system than at components using the Oracle system. Exhibit 1, 1115, and Exhibit 7

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(DHS OIG 2007 audit finding Coast Guard and TSA, using Oracle systems, not in full
compliance with FFMIA) to Plaintiff's Appendix.

With respect to the assertion that Oracle and SAP already support
/

the chart at page 756 (Figure 1.1) of the Justification shows that, as of October 1, 2006,

DHS. Thus, it is equally true that
The fact of the matter is that each of the
three systems
of DHS.

With respect to the second bullet point, DHS does not explain its assertion that the
Oracle and SAP systems

Nevertheless, Savantage's FFMS system is as

if indeed not more so, than the Oracle and SAP systems. While it is not entirely clear

what DHS meant with respect to"

"the term

___________________________________________________,,6 Savantage's system has not broken

down, has held up well under exceptional circumstances, and comes with a wide range of

capabilities. In fact, after the establishment of DHS in 2003, DHS attempted to migrate
several components to the Oracle system, but the effort failed. The same components were then migrated to the Savantage system in a period of 30 days without problems. Second Handberg Declaration, [
6

15.

These definitions were obtained from internet.com (Webopedia's Computer Dictionary).

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In addition, the Savantage system has demonstrated its scalability, i.e., ability to adapt to increased demands, through its migration from the former INS to the six DHS components
currently using the system. Savantage has been extremely flexible over the years through
timely deliveries of customer-specific enhancements to core software and of necessary system

updates. Finally, Savantage's system is just as"

"as the Oracle and SAP

systems. The FFMS cunently interfaces with the Bonds Management System, the IntraGovernmental Payment and Collection (IPAC) system, the Treasury payment file transmission
and confirmation system, the NFC payroll system, and the GELCO Travel Manager system. Although DHS has never tasked Savantage to develop an interface with the Asset Management
(Sunflower) system, Savantage expended its own funds in 2005 to build and demonstrate to

DHS a prototype interface with Sunflower, and that prototype interface remains available today

should DHS choose to acquire it. Second Handberg Declaration, ¶117. In addition, DHS
tasked Savantage in 2004 to develop an interface with the Procurement System application (PRISM), and Savantage completed that task in June 2006. However, DHS has delayed deployment of that interface for reasons discussed later in this section.

The third, fourth and fifth bullets noted above do not demonstrate any superiority of the Oracle and SAP systems to the Savantage system. While the Oracle system supports four DHS components and the SAP system supports one component, the Savantage system currently supports six components. Savantage agrees that consolidation is not as costly as building an entirely new system, and contends that consolidation to the Savantage system will result in substantial cost savings to DHS because (unlike the licensing anangement with
Oracle) DHS already has an agency-wide license with Savantage. Furthermore, as previously

stated, previous audit results establish that using the Savantage system, either exclusively or in
a shared baseline with Oracle or SAP, will reduce DHS exposure to adverse audit findings

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because historically the components using the FFMS system have had fewer audit findings,

deficiencies and material weaknesses than those using the Oracle and SAP systems. DHS has also stated that Oracle and SAP are
/

citing
) and

implementations at

agencies for Oracle (

agencies for SAP. A similar list could be compiled with respect to FFMS implementations by

Federal agencies. The list of 12 agencies includes the six DHS components using the
Savantage system, the U.S. Department of Labor, the U.S. Department of the Treasury, Federal

Retirement Thrift Investment Board, the U.S. Department of Defense, the Architect of the Capitol, and the U.S. House of Representatives. Exhibit 1, ¶
10,

to Plaintiff's Appendix.

Additionally, Savantage's FFMS system has competed against the Oracle and other "leading"

financial management systems in recent Federal procurements. With respect to three of the
five identified procurements, the FFMS system was selected for award in favor of the Oracle

system. Second Handberg Declaration, ¶

14.

