Hallmark-phoenix 3 LLC v. U.S.
| Decision Date | 13 May 2011 |
| Docket Number | No. 11-98C,11-98C |
| Parties | HALLMARK-PHOENIX 3, LLC, Plaintiff, v. THE UNITED STATES, Defendant. |
| Court | U.S. Claims Court |
Bid protest action; Challenge to agency in-sourcing decision; Motion to dismiss for lack of jurisdiction; 28 U.S.C. § 1491(b)(1); "Interested party"; Prudential standing doctrine; Bennett v. Spear - prudential standing doctrine applicable to bid protests; Section 1491(b)(1) does not negate doctrine; 10 U.S.C. §§ 129a and 2463(a); In-sourcing decisions subject only to legislative oversight; Contractor lacked prudential standing to challenge in-sourcing decision; Jurisdiction lacking; Dismissal granted.
OPINIONBryant S. Banes, Neel, Hooper & Banes, P.C., Houston, TX, for plaintiff.
Christopher Andrew Bowen, United States Department of Justice, Washington, D.C., with whom was Assistant Attorney General Tony West, for defendant.
"[C]ourts are not charged with general guardianship against all potential mischief in the complicated tasks of government. " 2 In this bid protest action, Hallmark-Phoenix 3, LLC (Hallmark or plaintiff) challenges the Air Force's decision to use its own civilian employees to supply services previously performed by Hallmark. Plaintiff asserts that this decision was not made in accordance with two federal statutes, sections 129a and 2463(a) of Title 10 of the U.S. Code, as well as Department of Defense guidance issued thereunder. Defendant has moved to dismiss plaintiffs complaint, claiming, pursuant to RCFC 12(b)(1), that this court lacks jurisdiction. Having fully considered the parties' arguments, and for the reasons that follow, the court GRANTS defendant's motion and orders the complaint dismissed.
A brief recitation of the facts provides necessary context.3
Hallmark is a Houston-based company. On July 30, 2008, the United States Air Force (the Air Force) awarded Hallmark a small-business set aside contract (FA 2521-08-C-007) to perform vehicle operations and maintenance services for the U.S. Air Force Space Command and the 45th Space Wing at Patrick Air Force Base and Cape Canaveral Air Force Station. The contract's period of performance consists of a base year running from October 1, 2008, through September 30, 2009, and four one-year options. The last option is scheduled to end September 30, 2013.
On October 1, 2008, plaintiff began performing the contract. On or about November 5, 2010, a few weeks after the Air Force exercised the second option year, the Air Force's Contracting Officer (CO) sent plaintiff a letter indicating that the Air Force had decided not to exercise the remaining two option years under the contract and to direct the work under the contract to civilian personnel. As a result, the current contract will end on September 30, 2011.
On December 20, 2010, plaintiff sent a letter to the CO objecting to the Air Force's procurement decision to in-source the scope of work under the contract. On January 12, 2011, the Air Force reiterated its decision to Hallmark during a face-to-face meeting. During that meeting, the Air Force allegedly acknowledged that its personnel had not strictly complied with applicable in-sourcing guidelines. Shortly thereafter, the Air Force began listing open job positions to perform vehicle maintenance services.
On February 16, 2011, Hallmark filed a complaint in this court protesting the Air Force's in-sourcing decision. On February 25, 2011, Hallmark amended this complaint to make clear that it was not directly contesting the Air Force's decision not to exercise the options on its current contract. Hallmark claims that the Air Force's decision to rely upon civilian personnel rather than contractor personnel violates 10 U.S.C. §§ 129a and 2463, as well as the associatedguidelines. On March 4, 2011, defendant filed a motion to dismiss the amended complaint, asserting that this court lacks subject matter jurisdiction. On March 29, 2011, plaintiff filed its response to the motion to dismiss. On April 5, 2011, defendant filed its reply to plaintiff's response. Oral argument was held on April 28, 2011.
Deciding a motion to dismiss "starts with the complaint, which must be well-pleaded in that it must state the necessary elements of the plaintiffs claim, independent of any defense that may be interposed." Holley v. United States, 124 F.3d 1462, 1465 (Fed. Cir. 1997) (citations omitted); see also Bell Atl. Corp., 550 U.S. at 555. The plaintiff must establish that the court has subject matter jurisdiction over its claims. Reynolds v. Army & Air Force Exch. Serv., 846 F.2d 746, 748 (Fed. Cir. 1988); Hansen v. United States, 65 Fed. Cl. 76, 94 (2005). With respect to standing issues, this court will employ the same standard of review it employs in reviewing all motions to dismiss. See Warth v. Seldin, 422 U.S. 490, 501 (1975) (); Metro. Wash. Airports Auth. v. Citizens for Abatement of Aircraft Noise, 501 U.S. 252, 264 (1991) (same).
