IMS Eng'rs v. Geren - Opposition

No. 08-82

In the Supreme Court of the United States

IMS ENGINEERS-ARCHITECTS, P.C., PETITIONER

v.

PETE GEREN, SECRETARY OF THE ARMY

ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT

BRIEF FOR THE RESPONDENT IN OPPOSITION

GREGORY G. GARRE
Solicitor General
Counsel of Record
GREGORY G. KATSAS
Assistant Attorney General
JEANNE E. DAVIDSON
ANTHONY J. STEINMEYER
MARK A. MELNICK
JOAN M. STENTIFORD
Attorneys
Department of Justice
Washington, D.C. 20530-0001
(202) 514-2217

QUESTION PRESENTED

Petitioner entered into an Indefinite Delivery, Indef inite Quantity (IDIQ) government services contract and ultimately received orders within the range specified in that contract. The question presented is as follows:

Whether the Armed Services Board of Contract Ap peals had authority to consider a claim that petitioner would have received additional orders under the IDIQ contract but for bad faith or other improprieties by the government party.

In the Supreme Court of the United States

No. 08-82

IMS ENGINEERS-ARCHITECTS, P.C., PETITIONER

v.

PETE GEREN, SECRETARY OF THE ARMY

ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT

BRIEF FOR THE RESPONDENT IN OPPOSITION

OPINIONS BELOW

The order of the court of appeals (Pet. App. 34a-35a) is not published in the Federal Reporter but is reprinted in 274 Fed. Appx. 898. The opinion of the Armed Ser vices Board of Contract Appeals (Board) (Pet. App. 1a- 25a) is reported at 06-1 B.C.A. (CCH) ¶ 33,231. The opinion of the Board denying reconsideration (Pet. App. 26a-33a) is reported at 07-1 B.C.A. (CCH) ¶ 33,467.

JURISDICTION

The judgment of the court of appeals was entered on April 14, 2008. The petition for a writ of certiorari was filed on July 11, 2008. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1).

STATEMENT

1. Petitioner is a business firm that provides archi tect-engineering services in connection with hazardous, toxic, and radioactive waste sites. Petitioner's founder and president is a native of India and a Sikh. Petitioner has been certified as a socially and economically disad vantaged entity within the meaning of Section 8(a) of the Small Business Act, 15 U.S.C. 637(a). Pet. App. 2a.

On August 5, 1994, the Army Corps of Engineers for the Omaha District (Corps) awarded petitioner an Indef inite Delivery, Indefinite Quantity (IDIQ) contract to provide environmental consulting services at various sites. Pet. App. 3a, 4a. "An IDIQ contract does not pro vide any exclusivity to the contractor." Travel Ctr. v. Barram, 236 F.3d 1316, 1319 (Fed. Cir. 2001). Instead, "an IDIQ contract provides that the government will purchase an indefinite quantity of supplies or services from a contractor during a fixed period of time," subject to a "minimum quantity stated in the contract." Ibid. Once the government has purchased the contractually specified minimum quantity, "its legal obligation under the contract is satisfied" and "it is free to purchase addi tional supplies or services from any other source it chooses." Ibid.

The IDIQ contract in this case had an initial period of one year that was extendable at the Corps' option for up to four additional years. Pet. App. 4a. Under the contract, the Corps was obligated to purchase at least $2500 in services from petitioner during the initial con tract period and was entitled to purchase up to $10 mil lion in services over the full five-year period. Ibid. The IDIQ contract required petitioner to "perform all ser vices" required "[u]pon receipt of duly executed delivery orders." Ibid. (brackets in original)

Petitioner's IDIQ contract also had a standard "ter mination for convenience" provision. Pet. App. 4a; see 48 C.F.R. 52.249-7. That provision stated that "[t]he Government may terminate this contract * * * for the Government's convenience or because of the failure of the Contractor to fulfill the contract obligations." Pet. App. 4a. The contract further provided that, "[i]f the termination is for the convenience of the Government, the Contracting Officer shall make an equitable adjust ment in the contract price but shall allow no anticipated profit on unperformed services." Ibid.

