Vero Technical Support, Inc. v. U.S. Dept. of Def.

• Decision Date: 18 August 2010
• Docket Number: Case No. 10-14162-CIV
• Parties: VERO TECHNICAL SUPPORT, INC., Plaintiff, v. U.S. DEPARTMENT OF DEFENSE, et al., Defendant.
• Court: U.S. District Court — Southern District of Florida

733 F.Supp.2d 1336

VERO TECHNICAL SUPPORT, INC., Plaintiff,

v.U.S. DEPARTMENT OF DEFENSE, et al., Defendant.

Case No. 10-14162-CIV.

United States District Court,

S.D. Florida,

Fort Pierce Division.

Aug. 18, 2010.

David F. Barton, The Gardner Law Firm, San Antonio, TX, Paul Richard Berg, Louis B. Vocelle, Jr., Vocelle & Berg, LLP, Vero Beach, FL, for Plaintiff.

Anthony Pogorzelski, U.S. Attorney's Office, Miami, FL, Arlene Pianko Groner, United States Department of Justice, Commercial Litigation Branch, Washington, DC, for Defendants.

ORDER

DONALD L. GRAHAM, District Judge.

THIS CAUSE comes before the Court upon Defendant's Motion to Dismiss [D.E. 15] and Plaintiff's Applications for Temporary Restraining Order [D.E. 25] and for Preliminary Injunction [D.E. 3].

THE MATTER was referred to the Honorable United States Magistrate Judge Frank J. Lynch pursuant to 28 U.S.C. § 636 and the Magistrate Rules for the Southern District of Florida [D.E. 7, 27]. Judge Lynch issued a Report and Recommendation [D.E. 29] recommending that Defendants' Motion to Dismiss be granted for lack of subject matter jurisdiction and that Plaintiff's applications for temporary restraining order and preliminary injunction be denied without prejudice. Plaintiff has filed objections to the report.

THE COURT has conducted an independent review of the record and is otherwise fully advised in the premises. Based thereon, it is hereby.

ORDERED AND ADJUDGED that the Magistrate Judge's Report [D.E. 29] is AFFIRMED, ADOPTED AND RATIFIED in its entirety. It is further.

ORDERED AND ADJUDGED that Defendants' Motion to Dismiss [D.E. 15] is GRANTED. This matter is dismissed for lack of subject matter jurisdiction. It is further.

ORDERED AND ADJUDGED that Plaintiff's Applications for Temporary Restraining Order [D.E. 25] and Preliminary Injunction [D.E. 3] is DENIED without prejudice. It is further.

ORDERED AND ADJUDGED that this case is CLOSED and any pending motions are DENIED as moot.

REPORT AND RECOMMENDATION ON DEFENDANT'S MOTION TO DISMISS(DE 15) AS WELL AS ON PLAINTIFF'S APPLICATIONS FOR TEMPORARY RESTRAINING ORDER (DE 25) AND FOR PRELIMINARY INJUNCTION (DE 3)

FRANK J. LYNCH, JR., United States Magistrate Judge.

THIS CAUSE comes before this Court upon Orders of Reference (DE 7 & 27) and the above Motions. Having reviewed the Motions, their respective Responses and Replies, and the various exhibits attached to them, this Court recommends as follows:

BACKGROUND

1. George Sigler has a long history of contract work in different capacities with the U.S. Government. This includes work done by the Plaintiff, Vero Technical Support, Inc., a company that Mr. Sigler started in 1991. Indeed Mr. Sigler attests in his Affidavit to having "special expertise in formulating bids and proposals for government contracts, and in performing the mathematical calculations necessary for those tasks." The Defendant awarded the Plaintiff a contract to provide weather-related services at various U.S. Army sites. Through the instant Complaint, the Plaintiff challenges the decision by the Defendant, the U.S. Department of Defense, to insource those services rather than to continue to rely on outside contractors. The Plaintiff also seeks preliminary injunctive relief to maintain the status quo.

2. 2008 saw a complete change in policy regarding the Government's use of outside contractors. As authors Major Kevin P. Stiens and Lieutenant Colonel (ret.) Susan L. Turley detail in their article,Uncontracting: The Move Back to Performing InHouse, 65 Air Force Law Review 145 (2010), experience had revealed many inherent problems and significant costs with outsourcing. To remedy these problems, the 2008 National Defense Authorization Act, found at 10 U.S.C. § 2463, required the Dept. of Defense, the Defendant, to begin considering use of its own resources to meet its needs. The first Dept. of Defense Guideline promulgated thereunder was issued on April 4, 2008.

3. It was shortly thereafter, on April 21, 2008, when the Defendant issued the Performance Work Statement describing the weather services that became subject of the parties' contract. As Mr. Sigler recalls in his Affidavit, the Plaintiff bid for that contract, lost the bid, and protested its award to a third party on three successive occasions. Mr. Sigler believes that the Defendant took advantage of the resulting delays to give it time to plan for the job's eventual insourcing.

