Central Arkansas Maintenance, Inc. v. U.S.

• Decision Date: 19 October 1995
• Docket Number: 95-5075 and 95-5076,Nos. 95-5059,s. 95-5059
• Citation: 68 F.3d 1338
• Parties: , 40 Cont.Cas.Fed. (CCH) P 76,856 CENTRAL ARKANSAS MAINTENANCE, INC., Plaintiff/Cross-Appellant, v. The UNITED STATES, Defendant-Appellant, and Ferguson-Williams, Inc., Third Party Intervenor-Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1338

68 F.3d 1338

64 USLW 2304, 40 Cont.Cas.Fed. (CCH) P 76,856

CENTRAL ARKANSAS MAINTENANCE, INC., Plaintiff/Cross-Appellant, v. The UNITED STATES, Defendant-Appellant, and Ferguson-Williams, Inc., Third Party Intervenor-Appellant.

Nos. 95-5059, 95-5075 and 95-5076.

United States Court of Appeals, Federal Circuit.

Oct. 19, 1995.

Patrick R. James, The Perroni Law Firm, Little Rock, Arkansas, argued for plaintiff/cross-appellant.

Frank W. Hunger, Assistant Attorney General, Commercial Litigation, Civil Litigation, Department of Justice, Washington, D.C., Dorann E. Banks, argued for the defendant-appellant. Of counsel were Jeanne E. Davidson and David M. Cohen.

Lynda Troutman O'Sullivan, Fried Frank Harris Shriver and Jacobson, Washington, D.C., argued for third party intervenor-appellant. Of counsel were Douglas W. Baruch and Catherine E. Pollack.

Before MAYER, MICHEL, and RADER, Circuit Judges.

MAYER, Circuit Judge.

The United States and Ferguson-Williams, Inc., appeal the judgment and order of the United States Court of Federal Claims, No. 94-746C (Jan. 25, 1995), enjoining the United States Army Corps of Engineers from awarding a contract for lake maintenance services to Ferguson-Williams. Central Arkansas Maintenance, Inc., cross-appeals. Because we conclude that the trial court exceeded its statutory authority to grant equitable relief, we affirm the judgment in part and vacate the injunction.

Background

On October 28, 1993, the United States Army Corps of Engineers ("Corps" or "government") issued Request for Proposals No. DACW38-94-R-0003 ("RFP" or "solicitation"), for the operation, maintenance, and repair of government-managed facilities, grounds, and flood control structures at Greeson, Ouachita, and DeGray Lakes in southwest Arkansas. Thereafter, on November 17, 1993, potential offerors attended a site investigation at DeGray Lake, hosted by DeGray Lake manager Charles Hargett and Greeson Lake manager Jim Young. During the visit, Hargett told the participants to direct future communications to Young, who would begin managing DeGray Lake on or about November 30, 1993, the date of Hargett's retirement.

Hargett was a longtime employee of the Corps, with a total of 31 years of federal service. Since September 1984, he had served as Assistant Resource Manager, and then as Resource Manager (the top Corps' official), of DeGray Lake. Hargett was in the latter position at the time the Corps was developing the Arkansas Lakes solicitation, and he assisted in its preparation.

In early January 1994, the president of one of Ferguson-Williams' proposed subcontractors, Marvin Pipes, contacted Hargett to ascertain his interest in working as a Ferguson-Williams supervisor on the Arkansas Lakes contract. Hargett said he would be interested in such a position, provided it did not create a conflict of interest. Shortly thereafter, Pipes asked Hargett for his resume. Ferguson-Williams included a version of Hargett's resume, enhanced to emphasize his experience at DeGray Lake, in its proposal, identifying Hargett as the proposed superintendent of DeGray Lake.

In response to the solicitation, eleven offerors submitted proposals, including Ferguson-Williams and Central Arkansas Maintenance, Inc. (CAM). During evaluation of the proposals, several Corps' evaluators raised questions about Hargett's potential employment with Ferguson-Williams. Their concerns were allayed by agency counsel, who determined that Hargett was not subject to any employment restrictions after his retirement. Agency counsel said that he was not a "procurement official" within the meaning of the Procurement Integrity Act, 41 U.S.C. Sec. 423 (1988 & Supp. V 1993), because, in counsel's opinion, he had not participated substantially in the development of the RFP.

After the evaluation team completed its evaluation of the eleven initial offers, the contracting officer established the competitive range based on the team's recommendations. The three firms within the competitive range, including Ferguson-Williams, were invited to submit their best and final offers (BAFOs). CAM was not within the competitive range.

During evaluation of the BAFOs, evaluators again questioned Hargett's involvement with Ferguson-Williams. This time, however, agency counsel determined that there was a conflict of interest problem. Consequently, he wrote to Hargett, suggesting that he remove his name from Ferguson-Williams' proposal. Hargett did so.