During the initial one-year contract period, peti tioner received and satisfactorily completed two delivery orders for services in amounts of $158,627 and $531,342. Pet. App. 5a; Gov't C.A. Br. 2 n.1. The current dispute involves the Corps' award and subsequent termination of a third delivery order (Delivery Order 3) to peti tioner. In May 1995, the Corps issued a request for pro posals for a six-month treatability study at an aban doned gas station on March Air Force Base. Pet. App. 6a-7a. In June 1995, petitioner submitted a proposal that called for a total payment of $932,828. Id. at 8a. Petitioner's proposal also stated that a subcontractor, Black & Vetach Waste Science, Inc. (B.&V.), would per form 85% of the total work. Ibid. In July 1995, the Corps issued Delivery Order 3, which called for peti tioner to perform $932,282 in services and complete the work by December 1995. Id. at 8a, 10a.1

Petitioner was unable to agree to terms of a subcon tract with B.&V. Pet. App. 9a; Gov't C.A. Br. 6. On No vember 6, 1995- more than three months into the five- month performance period for Delivery Order 3-peti tioner had still not performed any work in connection with the treatability study. Id. at 10a. On that date, an official at March Air Force Base asked the Corps to ter minate Delivery Order 3 for the convenience of the gov ernment and to award the project to a different contrac tor under an existing IDIQ contract. Ibid. On March 28, 1996, the Corps awarded a modified version of the project to a different contractor for $615,332. Id. at 11a. On May 2, 1996, the Corps informed petitioner that it was terminating Delivery Order 3 pursuant to the termination-for-convenience provision in petitioner's IDIQ contract and asked petitioner to submit "any costs that have been incurred in the preparation and submis sion of the cost proposals for this requirement." Id. at 11a-12a. Petitioner had not performed any work pursu ant to Delivery Order 3 as of May 2, 1996, and it did not submit a termination settlement proposal. Ibid. On October 1, 1997, the Corps informed petitioner that it had elected not to exercise the third option year under the IDIQ contract and that the contract had therefore expired on August 4, 1997. Id. at 13a.

2. a. On May 2, 2000-four years after the Corps terminated Delivery Order 3 and more than two-and-a- half years after the Corps gave notice that it was not exercising its option to further extend the IDIQ con tract-petitioner submitted to the contracting officer a request for an equitable adjustment of $5,773,760. Pet. App. 14a. The contracting officer denied petitioner's claim. Ibid.

b. Petitioner appealed the contracting officer's deci sion to the Armed Services Board of Contract Appeals (Board). Pet. App. 14a-15a; see 41 U.S.C. 607 (2000). Before the Board, petitioner sought $6,663,171 in dam ages. Pet. App. 1a.

After an evidentiary hearing, a panel of three admin istrative judges issued a unanimous written opinion that denied all of petitioner's claims. Pet. App. 1a-25a. The Board first stated that the Contract Disputes Act of 1978, 41 U.S.C. 601 et seq., limited its jurisdiction "to claims 'relating to a contract.'" Pet. App. 17a (quoting 41 U.S.C. 605(a)). As a result, the Board concluded that it "lack[ed] jurisdiction over allegations of irregularities in the selection process and misuse of IDIQ contracts," and it described such "issues" as being "reserved for other fora." Ibid.

The Board determined that the two issues that were properly before it were: "(1) whether the [Corps] acted in bad faith when it terminated [Delivery Order 3] for convenience; and (2) whether [the Corps] acted in bad faith when it failed to exercise the third and fourth op tion years of the contract." Pet. App. 17a-18a; see id. at 18a (citing Federal Circuit decision for the proposition that "termination for convenience results in a breach of contact" when the termination decision is "tainted by bad faith or an abuse of discretion"). The Board also observed, however, that "[g]overnment officials are pre sumed to act in good faith in the performance of their duties." Ibid. And, again citing Federal Circuit prece dent, the Board stated that "[i]n order to rebut th[at] presumption," petitioner was required to demonstrate by "clear and convincing evidence" "that the [Corps'] actions were motivated by racial or ethnic bias or a spe cific intent to harm or get rid of [petitioner] because it was [a Section 8(a)] contractor." Id. at 18a-19a.

The Board concluded that petitioner had not met its burden of proof. Pet. App. 20a-24a. The Board ob served that it "ha[d] long held that unsubstantiated as sertions do not constitute proof or evidence" and it de termined that "[k]ey aspects of [petitioner's] case [we]re based on the unsubstantiated assertions of [its founder and president]." Id. at 20a. The Board identified sev eral instances in which the testimony of petitioner's founder and president directly conflicted with that of other witnesses, and it resolved those conflicts in favor of the other witnesses. Id. at 9a-10a, 20a-21a. The Board also rejected petitioner's contention that the tim ing of and stated rationale for the Corps' termination of Delivery Order 3 demonstrated that the termination was improper. Id. at 21a-23a. With respect to the Corps' failure to exercise its options for the final two years of the potentially five-year contract period, the Board noted the contracting officer's testimony that the deci sion was made because "the district did not have enough work to justify exercising the options." Id. at 24a. The Board stated that petitioner had offered only "unsub stantiated allegations and conclusory assertions" to the contrary." Ibid.

