Dgr Assoc.s Inc v. United States
| Decision Date | 13 August 2010 |
| Docket Number | No. 10-396C,10-396C |
| Court | U.S. Claims Court |
| Parties | DGR ASSOCIATES, INC., Plaintiff, v. UNITED STATES, D efendant, and GENERAL TRADES & SERVICES, INC., Defendant-Intervenor. |
Darcy V. Hennessy, Hennessy and Boe, P.A., Mission, Kansas, for Plaintiff.
Steven M. Mager, with whom were Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director, United States Department of Justice, Commercial Litigation Branch, Civil Division, Washington, D.C., Christopher S. Cole, Department of the Air Force, and David A. Fishman, Small Business Administration, Of Counsel, for D efendant.
Wayne A. Keup, Wayne A. Keup, PLLC, Washington, D.C., for Defendant-Intervenor.
Bid Protest; Small Business Act; Statutory Interpretation; Priority of HUBZone Program Over Other S mall Business Programs; Solicitation Impropriety; Timeliness of Protest; Declaratory and Injunctive Relief.
In this bid protest, Plaintiff DGR Associates, Inc. ("DGR") challenges the Department of the Air Force's decision to conduct an 8(a) program small business set-aside procurement for housing maintenance, inspection, and repair services at Eielson Air Force Base, Alaska.
DGR contends that the Air Force violated the Small Business Act, 15 U.S.C. § 657a(b)(2)(B) (2006), by not giving priority to HUBZone small business concerns when there is a reasonable expectation that two or more such concerns would submit offers and that the award could be made at a fair market price. DGR is a qualified HUBZone small business concern, but is not eligible to compete under the 8(a) program. DGR prevailed in a timely bid protest at the Government Accountability Office ("GAO"), but the Air Force announced that it would not follow the GAO's recommended decision. DGR then filed suit in this Court, requesting declaratory and injunctive relief. The Air Force awarded the contract under the 8(a) set-aside procurement to Defendant-Intervenor General Trades & Services, Inc. Defendant represented that the Air Force suspended performance of the contract pending the Court's ruling in this case.
Defendant opposes DGR's protest, arguing that the lawsuit is untimely because it was not filed before the closing date for receipt of proposals, citing Blue & Gold Fleet L.P. v. United States, 492 F.3d 1308 (Fed. Cir. 2007). Defendant also argues that, under the Small Business Administration's regulations, the Air Force was not required to give any priority to HUBZone small business concerns. The outcome of this dispute turns on the interpretation of the statutory language that Congress used to establish the section 8(a) and HUBZone small business programs. Despite executive agency memoranda to the contrary, this Court and the GAO have held that the plain meaning of the Small Business Act mandates a priority to the HUBZone program. Mission Critical Solutions v. United States, 91 Fed. Cl. 386 (2010), appeal docketed, No. 2010-5099 (Fed. Cir. Apr. 2, 2010); DGR Assocs., Inc., B-402494, 2010 CPD ¶ 115 (Comp. Gen. May 14, 2010); Mission Critical Solutions, B401057, 2009 CPD ¶ 93 (Comp. Gen. May 4, 2009); Int'l Program Group, Inc., B-400278 et al., 2008 CPD ¶ 172 (Comp. Gen. Sept. 19, 2008). The Ninth Circuit has reached a similar conclusion, giving priority to the HUBZone program. Contract Mgmt., Inc. v. Rumsfeld, 434 F.3d 1145, 1149 (9th Cir. 2006).
The Court has before it Defendant's and Defendant-Intervenor's motions to dismiss for lack of jurisdiction, and the parties' cross-motions for judgment on the administrative record. For the reasons stated below, the Court sustains DGR's protest. DGR has not waived its right to challenge the Air Force's section 8(a) solicitation because it followed required protest procedures at the agency level and at the GAO before filing suit in this Court. Blue & Gold Fleet does not require a protester raising a solicitation impropriety to file suit before the closing date for receipt of proposals, provided that timely challenges first have been made at the agency or before the GAO. See 492 F.3d at 1313, and "Discussion," Part A, below.