Section 1491(b)(1) of Title 28 gives this court "jurisdiction to render judgment on an action by an interested party objecting to . . . any alleged violation of statute or regulation in connection with a procurement or proposed procurement." Defendant argues that plaintiff is not an "interested party" within the meaning of this provision and, therefore, should not be heard to complain about the Air Force's in-sourcing decision.
In American Federation of Government Employees, AFL-CIO v. United States, 258 F.3d 1294, 1302 (Fed. Cir. 2001), cert. denied, 534 U.S. 1113 (2002) (hereinafter "AFGE"), the Federal Circuit held that an "interested party," for purposes of section 1491(b)(1), is an "actual or prospective bidder and offeror whose direct economic interest would be affected by the award of the contract or the failure to award the contract." See also Distributed Solutions, Inc. v. United States, 539 F.3d 1340, 1344 (Fed. Cir. 2008); Rex Serv. Corp. v. United States, 448 F.3d 1305, 1307 (Fed. Cir. 2006). In AFGE, the Federal Circuit determined that federal employees who could lose their jobs based on an agency decision to outsource work to private contractors did not qualify as "interested parties" as they were ineligible to bid on this work. 258 F.3d at 1301-02. Unlike the employees in AFGE, however, plaintiff is a contractor who theoretically might have bid on any solicitation for a contract to perform the work that the Air Force instead decided to in-source. Several cases suggest that, in such an instance, plaintiff would qualify as an "interested party" under section 1491(b)(1). See LABAT-Anderson, Inc. v. United States, 65 Fed. Cl. 570, 575-76 (2005); see also Angelica Textile Servs., Inc. v. United States, 95 Fed. Cl. 208, 218 (2010). Indeed, this court recently reached this conclusion in a nearly identical case involving an Air Force decision to in-source work. See Santa Barbara Applied Research Inc. v.United States, 2011 WL 1680355, at * 6 (Fed. Cl. May 4, 2011); see also Vero Tech. Support, Inc. v. U.S. Dept. of Def., 733 F. Supp. 2d 1336, 1342 (S.D. Fla. 2010).
Yet, the court cannot help but observe the pile of assumptions, reminiscent of Pelion and Ossa, that underlies plaintiff's claim that it is a "prospective bidder" within the meaning of the "interested party" definition. Unlike in LABAT-Anderson, there is no existing solicitation here.4Nor is there any assurance that there ever will be one. If this court were to set aside the Air Force's in-sourcing decision, it is conceivable, if not likely, that the Air Force would simply make a second "corrected" decision to in-source, the effect of which would be to deny plaintiff a contracting opportunity. Even if this court's rejection of the Air Force's in-sourcing decision resulted in a new procurement, there is no assurance that plaintiff could or would bid on that procurement. After all, the contract that plaintiff previously won was a small-business set aside. And there is no guarantee that the Air Force would once again reserve the requirements at issue for such a set aside, nor any statute or regulation of which the court is aware that would dictate that result. See Totlo/King v. United States, 87 Fed. Cl. 680, 691-92 (2009) (discussing this issue). The Air Force might instead choose to allow smaller and larger businesses to compete for a contract to provide the services in question; or it might even to bundle together similar requirements at more bases (two were originally involved here) so as to compete a much larger contract on which plaintiff is unqualified to bid. Given these circumstances, it is debatable whether plaintiff qualifies as a prospective bidder within the meaning of the Federal Circuit's definition of interested party.5
The court need not decide, however, whether plaintiff is an interested party for purposes of section 1491(b)(1) because it finds, in any event, that Hallmark fails to meet prudential standing requirements. These standing requirements, which proceed from an amalgam of jurisprudential assumptions and statutory interpretations, take various forms. They are different from the standing requirements dictated by Article III of the Constitution, and its case or controversy requirement, and instead "embod[y] 'judicially self-imposed limits on the exercise of federal jurisdiction.'" Elk Grove Unified Sch. Dist. v. Newdow, 542 U.S. 1, 11 (2004) (quoting Allen v. Wright, 468 U.S. 737, 751 (1984)); see also Lujan v. Defenders of Wildlife, 504U.S. 555, 560 (1992) (). They "are 'founded in concern about the proper - and properly limited - role of the courts in a democratic society.'" Bennett v. Spear, 520 U.S. 154, 162 (1997) (quoting...
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