Commercial Energies, Inc. v. U.S.
| Decision Date | 29 March 1991 |
| Docket Number | No. 90-5123,90-5123 |
| Citation | 929 F.2d 682 |
| Parties | 37 Cont.Cas.Fed. (CCH) 76,057 COMMERCIAL ENERGIES, INC., Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Federal Circuit |
Gregory Kellam Scott, Lowell Thomas Law Building, Denver, Colo., argued for plaintiff-appellant.
Martha H. DeGraff, Atty., Commercial Litigation Branch, Dept. of Justice, of Washington, D.C., argued for defendant-appellee. With her on the brief were Stuart M. Gerson, Asst. Atty. Gen. and David M. Cohen, Director.
Before NEWMAN, LOURIE and CLEVENGER, Circuit Judges.
Commercial Energies, Inc. appeals the June 29, 1990, order of the United States Claims Court, No. 90-300-C, denying for the second time Commercial Energies' motion to order the Air Force to comply with the April 16, 1990, order of that court to award a natural gas supply contract in accordance with a statutorily-required preference. Since we conclude that the Claims Court did not err, we affirm.
On June 30, 1989, the Air Force issued a Request for Proposal, No. F39601-89-R0016, (the RFP) for supply of natural gas to three government Air Force facilities. The RFP consisted of four items: a Supply Adjustment Factor (SAF), a Transportation Adjustment Factor (TAF), a Supply Index Price, and a Williston Basin Interstate Index Price. The RFP stated that these four line items, when added together, would constitute the total contract price. A contractor However, when the RFP was first issued, it did not contain the evaluation preference provision of 48 C.F.R. Sec. 219.7001 (1990), which states:
responding to this RFP would thus submit costs for each of these line items as well as a total price, which was the sum of these items.
Offers will be evaluated so as to give preference to offers submitted by SDB [small disadvantaged business] concerns. Each responsive offer, other than offers from SDB concerns, shall be adjusted for the purpose of price evaluation by adding a factor of 10 percent. The factor shall be applied on a line-item by line-item basis or to any group of line items on which award may be made as specifically provided by the solicitation....
That section thus requires that SDBs receive an evaluation preference, implemented by the government's increasing non-SDB total price bids or line items by ten percent. Appellant, which is an SDB, informed the contracting officer that the RFP lacked this clause. The contracting officer thereafter issued an amendment to the RFP, essentially a new RFP, which provided that the Air Force would apply the ten percent preference only to the SAF and TAF line items.
On or about October 25, 1989, appellant filed its contract offer with the Air Force and, at the same time, a bid protest with the General Accounting Office challenging the Air Force's limitation of the ten percent preference to the SAF and TAF line items. On April 5, 1990, appellant filed a complaint in the Claims Court requesting that the Air Force be enjoined from awarding the contract on the ground that it did not properly apply the mandatory ten percent evaluation preference. The government and appellant both moved for summary judgment.
The Claims Court concluded that the Air Force erroneously limited the preference to the two line items. On April 16th, it denied the government's motion, granted appellant's cross-motion, and enjoined the Air Force from awarding the contract at issue under an improper evaluation preference procedure. It held that the Air Force, under 48 C.F.R. Sec. 219.7001, must apply the preference either to the total price or to every line item that constituted the basis for award of the contract. Commercial Energies, Inc. v. The United States, 20 Cl.Ct. 140, 150 (1990).
The Air Force subsequently issued a new RFP which instructed bidders to quote prices only for the TAF and SAF line items; the basis for the award would be the sum of those two prices. The Air Force, in considering bids on the contract, then applied the evaluation preference only to those two line items. Appellant filed a motion in the Claims Court asserting that the Air Force was not complying with the court's April 16th order. The court concluded that the Air Force's application of the preference to those two line items complied with the regulation since those two line items constituted the basis for the award; it therefore denied appellant's motion. Appellant subsequently asked for reconsideration. The Claims Court denied that motion and this appeal followed.
The issue in this case is whether the Air Force complied with the small disadvantaged business preference set forth by Congress and the Department of Defense regulations. The construction of the statute is a question of law which we review de novo. Frank's Livestock & Poultry Farm, Inc. v. United States, 905 F.2d 1515, 1517 (Fed.Cir.1990). Whether the Air Force complied with the statute is a question of fact which we review under the clearly erroneous standard. Danville Plywood Corp. v. United States, 899 F.2d 3, 7 (Fed.Cir.1990).
The Claims Court concluded that the Air Force applied the evaluation preference to all line items which constituted the basis of the award and thus complied with applicable law. Appellant argues that the Air Force awarded the contract on a price evaluation mechanism that was inconsistent with the total price award basis as stated in the RFP, and that it used an evaluation procedure that in effect nullified the mandatory
preference established by law and did so in a manner contrary to the Department of Defense's regulations.
In 1987, Congress enacted section 1207 of the Defense Authorization Act, Pub.L. No. 99-661, 100 Stat. 3816 (1987) (), entitled "Contract Goal for Minorities," to direct government defense contracts to small disadvantaged businesses and minority organizations. Section 1207(a), 100 Stat. 3973 (), of the act states that:
[A] goal of 5 percent of the amount [of defense contract funds] shall be the objective of the Department of Defense ... for the total combined amount obligated for contracts and subcontracts entered into with--
(1) small business concerns, including mass media, owned and controlled by socially and economically disadvantaged individuals ...;
(2) historically Black colleges and universities; or
(3) minority institutions....
Section 1207(e)(3), 100 Stat. 3974 (), provides that:
To the extent practicable and when necessary to facilitate achievement of the 5 percent goal described in subsection (a), the Secretary of Defense may enter into contracts using less than full and open competitive procedures ... but shall pay a price not exceeding fair market cost by more than 10 percent in payment per contract to contractors or subcontractors described in subsection (a).
To carry out the above objectives, the Department of Defense, under Pub.L. No. 100-180, Sec. 806(b) (1988) (), 1 promulgated 48 C.F.R. Sec. 219.7001 (1990), which states that:
Offers [for government defense contracts] will be evaluated so as to give preference to offers submitted by SDB [small disadvantaged business] concerns. Each responsive offer, other than offers from SDB concerns, shall be adjusted for the purpose of price evaluation by adding a factor of 10 percent. The factor shall be applied on a line-item by line-item basis or to any group of line items on which award may be made as specifically provided by the solicitation....
(Emphasis added).
Congress, in section 1207, thus set forth a general defense...
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