On page 754 of the Justification, DHS
." The

Savantage FFMS

system

:

(1) as demonstrated by previous

audits, the system will enhance DHS's ability to achieve unqualified audits, and it will support robust reporting requirements and enable the Secretary's Priority 12.2 to unify IT infrastructures; (2) the FFMS is FISO-compliant and has demonstrated it can support a clean
audit opinion; (3) the FFMS already supports the PMA framework and uses an 0MB-compliant accounting line; (4) the FFMS is already constructed on a Service Oriented Architecture, and is

a suite of real-time integrated applications ensuring users have the most accurate and timely
data to support operations; (5) the FFMS already provides an approved Chart of Accounts

compliant with the USSGL and 0MB Circular A-127 requirements; (6) the FFMS already

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provides compliance with FISCAM, NIST and other applicable federal requirements, including
NIST security requirements; and (7) FMLoB compliance will be achieved using the FFMS,

singularly or in a shared baseline approach, for the same reasons listed on page 754 (7th bullet

point). See Exhibit 1, ¶j 3, 9, 11, 15, and Attachments 1 and 3, to Plaintiff's Appendix;
Second Handberg Declaration, ¶Jj 6-12..

On page 756 of the Justification, DHS estimated that'1

." DHS

then listed several areas in which standardizing to the Oracle and SAP
." The

systems will allow DHS"

six listed

however, are directly associated with the consolidation

from five systems to two and do not differentiate between any

Savantage system. Indeed, the same

would result from a migration to the Savantage system, either as a single baseline or in a shared baseline. Most importantly, the substantial cost associated with the expansion of DHS's
licensing arrangement with Oracle, which Savantage estimates will be between $26M and $75. 5M over the next ten years, or that additional licensing costs would not be incurred

through migration to the Savantage system. Exhibit 1, JtI 4-6 and 17, to Plaintiff's Appendix;

One need only review the requirements of the Financial Systems Integration Office for certification as an FSIO-compliant software product to recognize that the Savantage FFMS system (now called Altimate) would not be FSIO certified (Exhibit 1, Attachment 1, to Plaintiff's Appendix) unless it met all of the technical system and functional requirements set forth in the Office of Federal Financial Management's publication "Core Financial Systems Requirements" (OFFM-NO-0 106), January 2006. This publication can be found at www.fsio.gov under the heading "systems requirements documents."

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Second Handberg Declaration, ¶ 9, and Attachment 1 thereto (chart comparing the 10-year life cycle costs of staying with ICE's current system (FFMS) to replacing it with TSA's system
(Oracle)).

The Justification provided a brief description of the five financial management systems

in use at DHS at page 759. With respect to the Savantage, Oracle and SAP systems, the
Justification stated as follows:
I

The first striking aspect of these brief descriptions is that the
Like

Oracle and SAP, however, the FFMS is a COTS product. The the Independent Auditor's Report on DHS' FY 2007 Balance Sheet and
Statement of Custodial Activity (Exhibit 7 to Plaintiff's Appendix) found numerous significant

deficiencies and material weaknesses with the accounting at the Coast Guard and TSA, which
use the Oracle system, but far fewer problems at ICE, which uses the Savantage system.

4672800.1

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Case 1:08-cv-00021-BAF

Document 25

Filed 02/13/2008

Page 36 of 58

As stated above, DHS

has never tasked Savantage to develop an interface with the Sunflower application, but
Savantage expended its own funds to develop that interface, which is ready for deployment

should DHS wish to acquire it. Second Handberg Declaration, ¶117. Moreover, in November
2004, the ICE Office of Procurement requested Savantage to develop an automated interface

between FFMS and PRISM. Savantage began work on the interface requirements document in
February 2005 and, following an ICE delay in obtaining funding, the work resumed in August

2005 with a target implementation in December 2005. The interface integration testing
occurred in early February 2006, and ICE acceptance testing was scheduled in late March with

an implementation date in June 2006. Savantage completed its work on the interface in June 2006. In late June, DHS security stopped the interface implementation due to a concern about
the security of the data being passed between DHS users and the PRISM application. No further work has been done on the interface since that time notwithstanding Savantage's urging
on sev