Ingersoll-Rand Co. v. U.S.

• Decision Date: 31 December 1985
• Docket Number: INGERSOLL-RAND,No. 85-5011,85-5011
• Citation: 250 U.S.App. D.C. 412,780 F.2d 74
• Parties: , 54 USLW 2374, 33 Cont.Cas.Fed. (CCH) 74,173 COMPANY, Appellant v. UNITED STATES of America.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 74

780 F.2d 74

250 U.S.App.D.C. 412, 54 USLW 2374,

33 Cont.Cas.Fed. (CCH) 74,173

INGERSOLL-RAND COMPANY, Appellant v. UNITED STATES of America.

No. 85-5011.

United States Court of Appeals,

District of Columbia Circuit.

Argued May 24, 1985.

Decided Dec. 31, 1985.

Jack P. Janetatos, with whom Arthur L. George, Washington, D.C., was on brief, for appellant.

Deborah A. Robinson, Asst. U.S. Atty., with whom Joseph E. diGenova, U.S. Atty., Royce C. Lamberth and R. Craig Lawrence, Asst. U.S. Attys., Washington, D.C., were on brief, for appellee.

Before GINSBURG and BORK, Circuit Judges, and McGOWAN, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge McGOWAN.

McGOWAN, Senior Circuit Judge:

In this case, appellant, Ingersoll-Rand Company ("I-R"), sued the United States of America, alleging that the government's decision to terminate I-R's contract to supply air compressors and to resolicit bids for the contract was arbitrary and capricious and contrary to several federal acquisition regulations. The District Court held that provisions of the Contract Disputes Act ¹ forbid the exercise of subject matter jurisdiction in this case. See Ingersoll-Rand Co. v. United States ("Order"), No. 84-3293 (D.D.C. Dec. 20, 1984) (order granting defendant's motion to dismiss), Appendix ("App.") at 184-93. We agree and therefore affirm, but remand to allow the district court to consider whether the case should be transferred to the Claims Court.

I. BACKGROUND

On August 12, 1983, the Warner-Robins Air Logistics Command of the Department of the Air Force issued a solicitation for the procurement of air compressors. The Air Force solicited and negotiated technical proposals and then solicited sealed bids from bidders who had submitted acceptable technical proposals. I-R was the lowest bidder, and was awarded the contract on September 27, 1984.

On October 16, 1984, the Air Force terminated the contract with I-R, for the convenience of the Government, pursuant to Federal Acquisition Regulation ("FAR") 52.249-2(a), ² which was incorporated into the contract. The Air Force simultaneously resolicited bids for the sale of the compressors, amending a clause in the original Request for Proposals ("RFP") to clarify that the Air Force would acquire unlimited rights to all technical data used by the contractor. Thereafter, on October 22, 1984, the Air Force indefinitely postponed the deadline for submission of new bids.

On October 26, 1984, I-R filed its complaint in the District Court, requesting a temporary restraining order and preliminary and permanent injunctions. I-R asserted, inter alia, that there was no ambiguity in the original RFP, and that the decision to terminate the contract was "arbitrary, capricious, an abuse of discretion, and lacked a rational basis." Complaint at 6-7, App. at 6-7. After a status conference held on October 26, I-R withdrew its request for a temporary restraining order, based on the government's promise that it would give five days notice to I-R before it began resoliciting bids under the new RFP.

On November 29, 1984, the Air Force notified I-R of its intention to proceed with solicitation of bids under the revised RFP. I-R renewed its request for a temporary restraining order. On December 4, 1984, the District Court denied I-R's motion for temporary relief. Ingersoll-Rand Co. v. United States, No. 84-3293 (D.D.C. Dec. 4, 1984) (order denying motion for temporary restraining order), App. at 177-83.

On December 20, 1984, the District Court granted the government's motion to dismiss I-R's complaint. The government raised two issues in that motion. First, the government argued that I-R's claim presented an issue arising prior to the award of the contract. According to the government, 28 U.S.C. Sec. 1491(a)(3) (1982) ³ establishes the Claims Court as the sole forum for the exercise of jurisdiction in such cases. Memorandum of Points and Authorities in Support of Defendant's Motion to Dismiss at 2-3, App. at 38-39. The District Court rejected this contention, holding that "the postaward aspects of this case dominate the preaward elements and Section 1491(a)(3) ... does not come into play." Order at 5, App. at 188. The government does not challenge this ruling, and we have no occasion to address the issue further.

