Triad Logistics Servs. Corp. v. United States

Decision Date16 April 2012
Docket NumberNo. 11-43C,11-43C
PartiesTRIAD LOGISTICS SERVICES CORPORATION, Plaintiff, v. UNITED STATES, Defendant.
CourtCourt of Federal Claims

TRIAD LOGISTICS SERVICES CORPORATION, Plaintiff,
v.
UNITED STATES, Defendant.

No. 11-43C

United States Court of federal Claims

Filed: February 29, 2012
Issued for Publication: April 16, 20121


Government Contracts; Subject Matter Jurisdiction; In-Sourcing;
Standing; Interested Party; Prudential Standing.

Edward J. Kinberg, Kinberg & Associates, LLC, Melbourne, FL, for the plaintiff. With him was R. Brent Blackburn, Kinberg & Associates, LLC, of counsel.

Elizabeth A. Speck, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, D.C., for the defendant. With her were Jeanne E. Davidson, Director, Commercial Litigation Branch, and Tony West, Assistant Attorney General, Civil Division.

OPINION

HORN, J.

FINDINGS OF FACT

Plaintiff, Triad Logistics Services Corporation (Triad), a Florida based corporation, was awarded Contract No. FA3022-07-C-0001-P00024 (the contract) for vehicle operations and maintenance services at Columbus Air Force Base in Columbus, Mississippi by the United States Air Force. The contract was a one year contract with four option years. Plaintiff provided the required services during the first year, after

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which the Air Force exercised the first three option years.2 On September 30, 2010, at the end of the third option year, pursuant to 48 C.F.R. § 52.217-8 (Nov. 1999), the Air Force did not exercise the full fourth option year, but modified the contract and extended the period of performance until November 29, 2010, on which date the contract between plaintiff and the Air Force ended by its own terms. The Air Force subsequently made a decision to in-source the work Triad had previously performed.

On January 28, 2008, Congress amended 10 U.S.C. § 24633 and instructed consideration of using Department of Defense (DoD) civilian employees to perform DoD functions on a more regular basis. See National Defense Authorization Act for Fiscal Year 2008, Pub. L. 110-181, 122 Stat. 3, 60-61 (Jan. 28, 2008). Section 2643 of Title 10 of the United States Code directed the Under Secretary of Defense for Personnel and Readiness to "devise and implement guidelines and procedures to ensure that consideration is given to using, on a regular basis, Department of Defense civilian employees to perform new functions and functions that are performed by contractors and could be performed by Department of Defense civilian employees." 10 U.S.C. § 2463(a). Additionally, 10 U.S.C. § 2463(b) instructed that the guidelines and procedures developed under 10 U.S.C. § 2463(a) shall provide:

special consideration to be given using Department of Defense civilian
employees to perform any function that--
(1) is performed by a contractor and--
(A) has been performed by Department of Defense civilian employees at any time during the previous 10 years;
(B) is a function closely associated with the performance of an inherently governmental function;
(C) has been performed pursuant to a contract awarded on a non-competitive basis; or
(D) has been performed poorly, as determined by a contracting officer during the 5-year period preceding the date of such determination,

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because of excessive costs or inferior quality; or
(2) is a new requirement, with particular emphasis given to a new requirement that is similar to a function previously performed by Department of Defense civilian employees or is a function closely associated with the performance of an inherently governmental function.4

10 U.S.C. § 2463(b). Furthermore, 10 U.S.C. § 2643(c) prohibits the Secretary of Defense from conducting:

a public-private competition under this chapter, Office of Management and Budget Circular A-76,5 or any other provision of law or regulation before--
(1) in the case of a new Department of Defense function, assigning the performance of the function to Department of Defense civilian employees;
(2) in the case of any Department of Defense function described in subsection (b), converting the function to performance by Department of Defense civilian employees; or
(3) in the case of a Department of Defense function performed by Department of Defense civilian employees, expanding the scope of the function.

