Southfork Systems, Inc. v. U.S.

• Decision Date: 14 April 1998
• Docket Number: No. 96-5136,96-5136
• Parties: 42 Cont.Cas.Fed. (CCH) P 77,283 SOUTHFORK SYSTEMS, INC., Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee, and State of Texas, acting through the Texas Commission for the Blind, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1124

141 F.3d 1124

42 Cont.Cas.Fed. (CCH) P 77,283

SOUTHFORK SYSTEMS, INC., Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee and State of Texas, acting through the Texas Commission for the Blind, Defendant-Appellee.

No. 96-5136.

United States Court of Appeals Federal Circuit.

April 14, 1998.

William R. Purdy, Ott & Purdy, P.A., Jackson, MS, argued, for plaintiff-appellant.

Janene M. Marasciullo, Attorney, Civil Division, Commercial Litigation Branch, U.S. Department of Justice, Washington, DC, argued, for defendant-appellee, United States. On the brief were, Frank W. Hunger, Assistant Attorney General, David M. Cohen, Director, Sharon Y. Eubanks, Deputy Director, and Stephanie M. Jackson, Trial Attorney.

Peter A. Nolan, Sheinfeld, Maley & Kay, P.C., Austin, TX, argued, for defendant-appellee, State of Texas.

Before NEWMAN, RADER, and SCHALL, Circuit Judges.

SCHALL, Circuit Judge.

This appeal arises out of a challenge to a pre-award procurement decision by the Department of the Air Force (Air Force). In April of 1995, the Air Force issued Solicitation Number F41636-95-R-0075 (the Solicitation) seeking contract proposals for the management and operation of the enlisted personnel cafeteria complex at Lackland Air Force Base in Texas. The Solicitation stated that the procurement was being conducted in accordance with the Randolph-Sheppard Vending Stand Act (RSA), Pub.L. No. 74-732, 49 Stat. 1559 (1936), as amended by Pub.L. No. 93-516, §§ 200-211, 88 Stat. 1617, 1623 (1974), codified at 20 U.S.C. §§ 107-107f (1994). ¹ The RSA accords priority in the awarding of food service contracts to blind persons found qualified to operate cafeterias on government property.

After evaluating the proposals submitted in response to the Solicitation, the contracting officer included the proposal of the Texas Commission for the Blind (the Commission) within the competitive range. Pursuant to the RSA, the Air Force thereupon entered into direct negotiations with the Commission, with the intention of awarding it the contract. Southfork Systems, Inc. (Southfork), the incumbent operator of the cafeteria and one of the six other offerors found to be within the competitive range, lodged a protest with the contracting officer. In its protest, Southfork challenged both the Commission's status as an offeror under the Solicitation and the Air Force's decision to enter into direct negotiations with the Commission. When the contracting officer failed to respond to the protest, Southfork filed suit in the United States Court of Federal Claims, seeking declaratory and injunctive relief disqualifying the Commission as an offeror and barring award of the contract to it. Southfork now appeals the judgment and order of the court, No. 96-41C (Aug. 29, 1996), (i) dismissing Southfork's complaint for failure to state a claim upon which relief could be granted, and (ii) holding on motion for summary judgment that Southfork had not demonstrated a violation of the Air Force's obligation to fairly and honestly consider Southfork's proposal. We affirm.

BACKGROUND

I.

The RSA states that, "[f]or the purposes of providing blind persons with remunerative employment, enlarging the economic opportunities of the blind, and stimulating the blind to greater efforts in striving to make themselves self-supporting, blind persons licensed under the provisions of this chapter shall be authorized to operate vending facilities on any Federal property." 20 U.S.C. § 107(a). ² The RSA further states that, in the award of contracts for vending facilities, priority shall be granted to "blind persons licensed by a State agency." 20 U.S.C. § 107(b). The Secretary of Education administers the RSA and is authorized to prescribe regulations to effectuate the purposes of the statute. See id. The Secretary is responsible for designating in each state an agency to issue licenses to blind persons for the operation of vending facilities. See 20 U.S.C. § 107a(a). A designated State licensing agency (SLA) is required to give preference to blind persons who are in need of employment when issuing a license for the operation of a vending facility. See 20 U.S.C. § 107a(b). The Commission is the designated SLA in Texas.