In an effort to cure any possible taint to the procurement process resulting from the perceived conflict, the contracting officer requested a second round of BAFOs. Based on the new BAFOs, the contracting officer determined that he would award the contract to Ferguson-Williams. ¹

On September 27, 1994, CAM filed a complaint in the United States District Court for the Eastern District of Arkansas, requesting injunctive relief based on alleged improper and illegal activity in this procurement and in a separate acquisition being conducted by the Corps for the maintenance of four Mississippi Lakes. On October 12, 1994, that court transferred the case to the United States Court of Federal Claims pursuant to 28 U.S.C. Sec. 1631 (1988). ²

In the Court of Federal Claims, CAM argued that its proposal was improperly excluded from the competitive range and that the solicitation was unduly vague. CAM also claimed that because Ferguson-Williams had violated procurement integrity and conflict of interest statutes and regulations, it should be enjoined from further participation in this procurement and CAM should be placed in the competitive range. Alternatively, CAM argued that the RFP should be cancelled and resolicited.

The court held that CAM had waived its vagueness challenge when it failed to raise it before submitting its proposal. It nevertheless found the allegation meritless. The court upheld the exclusion of CAM's proposal from the competitive range, concluding that the contracting officer did not act arbitrarily in eliminating CAM's proposal from further consideration. CAM does not appeal either of these rulings.

However, the court also concluded that Hargett, Ferguson-Williams, and the contracting officer either violated, or were about to violate, provisions of the Procurement Integrity Act. The court ruled further that such violations, or imminent violations, did not taint the entire procurement and did not deprive CAM of its right to have its offer considered fairly and honestly. Consequently, it refused to order the Corps to place CAM in the competitive range or to begin the procurement process anew. Notwithstanding, the court permanently enjoined the award of the Arkansas Lakes contract to Ferguson-Williams "for failing to live up to the dictates of the Procurement Integrity Act and the other relevant conflict statutes and regulations." Slip op. at 59. Ferguson-Williams moved the court for reconsideration, challenging its authority to issue such an injunction. The court denied the motion.

On appeal, Ferguson-Williams and the United States contend that the court had no jurisdiction to award injunctive relief once it had concluded that the Corps had considered CAM's offer fairly and honestly and that the entire acquisition process was not tainted. Alternatively, they both argue that CAM lacked standing to pursue its conflict of interest allegations once the court rejected its challenge to the competitive range determination because its proposal was "ranked" seventh out of eleven offers and was not, therefore, within the "zone of active consideration" for award. ³

Discussion

The central issue is whether the Court of Federal Claims exceeded its statutory authority to grant equitable relief by enjoining the award of the Arkansas Lakes contract to Ferguson-Williams, after finding that CAM's offer had been considered fairly and honestly and that any procurement integrity violations had not tainted the entire procurement. This issue raises a question of law, which we review de novo. See Parcel 49C Ltd. Partnership v. United States, 31 F.3d 1147, 1150 (Fed.Cir.1994).

All federal courts, except of course the Supreme Court, are creatures of statute, with jurisdictional reach only so far as Congress allows. U.S. Const. art. III, Sec. 1; Palmore v. United States, 411 U.S. 389, 400-01, 93 S.Ct. 1670, 1677-78, 36 L.Ed.2d 342 (1973). This is true as well for the Court of Federal Claims, which enjoys only so much judicial power as Congress expressly permits. Beck v. Secretary of HHS, 924 F.2d 1029, 1036 (Fed.Cir.1991); In re United States, 877 F.2d 1568, 1571 (Fed.Cir.1989).

By the Tucker Act, Congress granted the Court of Federal Claims jurisdiction "to render judgment upon any claim against the United States founded ... upon any express or implied contract with the United States." 28 U.S.C. Sec. 1491(a)(1) (1988 & Supp. V 1993). This jurisdictional grant extends to suits brought by disappointed bidders, commonly called bid protests, challenging the proposed award of contracts based on alleged improprieties in the procurement process. CACI, Inc.-Fed. v. United States, 719 F.2d 1567, 1572-73 (Fed.Cir.1983). Jurisdiction in these cases arises from an alleged breach of "an implied contract to have the involved bids fairly and honestly considered." United States v. John C. Grimberg Co., 702 F.2d 1362, 1367 (Fed.Cir.1983) (in banc). The government breaches this implied contract if its consideration of offers is found to be "arbitrary and capricious toward the bidder-claimant." Keco Indus., Inc. v. United States, 492 F.2d 1200, 1203 (Ct.Cl.1974); see also Prineville Sawmill Co. v. United States, 859 F.2d 905, 909 (Fed.Cir.1988).

If such a breach is found, Congress has granted the Court of Federal Claims the power to award equitable relief not generally available in other areas within its jurisdiction. See 28 U.S.C. Sec. 1491(a)(3) (1988); Grimberg, 702 F.2d at 1366. Specifically, the Tucker Act, as amended by the Federal...