Contract Management, Inc. v. Rumsfeld, CIV.03-00232 HG-LEK.
| Decision Date | 24 November 2003 |
| Docket Number | No. CIV.03-00232 HG-LEK.,CIV.03-00232 HG-LEK. |
| Citation | 291 F.Supp.2d 1166 |
| Parties | CONTRACT MANAGEMENT, INC., Plaintiff, v. Donald RUMSFELD, in his representative capacity as Secretary of Defense, Hector V. Barreto, Jr., in his representative capacity as Administrator of the Small Business Administration, and the United States of America, Defendants. |
| Court | Hawaii Supreme Court |
William M. Tam, Corianne W. Lau, Alston Hunt Floyd & Ing, Honolulu, HI, Timothy H. Power, Walnut Creek, CA, for Plaintiff.
Mark J. Mellett, for Defendants Rumsfeld and the U.S.A., Special Assistant U.S. Attorney, Office of the U.S. Attorney, Honolulu, HI.
Beverley Hazlewood Lewis, for Defendant Barreto, Office of General Counsel, U.S. Small Business Administration, Washington, DC.
ORDER DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AND GRANTING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
The instant case involves a dispute surrounding the Small Business Administration's ("SBA") interpretation of the HUBZone Program, set forth in the Small Business Act, at 15 U.S.C. § 657a, and the corresponding federal regulations. See generally 13 C.F.R. § 126.607; 48 C.F.R. § 19.1305. Plaintiff contends that § 657a does not authorize or require the designation of contracts to be limited to bidding by qualified HUBZone businesses and that the HUBZone regulations, specifically 48 C.F.R. § 19.1305 and 13 C.F.R. § 126.607, conflict with § 657a and are therefore invalid. Defendants respond that the HUBZone Act mandates that contracts be set aside for HUBZone businesses when certain statutory criteria are met and that the HUBZone regulations properly implement such statutory mandates.
Plaintiff filed a motion for summary judgment on all claims asserted in its Verified Complaint filed May 13, 2003. Defendants also filed a motion for summary judgment, seeking dismissal of Plaintiff's complaint with prejudice or, in the alternative, for summary judgment as to all allegations of Plaintiff's complaint.
For the reasons set forth below, the Court DENIES Plaintiff's request for summary judgment, GRANTS Defendants' request for summary judgment, and DISMISSES the action.
On May 13, 2003, Plaintiff filed a Verified Complaint for Declaratory and Injunctive Relief.
Plaintiff's Ex Parte Motion to Shorten Time for Notice and Hearing on Plaintiff's Motion for Preliminary Injunction was granted on June 2, 2003.
On June 3, 2003, Plaintiff filed a Motion for Preliminary Injunction.
On June 20, 2003, Defendants filed an Opposition to Plaintiff's Motion for Preliminary Injunction. Plaintiff filed a Reply to Defendant's Opposition on June 24, 2003.
Plaintiff's motion came before the Court on June 27, 2003. At the hearing, the Court GRANTED Plaintiff's Motion for Preliminary Injunction. A written order issued on July 15, 2003.
On July 30, 2003, Plaintiff filed a Motion for Summary Judgment, a Memorandum in support of the Motion, and a Separate and Concise Statement of Facts in support of the motion.
On July 30, 2003, Defendants filed a Motion for Summary Judgment, a Memorandum in support of the Motion, and a Separate and Concise Statement of Facts in support of the Summary Judgment Motion.
On August 18, 2003, Plaintiff filed a Memorandum in Opposition to Defendants' Motion for Summary Judgment. Also on August 18, 2003, Defendants filed a Response to Plaintiff's Separate and Concise Statement of facts, Table of Contents, Table of Authorities and Memorandum in Support of Defendants' Opposition to Plaintiff's Motion for Summary Judgment.
On September 4, 2003, Defendants filed their Reply in Support of their Motion for Summary Judgment. Also on that date, Plaintiff filed its Reply in support of its own motion.
On September 18, 2003 this Court heard Plaintiff's arguments in support of its Motion for Summary Judgment and Defendants' arguments in support of their Motion for Summary Judgment. The Court issued a Minute Order in which it DENIED Plaintiff's Motion for Summary Judgment and GRANTED Defendants' Motion for Summary Judgment. The parties agreed that Plaintiff's contract with the Government will continue until March 31, 2004.
Plaintiff is a small business which provides custodial services to the United States Naval Base and Shipyard at Pearl Harbor, Hawaii.
