36 F.3d 1576 (Fed. Cir. 1994), 93-5072, A-Transport Northwest Co., Inc. v. United States

Docket Nº:93-5072.
Citation:36 F.3d 1576
Party Name:A-TRANSPORT NORTHWEST CO., INC., Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee.
Case Date:October 04, 1994
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit
 
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Page 1576

36 F.3d 1576 (Fed. Cir. 1994)

A-TRANSPORT NORTHWEST CO., INC., Plaintiff-Appellant,

v.

The UNITED STATES, Defendant-Appellee.

No. 93-5072.

United States Court of Appeals, Federal Circuit

October 4, 1994

Page 1577

Ken W. Hart, Casey & Pruzan, Seattle, WA, argued, for plaintiff-appellant. With him on the brief was Michael A. Larson.

Elizabeth A. Cavendish, U.S. Dept. of Justice, Washington, DC, argued, for defendant-appellee. With her on the brief were Stuart E. Schiffer, Acting Asst. Atty. Gen., David M. Cohen, Director and James M. Kinsella, Asst. Director.

Before RICH, MICHEL, and PLAGER, Circuit Judges.

PLAGER, Circuit Judge.

This is a government contract case involving the issue of whether the Government's resolicitation of tenders for transportation services breached an existing contract with a carrier. A-Transport Northwest Co. (A-Transport) appeals the judgment of the Court of Federal Claims (CFC) 1, entered November 30, 1992, granting summary judgment in favor of the Government. A-Transport Northwest Co., Inc. v. United States, 27 Fed.Cl. 206 (1992). We affirm.

BACKGROUND

A-Transport was a trucking firm based in the Seattle, Washington area. 2 By way of a letter and related materials dated July 1, 1986, the Government, acting through the Military Traffic Management Command (MTMC) and the Defense Logistics Agency (DLA) (hereafter collectively the Government), solicited tenders from A-Transport and other Seattle-based trucking firms for the transport of perishable goods from a warehouse owned by Seattle Cold Storage (SCS), and located in Seattle, Washington, to various government facilities in Washington, Oregon, Idaho, Montana, and California. 3

The solicitation called for the tenders to be effective for the period January 1, 1987 through December 31, 1988. The solicitation included an unexecuted Perishable Subsistence Carrier Rate Tender and Service Agreement (Tender Agreement or Agreement) to be executed by the contractor upon submission of a tender. The Tender Agreement specified the terms and conditions under which services were to be provided to the Government. Included was Item 28, a schedule of rates for the transportation of perishable goods from the SCS warehouse in Seattle to various Government installations, and Item 29, a corresponding loading and delivery schedule. Also included was Item 18(d), in which the Government reserved the right to change under certain conditions the prescribed distribution point:

Should changing supply missions or requirements make it necessary for the Government to make distribution from a new supply point, those carriers selected under procedures outlined herein, will receive notice no less than thirty days in advance of such change, and will be invited to tender rates for their services under such new requirements as may be indicated on a competitive basis with other qualified carriers. The furnishing of thirty (30) days notice to the carrier(s) is not intended to apply to relocation of distribution points within the same commercial zone.

A-Transport signed the Tender Agreement on July 31, 1986, and submitted the signed document to the Government.

Before making the final selection of carriers which had submitted tenders, the Government notified the carriers that the prescribed distribution point in Seattle had been changed. The change was prompted by SCS's decision to move its warehouse approximately 25 miles to Algona, Washington, a suburb of Seattle. The Government also

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notified the carriers that because the new location was still within the Seattle 'commercial zone,' 4 no increase in rates would be authorized.

Thereafter, by means of letters dated November 16, 1986, 5 the Government notified those carriers whose tenders had been accepted. Each route specified in the Tender Agreement was assigned a primary carrier and one or more secondary carriers. A-Transport was awarded more routes as primary carrier--23--than any other carrier.

Since Item 29 of the Tender Agreement--the loading and delivery schedule--did not reflect the Algona distribution point, the DLA, in a letter dated November 26, 1986, proposed, subject to final approval by the MTMC, that all carriers, including A-Transport, agree to a modified loading and delivery schedule which reflected that point. No increase in costs were mentioned. Although it expressed some reservations, A-Transport agreed to the requested modifications.

In a letter dated January 29, 1987, the DLA asked A-Transport to agree to additional modifications to the loading and delivery schedule, again with no cost increase. This time, A-Transport refused to agree. Moreover, in a letter dated February 12, 1987, it rescinded its acceptance of the earlier schedule revisions, and outlined the specific changes and conditions the company would find acceptable.

The Government then considered whether to resolicit tenders for the services required. This option was not immediately pursued, however, because the DLA and MTMC were not in agreement on how to proceed. The DLA wanted to resolicit tenders; MTMC wanted to continue efforts to persuade the contractors, including A-Transport, to agree to the revised schedule without an increase in rates. Eventually all the remaining primary carriers involved agreed to the proposed revisions except A-Transport.

At this point, the Government decided to pursue the resolicitation option. Accordingly, by means of a letter and associated materials dated August 18, 1987, the Government resolicited the tender. Invitations were sent to all existing contractors, including A-Transport. The Government stated that the resolicitation was being conducted because of the unacceptability to existing carriers of proposed modifications to the loading and delivery schedule. It was also specified that the new tenders were to be effective for the fourteen-month period extending from November 1, 1987 through December 31, 1988, and would be subject to a revised loading and delivery schedule appropriate for the Algona distribution point.

By letter dated October 23, 1987, the Government notified those carriers which had been selected in connection with the resolicitation. In that letter, the Government also revoked all prior tenders and rankings for the Seattle area. Although A-Transport was once again awarded more routes as primary carrier than any other carrier--18--it had a net loss as primary carrier of five routes.

Subsequently, A-Transport submitted a claim for lost profits on the theory that the Government breached the Tender Agreement by its resolicitation activities. The Government responded stating that this conduct was authorized by Item 18(d) of the Tender Agreement. As the Government explained to A-Transport's attorney:

[I]tem 18d specifically provides that, "Should changing supply missions or requirements make it necessary for the Government to make distribution from a new supply point, those carriers selected under procedures outlined herein, will receive notice no less than thirty days in advance of such change, and will be invited to tender rates for their services under such new requirements as may be indicated on a competitive basis with other qualified carriers." (Emphasis supplied).

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We advised your client, more than 30 days in advance, that the warehouse would be relocated. We advised that due to the requested move there would be a change in scheduling (item 29) and requested agreement to this modification. A-Transport refused to sign this agreement thus contributing to the necessity of a resolicitation of rates/charges from the new location....

This resolicitation is fully and properly justified under general procurement law and specifically authorized by the provisions of the tender and we find no merit to your claim. (Emphasis in original).

A-Transport responded in a letter dated May 24, 1988. In that letter, A-Transport characterized the Government's justification for the resolicitation--the failure of A-Transport to agree to the proposed modifications to the loading and delivery schedule (Item 29)--as a sham. It further charged the Government with bad faith on the theory that the Government was in fact using the resolicitation as a pretext to eliminate A-Transport as a government contractor:

[T]he tender does not require carriers to agree with item 29 modifications. The government is authorized to unilaterally modify item 29 without approval by carriers. Finally, all previous communications to A-Transport stated that the resolicitation of the tender was the result of "unacceptability" of modifications to Item 29 of the tender, not changes in the supply point.

* * * * * *

.... The DLA has repeatedly altered its reasons for resolicitation of the tender. It appears there has been a concerted effort to eliminate A-Transport as a government contractor by whatever...

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