4. A second insourcing guideline was promulgated on September 2, 2009, and in January 2010, two more guidelines were promulgated. These guidelines set forth the complicated framework for comparing the cost of outsourced services against the cost of in-house services. The guidelines also give instructions for how to consider certain cost factors. For example the cost of employee benefits are to be imputed on outside contractors, whether or not they pay them, in order to eliminate that cost advantage.

5. On September 11, 2009 the Defendant issued a new Solicitation for bids on the subject weather services. The memorandum amended the Solicitation in light of the new preference towards insourcing, and it shortened the performance time from September 30, 2013 to June 2010, with the option of renewing the contract at one-month intervals through September 30, 2010. The contract was opened to re-bidding in light of the changes, and the Plaintiff was awarded the contract. The contract took effect March 2010 with performance to begin that April.

6. Almost immediately, despite the contract, the Defendant began its conversion to insourcing. On April 8, 2010 the Defendant hired one of the Plaintiff's employees to manage a site. That next day, on April 9, the Plaintiff submitted a FOIA request regarding the insourcing decision on the contract. The Defendant answered by producing a cost study analysis, apparently conducted in September 2009 around the time of the Solicitation amendment. On May 17, 2010 the Plaintiff executed a Modification of Contract, converting one position to civil service, presumably to account for the April 8th employee conversion. On June 8, 2010, with the contract set to expire at the end of the month, the Plaintiff filed the instant lawsuit.

7. The Defendant exercised two one-month renewal options, extending the contract through the end of this August. (The contract was not renewed for one particular location, however. The Ft. Sill site already had been fully converted, and this conversion presumably was subject of the second Modification of Contract, executed July 23.) These renewals are subject of the pending Application for Temporary Restraining Order. The Defendant announced the renewals in conjunction with its request to continue the preliminary injunction hearing with the implication being that they would maintain the status quo. The Plaintiff objects to the continued insourcing conversion process which it maintains violates the status quo.

8. The Defendant also has announced that it is preparing a new insourcing analysis, one based on the data that the Plaintiff proposes. By preparing the new analysis, the Plaintiff emphasizes, the Defendant implicitly concedes that its prior insourcing decision, the subject of the Complaint, was erroneous, and the Plaintiff seeks immediateinjunctive relief on that basis. On the other hand, the analysis revision renders the Plaintiff's Complaint moot, at least in a practical sense. It in effect grants the relief the Plaintiff is seeking: remand for a proper insourcing determination that complies with 10 U.S.C. § 2463 and the guidelines promulgated thereunder. As the Plaintiff emphasizes at ¶ 7 of its Response in opposition to the Motion to Dismiss, "Defendants will have the right to remand, as every other agency does in APA cases, to revisit and reaffirm their insourcing decision so that it passes muster under the APA's ' arbitrary and capricious' standard of review." However this development may not render the Complaint moot in the sense that the Plaintiff is seeking "a post-judgment remand", as it states in footnote 5 to its Reply in support of its Application for Temporary Restraining Order.

9. The Plaintiff carefully defines its cause of action, limiting it to the Administrative Procedure Act ("APA"), 5 U.S.C. § 702. The Plaintiff does so in order to invoke this Court's federal subject matter jurisdiction. The Plaintiff alleges that the Defendant's "insourcing decision, and whatever findings and conclusions are alleged to support it, are agency actions that are 'arbitrary, capricious, and abuse of discretion, or otherwise not in accordance with law.' " The Plaintiff alleges that the insourcing analysis does not comply with the governing regulations and procedures in the following ways: The Defendant failed to account for the cost of benefits or the cost of government vehicles. The Defendant misclassified the personnel needed. Lastly there is a gross disparity between the Defendant's estimated cost of contractor performance and the actual cost claimed by the Plaintiff (and other bidders). There also is a disparity between the Defendant's estimate of the cost of doing the work, itself, and what the Plaintiff is charging.

10. There appears to be no dispute that the APA governs the Plaintiff's claim. Rather the dispute concerns which court has jurisdiction to hear the APA claim. Both in the Complaint, itself, and now in Response to the Motion to Dismiss, the Plaintiff argues vigorously that this Court has subject matter jurisdiction. The Defendant disagrees and contends that it is the U.S. Court of Federal Claims ("COFC") that has jurisdiction over the claim and that the COFC's jurisdiction is exclusive. The Plaintiff also seeks injunctive relief, but the jurisdictional question must be answered first.

DISCUSSION

The Defendant moves to dismiss the Complaint under Rule 12(b)(1) for lack of subject matter jurisdiction. Because the Defendant's arguments take the form of a "facial attack" on jurisdiction, this...