Regulations promulgated by the Department of Education's Office of Special Education and Rehabilitation Service are found at 34 C.F.R. §§ 395.1-395.38 (1997). The regulations provide that an SLA can respond, on behalf of a licensed vendor, to a solicitation for offers for cafeteria services and that the licensed vendor will be given priority in award if the SLA's offer is ranked among the qualified submitted proposals:

(a) Priority in the operation of cafeterias by blind vendors on Federal property shall be afforded when the Secretary determines (b) In order to establish the ability of blind vendors to operate a cafeteria in such a manner as to provide food service at comparable cost and of comparable high quality as that available from other providers of cafeteria services, the appropriate State licensing agency shall be invited to respond to solicitations for offers when a cafeteria contract is contemplated by the appropriate property managing department, agency, or instrumentality. Such solicitations for offers shall establish criteria under which all responses will be judged. Such criteria may include sanitation practices, personnel, staffing, menu pricing and portion sizes, menu variety, budget and accounting practices. If the proposal received from the State licensing agency is judged to be within a competitive range and has been ranked among those proposals which have a reasonable chance of being selected for final award, the property managing department, agency, or instrumentality shall consult with the Secretary as required under paragraph (a) of this section.

on an individual basis, and after consultation with the appropriate property managing department, agency, or instrumentality, that such operation can be provided at a reasonable cost, with food of a high quality comparable to that currently provided employees, whether by contract or otherwise. Such operation shall be expected to provide maximum employment opportunities to blind vendors to the greatest extent possible.

34 C.F.R. § 395.33. After contract award, the SLA remains involved and "shall attempt to resolve day-to-day problems pertaining to the operation of the vending facility in an informal manner with the participation of the blind vendor and the on-site official responsible for the property." 34 C.F.R. § 395.36(a).

Regulations promulgated by the Department of Defense (DOD) to implement the RSA give preference to SLA proposals in order that "[t]he blind will be given a priority in award of contracts to operate cafeterias." 32 C.F.R. § 260.3(b) (1996). Under its regulations, DOD is responsible for ensuring that "operators are in fact State licensed blind persons and that sighted employees and assistants are utilized only to the extent reasonably necessary." 32 C.F.R. § 260.4(c)(4). DOD's regulations further provide that "[i]f the State licensing agency submits a proposal and it is within the competitive range established by the contracting officer, the contract will be awarded to the State licensing agency" unless "the on-site official determines that award to the State licensing agency would adversely affect the interests of the United States." 32 C.F.R. § 260.3(g)(1)(ii)-(iii). A determination that according priority to the SLA would be adverse to the interests of the United States must be fully documented and sent to the Secretary of Education for review. See 32 C.F.R. § 260.3(f)(2).

II.

The Air Force issued the Solicitation on April 27, 1995. The Solicitation included a provision regarding preference for SLAs:

PREFERENCE FOR THE STATE LICENSING AGENCY FOR THE BLIND (SLA): This acquisition is being conducted in accordance with the Randolph-Sheppard Vending Facilities Act ... as implemented by [Air Force Instruction] 34-206, Vending Facility Program for the Blind on Air Force Property[,] and DoD Directive 1125.3[,] which give the SLA priority in award of contracts to operate cafeterias on DoD controlled property. If the SLA submits a proposal that is within the final competitive range established by the Contracting Officer, the contract will be awarded to the Texas Commission for the Blind unless the Center Commander determines that award to the SLA would adversely affect the interests of the United States and the Secretary of the Department of Education approves the determination, or unless the Center Commander determines, after conferring with the Commander, Air Force Services Agency ... and the Secretary of Education agrees, that the blind vendor does not have the capacity to operate a cafeteria in such a manner as to provide food services at a comparable cost and of a comparable high quality as that available from other providers of cafeteria services.

Under a section titled "PROCESS," the Solicitation explained the process for reviewing and evaluating each submitted proposal. The Air Force would first eliminate those proposals "that fail to provide all information relative to data, format, and certifications." The remaining proposals then would be compared to determine a competitive range:

A competitive range may be made and will consist of all proposals which are considered to have a reasonable chance of being selected for award. If needed, a competitive range determination will be made and written and/or oral discussions will be conducted with all offerors within the competitive range. More than one competitive range determination may be made. The determination as to whether the SLA is in the competitive range for purposes of award may be made as late as immediately prior [to] the request for best and final offers. Upon completion of written and/or oral discussions, best and final offers will be requested. The government may reject any or all...