Ellsworth Bottling Co. v. United States

• Decision Date: 24 September 1975
• Docket Number: Civ. No. 75-0365-D.
• Citation: 408 F. Supp. 280
• Parties: ELLSWORTH BOTTLING COMPANY, a corporation, Plaintiff, v. UNITED STATES of America et al., Defendants.
• Court: U.S. District Court — Western District of Oklahoma

408 F. Supp. 280

ELLSWORTH BOTTLING COMPANY, a corporation, Plaintiff, v. UNITED STATES of America et al., Defendants.

Civ. No. 75-0365-D.

United States District Court, W. D. Oklahoma, Civil Division.

September 24, 1975.

C. E. Wade, Jr., Lawton, Okl., for plaintiff.

William F. Bronson, Associate Gen. Counsel, Chief, Procurement Law Branch, Dallas, Tex., William R. Burkett, U. S. Atty., Oklahoma City, Okl., for defendants.

ORDER

DAUGHERTY, Chief Judge.

In this action Plaintiff challenges the procedure whereby the Army and Air Force Exchange Service (AAFES) solicited and awarded contracts for soft drink vending machine concessions at Ft. Sill, Oklahoma and Altus Air Force Base, Oklahoma. Both of these installations are located within this Judicial District. Also named as Defendants are the United States, Jim Uechi, Contracting Officer for the AAFES, and Major General C. W. Hospelhorn, Commanding General of the AAFES. Jurisdiction is alleged under 28 U.S.C. § 1346(a)(2) and 5 U.S.C. § 702.

It appears from the Complaint that in past years Plaintiff has provided a portion of the soft drink vending machines located at Ft. Sill and Altus Air Force Base. In 1974 AAFES changed its policy and wanted to secure a single source of soft drink vending machines at these two installations. Accordingly, it issued a solicitation through its Contracting Officer. Plaintiff was unable to bid on the solicitation as it lacked the capital with which to secure additional machines to service all of both installations. The contract under the solicitation was awarded to one of Plaintiff's competitors.

Plaintiff now seeks to undo the contract so awarded. It charges Defendants with violations of the AAFES Procurement Manual in soliciting and awarding the subject contract. It charges Defendants with structuring the solicitation in such a manner that only one company was in a financial position to bid on it. It further charges Defendants with making certain false representations in connection with negotiations surrounding the solicitation and issuance of the contract. Plaintiff asks that the Court void the above mentioned contract issued to Plaintiff's competitor, that it require Defendants to resolicit bids which will secure full and fair competition among all bidders and that it require compliance with the AAFES Procurement Manual in the process.

Defendants have filed herein a joint Motion to Dismiss or for Summary Judgment. Defendants assert lack of jurisdiction over the subject matter of the action; that Plaintiff lacks standing to maintain the action; lack of personal jurisdiction over AAFES; and failure to state a claim upon which relief can be granted. Defendants' objections to subject matter jurisdiction are directed towards Plaintiff's allegations of jurisdiction under the Tucker Act, 28 U.S.C. § 1346. Defendants' challenge to Plaintiff's standing is directed towards Plaintiff's standing under the Administrative Procedure Act (APA), 5 U.S.C. §§ 701-706.

SUBJECT MATTER JURISDICTION

Plaintiff's jurisdictional reliance on 28 U.S.C. § 1346 is clearly misplaced. The Tucker Act authorizes actions for money damages and not suits for equitable relief. Richardson v. Morris, 409 U.S. 464, 93 S.Ct. 629, 34 L.Ed.2d 647 (1973). Plaintiff seeks only equitable relief herein. It does not assert that it has a right to have the subject contract awarded to it or that it is in any way entitled to money damages. Thus, the Court has no jurisdiction by reason of 28 U.S.C. § 1346(a)(2).

STANDING

The Administrative Procedure Act (APA), 5 U.S.C. §§ 701-706, provides for judicial review of certain agency action. 5 U.S.C. § 702 reads as follows:

"A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof."

A threshold consideration is whether the AAFES is an agency within the meaning of the above section. 5 U.S.C. § 701(b) defines agency as:

". . . each authority of the Government of the United States, whether or not it is within or subject to review by another agency . ."