As an alternative basis for dismissing the complaint, the government alleged that the Claims Court had exclusive jurisdiction over the case because of the Contract Disputes Act ("CDA"). Defendant's Reply to Plaintiff's Opposition to Defendant's Motion to Dismiss at 2, App. at 58; see supra note 1 (relevant text of CDA). The District Court held that the CDA applies because "plaintiff here is attempting to protect contractual rather than proprietary rights," Order at 9, App. at 192, and because "plaintiff here seeks contract reinstatement, a traditional equitable remedy for the identical contract rights redressable by money damages under the CDA." Id. The remainder of our opinion focuses on the issues surrounding this holding.

II. ANALYSIS

A. Categorizing Disputes Under the Contract Disputes Act

The essential question in this case is whether appellant's claim is "founded upon an[ ] express or implied contract with the United States." 28 U.S.C. Sec. 1346(a)(2) (1982). If it is, then the CDA limits adjudication of this dispute to the Claims Court. See S.Rep. No. 1118, 95th Cong. 2d Sess. 10 (1978), U.S.Code Cong. & Admin.News 1978, pp. 5235, 5244 (indicating that, under Section 10(a) of the CDA, district court jurisdiction is eliminated from government contract claims).

The starting point for determining whether appellant's claim is founded upon the contract must be this court's opinion in Megapulse, Inc. v. Lewis, 672 F.2d 959 (D.C.Cir.1982). In Megapulse, the plaintiff, a government contractor, sought to enjoin the release of technical data acquired by the Coast Guard in conjunction with a contract for the sale of long-range navigation equipment. The plaintiff alleged that this proposed release of data would violate the Trade Secrets Act. The District Court, however, held that it had no subject matter jurisdiction over the claim, relying on 28 U.S.C. Sec. 1346(a). This court reversed.

Essential to this court's holding that subject matter jurisdiction existed in Megapulse was a framework for determining whether an action is founded upon a contract: "[t]he classification of a particular action as one which is or is not 'at its essence' a contract action depends both on the source of the rights upon which the plaintiff bases its claim, and upon the type of relief sought (or appropriate)." Id. at 968. As to the source of the rights at stake in the Megapulse case, the court noted:

[Plaintiff] does not claim a breach of contract, it has limited its request for relief to only six documents 'reflecting the essence of the proprietary technology developed ... prior to the parties' first contract,' it seeks no monetary damages against the United States, and its claim is not properly characterized as one for specific performance. Appellant's position is ultimately based, not on breach of contract, but on an alleged governmental infringement of property rights and violation of the Trade Secrets Act.

Id. at 969 (footnotes omitted). As to whether the relief sought was essentially contractual, the court recognized that the question "may be resolved only against the facts of each case." Id. at 970. The government asserted that the relief requested (an injunction against release of the proprietary data) was based both on an alleged violation of the Trade Secrets Act and a breach of contract. The court concluded, however, that "the mere fact that an injunction would require the same governmental restraint that specific (non)performance might require in a contract setting is an insufficient basis to deny a district court the jurisdiction otherwise available...." Id. at 971. In addition, the court noted that the ordinary contractual remedy of damages would be an inadequate substitute for an injunction against release of the information. Id. at 970.

We employ the framework developed in Megapulse to resolve the question whether I-R's claim is founded upon the contract.

B. Source of the Right at Stake

Ingersoll-Rand did not explicitly style its complaint as an action for breach of contract. I-R's complaint breaks down into two essential components: wrongful termination of the contract and unlawful resolicitation of the contract. I-R argued before the District Court that the termination of the contract violated two federal regulations. First, I-R asserted that the termination violated FAR Sec. 14.404-1(a)(1), which allows the government to cancel a contract after it has taken bids only upon a showing of a cogent and compelling reason. ⁴ Memorandum in Support of Plaintiff's Application for Temporary Restraining Order and Motion for Injunction at 6, App. at 106. Second, I-R argued that the termination violated FAR 14.404-1(a)(2), which instructs the government to attempt to resolve ambiguities in a RFP prior to the opening of bids. ⁵ Memorandum at 11-12, App. at 11-12. As to the proposed resolicitation, I-R argued that it constituted an "auction" in violation of FAR 15.610(d), ⁶ because I-R's bid on the original solicitation was already known and could be used by other bidders as a gauge for their bids on the resolicitation. Memorandum at 15-16, App. at 115-16. These violations of government regulations, according to I-R, also contravened the Administrative Procedure Act's prohibitions against arbitrary and capricious decisions. ⁷ Complaint at 6-7, App. at 6-7.

Despite I-R's efforts to cast its complaint otherwise, we conclude that the essential rights at stake here are contractual. We begin with the well-accepted proposition that a plaintiff may not avoid the jurisdictional bar of the CDA merely by alleging violations of regulatory or statutory provisions rather than breach of...