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DOE’s Misstep Didn’t Matter: COFC Says Errors Not Enough to Overturn $128 Million Award

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In National Energy Security Operations, LLC v. United States, U.S. Court of Federal Claims, No. 25-774 (Sept. 30, 2025, reissued Nov. 24, 2025), National Energy Security Operations, LLC challenged a $128 million Department of Energy (DOE) award to Strategic Storage Partners, LLC (SSP) for the management and operation of the Strategic Petroleum Reserve (SPR). The Court agreed with National Energy that DOE improperly applied unstated evaluation criteria in assessing the company’s Contractor Assurance System (CAS) approach, a rare such win on the merits. But National Energy’s broader protest failed because the Court concluded that this error did not affect the outcome. SSP’s proposal was simply too far ahead on the overall Management Approach factor, which was the most important evaluation factor. The decision provides a strong reminder that showing error is not enough, a protestor must also prove prejudice.

The Decision
The COFC denied the protest, ruling that:

  1. DOE Applied Unstated Evaluation Criteria in the CAS Evaluation: The Court found that DOE improperly used a special contract clause included in Section H of the solicitation as a de facto grading rubric for evaluating National Energy’s CAS approach, even though the clause was not referenced in Sections L or M of the solicitation and related to requirements that would not be developed and approved until after award. The Court held this was a textbook example of applying unstated evaluation criteria, making DOE’s evaluation in this area arbitrary and capricious.
  2. But the Error Was Not Prejudicial: Despite the error, the Court held that removing the “Weakness” from National Energy’s CAS evaluation would not have changed the award decision. SSP’s proposal earned more favorable ratings across six Management Approach subfactors and was described as having a “far better” overall management approach. Correcting the CAS rating would not have given National Energy a substantial chance of award.
  3. Evaluation of Other Weakness Was Reasonable: The Court rejected National Energy’s claim that DOE applied unstated criteria when it assigned a weakness to its approach for managing the LE2 (Life Extension 2) project. Because National Energy’s proposal planned to use the same general contractor that had experienced problems on the incumbent contract, the Court found that DOE reasonably considered those performance risks as part of its evaluation.
  4. Settlement Agreement Was Not “Too Close at Hand”: National Energy argued DOE should have considered a 2023 settlement agreement related to past fee reductions on one of its reference contracts performed by a key subcontractor, which was an area of concern flagged by DOE. In National Energy’s view, had the SSA considered that DOE “capitulated” when its key subcontractor sued the Agency to challenge the fee reductions, the SSA would have reached a different conclusion about National Energy’s Past Performance. The Court rejected this, finding the agreement didn’t alter the performance record, wasn’t part of DOE’s past performance assessment, and couldn’t be used to “prove” the government was wrong under Federal Rule of Evidence 408. It was therefore neither past performance information nor relevant to judicial review.
  5. Clarifications Were Not Required for Negative PPQs: Although National Energy had not previously seen the negative Past Performance Questionnaires (PPQs) used by DOE, the Court emphasized that clarifications are discretionary, and the agency did not abuse its discretion by relying on unrebutted PPQs. The Court noted that nothing in the FAR or the solicitation required DOE to provide an opportunity to respond.
  6. The Court Rejected National Energy’s View of Prejudice: The Court corrected National Energy’s misstatement of the prejudice standard, clarifying that a protestor must show a “substantial chance” of receiving the award, not merely that its chances would have increased. DOE’s error, in this case, was “de minimis” in the context of SSP’s broader technical superiority and thus did not warrant setting aside the award.

Key Takeaways for Contractors:

  1. Proving Error Is Only Half the Battle: Even if you show that the agency applied unstated evaluation criteria, or any error for that matter, you must also demonstrate prejudice. If you don’t, you can’t—and won’t win.
  2. Unstated Criteria Claims Can Succeed: The Court doesn’t hesitate to strike down evaluations that rely on unstated criteria. Evaluators must stick to Sections L and M.
  3. Past Contractor Issues Can Follow You: When you propose using the same personnel or subcontractors from a prior contract, the agency may reasonably consider their documented performance issues, especially if your proposal lacks a clear plan for improvement.
  4. Clarifications Are Discretionary, Not Guaranteed: You don’t have a right to respond to negative past performance comments or PPQs unless the agency chooses to allow it. Courts will rarely second-guess that decision.
  5. Settlement Agreements Don’t Rewrite Performance History: Unless they directly revise an offeror’s past performance record (e.g., CPARS ratings), settlement agreements generally aren’t considered past performance information and won’t be factored into the agency’s evaluation.
  6. The Prejudice Standard Remains High: Small changes in evaluation outcomes won’t justify overturning an award. The protestor must show that correcting the error would have given it a real shot at winning.