The Board stated that it had "carefully reviewed [the contracting officer's] actions as well as the actions of other [Corps] personnel involved with [Delivery Order 3]," and that it had not "f[ou]nd any evidence of racial or ethnic discrimination or a desire to get rid of [petitioner] because it was [a Section 8(a)] contractor." Pet. App. 23a; see id. at 24a. The Board also "conclude[d] that the [Corps] ha[d] established a reasonable basis for its deci sion and that [petitioner] ha[d] not proven the elements necessary for relief." Id. at 24a.

c. Petitioner filed a motion for reconsideration, which the Board denied. Pet. App. 26a-33a.

3. Petitioner appealed the Board's decision to the United States Court of Appeals for the Federal Circuit. See 41 U.S.C. 607(g)(1)(A). The court of appeals af firmed without opinion in a one-word, unpublished per curiam judgment order. Pet. App. 34a-35a.

ARGUMENT

Petitioner contends (Pet. i, 13-27) that the Armed Services Board of Contract Appeals (Board) erred in concluding that it lacked jurisdiction to review peti tioner's claims of bad faith or improprieties in connec tion with the issuance of specific delivery orders under its validly executed IDIQ contract. Further review is not warranted.

1. The court of appeals issued no opinion in this case, and its one-word judgment order will have no preceden tial force in future cases. See Pet. App. 34a-35a. In ad dition, petitioner does not assert that the Federal Cir cuit's resolution of this case conflicts with any decision of this Court or another court of appeals. See Sup. Ct. R. 10(a) and (c). Petitioner's assertion that there is a "direct conflict" (Pet. 21) between various decisions of the Board itself and of the United States Court of Fed eral Claims, see Pet. 21-25, does not warrant this Court's review. Any such conflict can and should be ad dressed in the first instance by the Federal Circuit, which has exclusive jurisdiction over appeals taken from both the Board and the Court of Federal Claims. 28 U.S.C. 1295(a)(3); 41 U.S.C. 607(g)(1)(A). Cf. Wis niewski v. United States, 353 U.S. 901, 902 (1957).2

2. The issues raised by the petition lack any mean ingful prospective importance because the Federal Ac quisition Streamlining Act of 1994 (Streamlining Act), Pub. L. No. 103-355, 108 Stat. 3243, which was enacted after the formation of the IDIQ contract at issue here and is therefore inapplicable to this case, has super seded the provisions of law under which petitioner's suit was adjudicated. The Streamlining Act "codif[ied] the government's IDIQ contracting authority." Tyler Constr. Group v. United States, 83 Fed. Cl. 94, 99 (2008). It also provides that, subject to certain statuto rily prescribed exceptions, "all contractors awarded [IDIQ] contracts shall be provided a fair opportunity to be considered, pursuant to procedures set forth in the contracts, for each task or delivery order in excess of $2,500." 10 U.S.C. 2304c(b) (so providing for military contracts); 41 U.S.C. 253j(b) (so providing for civilian contracts).

The Streamlining Act further provides, however, that, subject to one specifically enumerated exception, "[a] protest is not authorized in connection with the issu ance or proposed issuance of a task or delivery order except for a protest on the ground that the order in creases the scope, period, or maximum value of the con tract under which the order is issued." 10 U.S.C. 2304c(d); 41 U.S.C. 253j(d). In lieu of formal protests, the Streamlining Act requires the "head of an agency who awards" IDIQ contracts to "appoint or designate a task and delivery order ombudsman." 10 U.S.C. 2304c(e); see 41 U.S.C. 253j(e). The ombudsman must be "independent of the contracting officer for the con tracts" in question and "shall be responsible for review ing complaints from the contractors on such contracts and ensuring that all of the contractors are afforded a fair opportunity to be considered for task and delivery orders." 10 U.S.C. 2304c(e), 41 U.S.C. 253j(e). As the Court of Federal Claims has explained, the purpose of these provisions was to "exempt" from "agency protests, Government Accountability Office (GAO) protests or judicial review" "the issuance of individual task orders to contractors who had already received awards, subject to protest, of their master IDIQ contracts." A&D Fire Prot., Inc. v. United States, 72 Fed. Cl. 126, 134 (2006) (emphasis added).