Post exchanges were determined to be "arms of the Government" in Standard Oil Company of California v. Johnson, 316 U.S. 481, 62 S.Ct. 1168, 86 L.Ed. 1611 (1942) and it appears that the AAFES is nothing more than a modern day P.X. See 32 C.F.R. § 554.7. The test for determining whether an arm of the Government has sufficient authority to justify classifying it as an agency under the APA is whether the arm has the authority to act with the sanction of the Government behind it. Lassiter v. Guy F. Atkinson Co., 176 F.2d 984 (Ninth Cir. 1949); Kam Koon Wan v. E. E. Black, Limited, 188 F.2d 558 (Ninth Cir. 1951). The AAFES acts with the sanction of the Government behind it as under the 1970 amendments to the Tucker Act, 28 U.S.C. § 1346(a)(2), an express or implied contract with the AAFES is to be considered an express or implied contract with the United States, and as under the 1970 Amendment to the Supplemental Appropriations Act, 31 U.S.C. § 724a, any judgment or compromise settlement against the United States arising out of an express or implied contract entered into by the AAFES is to be paid out of treasury funds, subject to reimbursement by the AAFES. See W. B. Fishburn Cleaners, Inc. v. Army & Air Force Ex. Serv., 374 F.Supp. 162 (N.D.Tex. 1974) and Swiff-Train Company v. United States, 443 F.2d 1140 (Fifth Cir. 1971). Thus, the AAFES is an agency within the meaning of 5 U.S.C. § 702.

Persons have standing to obtain judicial review of federal agency action under § 10 of the APA, 5 U.S.C. § 702, where (1) the challenged action has caused them injury in fact and (2) where the alleged injury is to an interest arguably within the zone of interest sought to be protected by a relevant statute. Sierra Club v. Morton, 405 U.S. 727, 92 S.Ct. 1361, 31 L.Ed.2d 636 (1972); United States v. SCRAP, 412 U.S. 669, 93 S.Ct. 2405, 37 L.Ed.2d 254 (1973). Economic, aesthetic, conservational or recreational values may satisfy the injury in fact test. But the party seeking the review must himself be among the injured. Sierra Club v. Morton, supra. A plaintiff must allege that he has been or will be perceptibly harmed by the challenged agency action. United States v. SCRAP, supra. Unsuccessful bidders challenging the procedure whereby government agencies have awarded contracts have widely been held to have standing under 5 U.S.C. § 702. Scanwell Laboratories, Inc. v. Shaffer, 424 F.2d 859 (C.A.D.C. 1970); Merriam v. Kunzig, 476 F.2d 1233 (Third Cir. 1973); Keco Industries, Inc. v. Laird, 318 F.Supp. 1361 (C.A.D.C. 1970). See also cases cited in 23 A.L.R. Fed. 301. Under the above authority it appears clear that the Plaintiff meets the first prong of the standing test. It has alleged facts showing economic injury; that it held a portion of the soft drink concessions at the subject installations and that it lost its concession due to an illegal solicitation.¹

The second prong of the standing test, that the alleged injury is to an interest arguably within the zone of interests to be protected by a statute that the agency is claimed to have violated, requires that the Plaintiff point to a separate statute which imposes a duty upon the involved agency, allege a breach thereof and show that it is arguably within the zone of interests sought to be protected by that statute. Cf. Rasmussen v. United States, 421 F.2d 776 (Eighth Cir. 1970); Environmental Defense Fund, Incorporated v. Hardin, 138 U.S.App.D.C. 381, 428 F.2d 1093 (1970); Davis v. Romney, 490 F.2d 1360 (Third Cir. 1974).

Plaintiff points to 41 U.S.C. §§ 252 and 253 as being the relevant statutes herein. These statutes read in part as follows:

"§ 252(a) Executive agencies shall make purchases and contracts for property and services in accordance with the provisions of this chapter and implementing regulations of the Administrator; but this chapter does not apply — (1) to the Department of Defense . . .

* * * * * *

(c) All purchases and contracts for property and services shall be made by advertising, as provided in section 253 of this title, . . ."

§ 253 "Whenever advertising is required — (a) The advertisement for bids shall be made a sufficient time previous to the purchase or contract, and specifications and invitations for bids shall permit such full and free competition as is consistent with the procurement of types of property and services necessary to meet the requirements of the agency concerned."

Plaintiff contends that the AAFES is an executive agency within the meaning of 41 U.S.C. § 252(a) and that Defendants violated 41 U.S.C. § 253 in that their specifications and invitations for bids do not provide for full and free competition. Defendants contend that the AAFES is not an executive agency within the meaning of 41 U.S.C. § 252(a) as it is part of the Department of Defense which is specifically excluded by 41 U.S.C. § 252(a)(1).

The term executive agency as used in 41 U.S.C. § 252 is defined by 40 U.S.C. § 472² to be:

". . . any executive department or independent establishment in the executive branch of the Government . . ."

This is similar to the definition found in 5 U.S.C. § 105. 5 U.S.C. § 101 reads as follows:

"The Executive departments are:

The Department of State.

The Department of the Treasury.

The Department of Defense.

The Department of Justice.

The Department of the Interior.

The Department of Agriculture.

The Department of Commerce.

The Department of Labor.

The Department of Health, Education, and Welfare.

The Department of Housing and Urban Development.

The Department of Transportation."

Thus, the AAFES is not an executive department and it can only be found to be an executive agency within the meaning of 41 U.S.C. § 252 if it meets the "independent establishment" criteria of 40 U.S.C. § 472. The term "independent establishment" is not defined in the Federal Property and...