10 U.S.C. § 2463(c).

On April 4, 2008, the DoD issued guidelines and procedures to implement 10 U.S.C. § 2463. The guidelines noted that 10 U.S.C. § 2463 required the "Under Secretary of Defense for Personnel and Readiness to develop guidelines and procedures to ensure that the Department considers using DoD civilian employees to perform new functions or functions that are performed by contractors." (internal citation omitted). On March 4, 2009, the President directed the Office of Management and Budget (OMB), in collaboration with heads of various agencies, including the Secretary of Defense, to issue guidance to assist agencies in identifying "contracts that are wasteful, inefficient, or not otherwise likely to meet the agency's needs, and to formulate

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appropriate corrective action," including modification or cancellation of contracts when appropriate.

On April 8, 2009, the DoD issued Resource Management Decision 802 (RMD 802), which realigned resources for the DoD for fiscal years 2010 through 2014, by decreasing funding for contract support and increasing funding for civilian manpower authorizations, including the Defense acquisition workforce. On May 28, 2009, the Deputy Secretary of Defense released a guidance document titled "In-sourcing Contracted Services - Implementation Guidance." The guidelines explained that "[i]n-sourcing is a high priority of the Secretary of Defense," and that "10 U.S.C. § 2463 requires the Department to ensure that consideration is given to using, on a regular basis, DoD civilian employees to perform functions that are performed by contractors but could be performed by DoD civilian employees."

The guidelines suggested that when considering conversions from contractor to DoD, the following considerations would support in-sourcing: the function is inherently governmental or is exempt from private sector performance, the contract is for personal services, the contract has contract administration problems, or a cost analysis shows that DoD civilian performance is more cost effective than contractor performance. The guidelines also indicated that:

If possible, contracted services that have option-years that will be exercised during FY [fiscal year] 2010 should be identified for in-sourcing in FY 2010. However, contracted services that require re-competition during FY 2010 should be given priority over contracted services that have option years remaining since in-sourcing services that require re-competition would save the Department the time, effort, and costs of re-competing the contract.

For an in-sourcing decision based on cost, the guidelines also noted that "services may be in-sourced if a cost analysis shows that DoD civilian employees would perform the work more cost effectively than the private sector contractor."

Following the issuance of the May 28, 2009, guidelines, each Air Force major command was instructed to identify candidates for in-sourcing. Once each major command had identified candidates for in-sourcing, they were instructed to ascertain whether the identified contracts were viable candidates for in-sourcing by using the COMPARE cost calculating tool.6 On January 29, 2010, the DoD published Directive-Type Memorandum [DTM] 09-007, titled "Estimating and Comparing the Full Costs of Civilian and Military Manpower and Contract Support" (DTM 09-007). DTM 09-007 established rules "for use in estimating and comparing the full costs of military and DoD

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civilian manpower and contract support." The DoD reissued DTM 09-007 on October 21, 2010 to establish that DTM 09-007 would expire on September 1, 2011.7 The Air Force subsequently updated the COMPARE database with costing procedures outlined in DTM 09-007.

In accordance with the May 28, 2009, guidelines, the Air Force began to identify candidates suitable for in-sourcing. On August 19, 2009, the Air Education and Training Command was instructed to identify candidates suitable for in-sourcing for fiscal year 2010, as well as consider candidates for fiscal years 2011-2015. Subsequently, on October 24, 2009, the Air Education and Training Command requested its Bases to identify candidates for in-sourcing and attached a preliminary list of contracts which were potential in-sourcing candidates for fiscal years 2010-2015, including Triad's contract.8

On June 22, 2010, the Air Force held a meeting with Triad employees and informed Triad of the Air Force's intent to in-source the work Triad was performing for the Air Force. That same day, June 22, 2010, the Air Force sent Triad written notice of its intent to in-source the work then being performed under Contract No. FA3022-07-C-0001-P00024. The notice stated, in part:

The purpose of this letter is to notify Triad Logistics that contract number FA3002-07-C-0001 [sic] for vehicle operations and maintenance on Columbus Air Force Base, Mississippi was indentified and approved as a candidate for the RMD 802 initiative (in accordance with Secretary of Defense Letter dated 28 May 09). The Government will initiate the process of in-sourcing this effort in the upcoming days.... The Government retains the right to
...

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