Plaintiff has named the following parties as Defendants: Donald Rumsfeld in his representative capacity as Secretary of Defense of the United States; Hector Barreto, Jr. in his representative capacity as Administrator of the Small Business Administration ("SBA"); and the United States of America. Plaintiff alleges that Defense Secretary Rumsfeld has violated his duty to carry out the laws of the United States with respect to his responsibility over the management of the Pearl Harbor Naval Base in Honolulu, Hawaii. Plaintiff alleges that Administrator Barreto has breached his responsibility to administer properly the SBA programs at issue in the instant case. Plaintiff has named the United States as a Defendant alleging that the sovereign nation has violated its obligation to follow its own laws.
The material facts in this case are undisputed. Plaintiff has provided custodial services at Pearl Harbor continuously for 18 years, since 1985. At the time of filing, Plaintiff held four contracts to provide custodial services at the United States Naval Base and Shipyard at Pearl Harbor. Plaintiff was awarded the contracts as small business set-asides1 as provided for in 15 U.S.C. § 644. The contracts expired on September 30, 2003.2
In December 2002, the Navy, with the approval of the Small Business Administration, combined the four contracts then being performed by Plaintiff with other custodial contracts then being performed by other small businesses. The Navy combined all of these contracts into three contract bid solicitations. One of the solicitations, Solicitation No. N62742-03-R-2216, is for custodial services for 212 buildings located at the Pearl Harbor Naval Base. The solicitation includes portions of two of Plaintiff's then-existing contracts, as well as work from two other contracts that Plaintiff was not performing.
During this process, the Navy contracting officer consulted with an SBA procurement representative, reviewed the Federal Acquisition Regulations, and concluded that Solicitation No. N62742-03-R-2216 had to be designated a set-aside for HUBZone small businesses. Plaintiff does not qualify as a HUBZone small business and therefore was faced with the prospective loss of its custodial contracts with the Navy. Plaintiff, therefore, brought this case to challenge the Navy's designation — and the SBA's authorization of that designation — of Solicitation No. N62742-03-R-2216 as a HUBZone set-aside.
Congress enacted the Small Business Act (the "Act") to assist the interests of small businesses. 15 U.S.C. § 631(a). The Small Business Administration is charged with carrying out the policies of the Act and making rules and regulations it deems necessary to carry out the Act's purposes. 15 U.S.C. §§ 633(a) and 634(b)(6). The SBA's implementing regulations are codified at 13 C.F.R. Part 101 et seq. The Federal Acquisition Regulations ("FAR") pertaining to small business programs are codified at 48 C.F.R. Part 19.3
The Small Business Act allows competition and procurement awards to be limited to small businesses in certain situations. 15 U.S.C. § 644(g). The Act also provides special programs to assist particular groups of small businesses. One such program is the HUBZone program. See 15 U.S.C. § 657a.
A HUBZone is a "Historically Underutilized Business Zone" and refers to certain qualified areas. 15 U.S.C. § 632(p)(1). The purpose of the HUBZone program is to "provide Federal contracting assistance for qualified small business concerns located in historically underutilized business zones, in an effort to increase employment opportunities, investment, and economic development in those areas." 48 C.F.R. § 19.1301(b) (2000).
In order to qualify to receive a contract award under the HUBZone program, a small business must have its principal office located in a designated HUBZone and no fewer than 35 percent of its employees must reside in HUBZone areas. 15 U.S.C. § 632(p)(5)(A); 13 C.F.R. §§ 126.103, 126.200. A small business that is qualified under the HUBZone program can receive contracting preferences, such as set-aside awards4 based on competition. 15 U.S.C. § 657a(b); 13 C.F.R. § 126.600; 48 C.F.R. § 19.1305-1307.
Another special program under the Small Business Act is the 8(a) Program, named after Section 8(a) of the Act. The purpose of the 8(a) Program is to increase federal contracts awarded to small businesses owned by socially and economically disadvantaged individuals. 15 U.S.C. § 637(a).
Under the 8(a) program, a contracting officer awards a contract to the SBA. 15 U.S.C. § 637(a)(1)(A). The SBA then awards a subcontract to a small business owned by socially and economically disadvantaged individual(s). 15 U.S.C. § 637(a)(1)(B).
Summary judgment is appropriate when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R.Civ.P. 56(c).
The moving party has the initial burden of "identifying for the court the portions of the materials on file that it believes demonstrate the absence of any genuine issue of material fact." T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir.1987) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). The moving party, however, has no burden to negate or disprove matters on which the opponent will have the burden of proof at trial. The moving party need not produce any evidence at all on matters for which it does not have the burden of proof. Celotex, 477 U.S. at 325, ...
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