The "limitation on protests" set forth in the Stream lining Act "only applies to orders issued" and "autho rized under" the provisions enacted as part of that stat ute. Data Mgmt. Servs. Joint Venture v. United States, 78 Fed. Cl. 366, 371 n.4 (2007); see 10 U.S.C. 2304c(f) (providing that "[t]his section"-which includes the pro test bar-"applies to task and delivery contracts entered into under sections 2304a and 2304b of this title"); Streamlining Act § 1004(a), 108 Stat. 3249-3250 (enact ing 10 U.S.C. 2304a and 2304b). The IDIQ contract at issue in this case was awarded on August 5, 1994, see Pet. App. 4a, more than two months before the October 13, 1994, enactment of the Streamlining Act. Because the statutory scheme that applies to petitioner's IDIQ contract was modified 14 years ago, this case is a partic ularly unsuitable vehicle for considering any broader issues (see Pet. 14-20, 25-27) raised by IDIQ contract ing.

3. Even if the Board had exercised jurisdiction to consider petitioner's contentions that the contracting of ficer engaged in bad faith or other improprieties in fail ing to issue additional delivery orders under the IDIQ contract, those claims clearly would have failed on the merits. The Federal Circuit has held that when the gov ernment purchases the minimum quantity specified in an IDIQ contract, "its legal obligation under the con tract is satisfied," and "it is free to purchase additional supplies or services from any other source it chooses * * * at its discretion," even in situations where agen cy's "contracting tactics" are "less than ideal." Travel Ctr. v. Barram, 236 F.3d 1316, 1319 (Fed. Cir. 2001). In addition, the Board specifically found in this case that petitioner "ha[d] not proven that the actions of [Corps] personnel, either individually or in the aggregate, were motivated by racial or ethnic bias or a desire to get rid of [petitioner] due to its [Section 8(a)] status." Pet. App. 24a. There is no reason to believe that the Board would have reached a different conclusion had it specifically considered petitioner's claim that the Corps acted in bad faith in not issuing it more delivery orders under its IDIQ contract. See note 1, supra (noting that petitioner received and satisfactorily completed two additional de livery orders after the issuance of Delivery Order 3).

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

GREGORY G. GARRE
Solicitor General
GREGORY G. KATSAS
Assistant Attorney General
JEANNE E. DAVIDSON
ANTHONY J. STEINMEYER
MARK A. MELNICK
JOAN M. STENTIFORD
Attorneys

OCTOBER 2008

1 In September 1995, petitioner received and satisfactorily completed two additional delivery orders for services in amounts of $104, 905 and $171,899. Pet. App. 12a.

2 At any rate, there is no conflict between the Board's decision in this case and any of the decisions cited by petitioner. ABF Freight System, Inc. v. United States, 55 Fed. Cl. 392 (2003) (see Pet. 24-25), held that a party that had been awarded an IDIQ contract could not seek review pursuant to a statute authorizing challenges by "disappointed bidders." Id. at 397 (citing 28 U.S.C. 1491(b)(1)). Although L.P. Consulting Group, Inc. v. United States, 66 Fed. Cl. 238 (2005) (see Pet. 24), suggested that the government's "implied obligation to carry out its duties under a contract in good faith" extended to the award of delivery orders under an IDIQ contract (see 66 Fed. Cl. at 243), the court did not cite two no-protest statutes that had been enacted after the award of the contract in this case but before the award of the contracts at issue in L.P. Consulting Group, Inc. See id. at 239 (stating that the two contracts at issue had been awarded in June of 1996); pp. 8-10, infra. And in the post-L.P. Consulting Group, Inc., decision of A&D Fire Protection, Inc. v. United States, 72 Fed. Cl. 126, 134 (2006) (see Pet. 23-24), the Court of Federal Claims expressly held that one of the bid- protest bars that was not cited in L.P. Consulting Group, Inc., "applies to task orders on multiple award IDIQ contracts." Petitioner acknowl edges (see Pet. 26) that Weeks Marine, Inc. v. United States, 79 Fed. Cl. 22 (2007), "was a bid protest action" and thus did not present the question presented here, that is, "whether a holder of an awarded Federal Government Contract [may] use the Contract Disputes Act to remedy unfair treatment in task order selection." Pet. 26.

Petitioners' reliance on three previous Board decisions (see Pet. 21- 23) is also misplaced. Unlike the IDIQ contract at issue here, the con tracts at issue in those cases contained either express factors governing the award of delivery orders, Burke Court Reporting Co., 97-2 B.C.A. (CCH) ¶ 29,323 (1997), or an express provision that the contractor would be given a "fair opportunity" to obtain delivery orders, Com munity Consulting Int'l, 02-2 B.C.A. ¶ 31,940, at 157,782 (2002); L-3 Commc'ns Corp., 06-2 B.C.A. (CCH) ¶ 33,374 (2006).