On the issue of statutory interpretation, the language of the Small Business Act granting priority to the HUBZone program could not be more clear. By using the phrases "notwithstanding any other provision of law... a contract opportunity shall be awarded on the basis of competition to qualified HUBZone small business concerns," Congress established a priority for the HUBZone program over other competing small business programs. See 15 U.S.C. § 657a(b)(2)(B). If Congress intended something different from what it stated, Congress alone must enact an appropriate amendment, as this Court can only apply the laws as written. See, e.g., Conn. Nat'l Bank v. Germain, 503 U.S. 249, 254 (1992) (). The executive agency memoranda reflecting disagreement with this interpretation, more than anything, simply express disbelief that Congress could have intended a priority for the HUBZone program.1 These agencies would be better served to seek legislative relief from Congress rather than judicial relief in this Court.
With the issuance of this decision, the Court permanently enjoins Defendant from proceeding with the contract unlawfully awarded to General Trades & Services, and from awarding any contract that is not in compliance with the Small Business Act as interpreted herein.
Congress enacted the Small Business Act ("the Act") to "aid, counsel, assist, and protect, insofar as is possible, the interests of small-business concerns." 15 U.S.C. § 631(a) (2006). The Small Business Administration ("SBA") is charged with carrying out the policies of the Act and with promulgating the necessary rules and regulations to fulfill its statutory responsibilities. Id. §§ 633(a), 634(b).
To further the goal of aiding small businesses, Congress has established certain programs to assist qualifying small businesses in obtaining "a fair proportion" of Federal contracts.2 Id. §§ 631(a), 637(a)(1)(C), 657a. Two of the Act's programs are relevant to this case: (1) the 8(a) Business Development Program, which assists those firms owned andcontrolled by socially and economically disadvantaged individuals, 15 U.S.C. § 637; and (2) the HUBZone Program, which assists those small businesses operating in a "historically underutilized business zone." Id. §§ 632(p)(2), 657a.
Congress established the 8(a) Business Development Program through an amendment to the Act in 1978. Pub. L. No. 95-507, §§ 201-202, 92 Stat. 1757, 1761 (1978) (). The program's stated purpose is to "promote the business development of small business concerns owned and controlled by socially and economically disadvantaged individuals." 15 U.S.C. § 631(f)(2). It also "expand[ed] the program for the procurement by the United States of articles, supplies, services, materials, and construction work from small business concerns owned by socially and economically disadvantaged individuals." Id. The Act defines socially disadvantaged individuals as "those who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities." IcL § 637(a)(5). "Economically disadvantaged individuals" are defined as those "whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit o pportunities as compared to others in the same business area who are not socially disadvantaged." Id. § 637(a)(6)(A).
The Act sets a government-wide contracting goal for the 8(a) program of "not less than 5 percent of the total value of all prime contract and subcontract awards for each fiscal year." Id. § 644(g)(1). Pursuant to the Act, the SBA is empowered to enter into contracts with federal procurement agencies to furnish goods and services and then to "arrange for the performance of such procurement contracts by negotiating or otherwise letting subcontracts to socially and economically disadvantaged small business concerns...." 15 U.S.C. § 637(a)(1)(A)-(B). SBA's authority to award an 8(a) contract is conditioned on the requirement that the award be made as a result of an offer submitted in response to a published solicitation "relating to a competition conducted pursuant to subparagraph (D)." Id. § 637(a)(1)(C)(i). Subparagraph (D)(i) provides:
A contract opportunity offered for award pursuant to this subsection shall be awarded on the basis of competition restricted to eligible Program Participants if (I) there is a reasonable expectation that at least two eligible Program Participants will submit offers and that award can be made at a fair market price....
Id. § 637(a)(1)(D)(i)(I). A contracting officer's decision to set aside a contract opportunity under the 8(a) program is discretionary. Id. § 637(a)(1)(A). The SBA also must agree thatcompetition for the procurement be limited to those firms participating in the 8(a) program. Id. If the contracting officer decides not to make the contract available for award under the 8(a) program or the contracting officer and the SBA disagree over the terms and conditions of a contract to be awarded, the SBA Administrator may appeal the agency's decision. Id. A contract may not be awarded to an 8(a) small business if "the award of the contract would result in a cost to the awarding agency which exceeds a fair market price." Id.
The Small Business Reauthorization Act of 1997 added the HUBZone Program to the S mall Business Act in order to assist small businesses operating in a "historically underutilized business zone," defined as an area located within one or more qualified census tracts, non-metropolitan counties, Indian reservations, or...
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