OUTDOOR VENTURE CORP. v. USA
PUBLISHED OPINION. Signed by Chief Judge Emily C. Hewitt. (mm3) Copy to parties.
In the United States Court of Federal Claims
No. 11-353 C
(E-Filed: July 25, 2011) 1
OUTDOOR VENTURE CORP.,
THE UNITED STATES,
Post-Award Bid Protest; Awardee
Lacks Standing to Bring a Bid
Protest Action; Effect of Failure
Timely to Request Reconsideration
of SBA Size Determination
Marc Lamer, Philadelphia, PA, for plaintiff.
Loren Misha Preheim, with whom were Tony West, Assistant Attorney General, Jeanne
E. Davidson, Director, and Todd M. Hughes, Deputy Director, Commercial Litigation
Branch, Civil Division, United States Department of Justice, Washington, DC, for
OPINION AND ORDER
At the request of the parties, the court entered a protective order in this action. See June
3, 2011 Order (Protective Order), Docket Number (Dkt. No.) 9, passim. Pursuant to the
Protective Order, the court filed this Opinion under seal on July 13, 2011. See July 13, 2011 Op.
and Order, Dkt. No. 18. The court directed that,
[i]f the parties believe that this Opinion contains protected material that should be
redacted before publication, the parties shall file a joint motion, or separate
motions if they do not agree, at or before 5:00 p.m. Eastern Daylight Time on
Wednesday, July 20, 2011, requesting that such protected material be redacted.
The motion or motions shall indicate the specific protected material as to which
redaction is requested and, with respect to each such proposed redaction, the
reason(s) for the request.
Id. at 1 n.1. Because neither party filed a motion requesting that material be redacted, the court
now publishes this Opinion without redaction.
HEWITT, Chief Judge
This is a post-award bid protest brought by Outdoor Venture Corporation (OVC or
plaintiff), the awardee in Solicitation SPM1C1-09-R-0141 (Solicitation), issued by the
United States government acting through the Defense Supply Center Philadelphia, now
known as the Defense Logistics Agency Troop Support (DLA, the agency, the
government or defendant). Complaint for Declaratory and Injunctive Relief (Complaint
or Compl.), Docket Number (Dkt. No.) 1, ¶¶ 4, 16.
Before the court are plaintiff’s Complaint, filed on June 3, 2011; Defendant’s
Motion to Dismiss (defendant’s Motion or Def.’s Mot.), filed on June 8, 2011, Dkt. No.
12; Plaintiff’s Opposition to Defendant’s Motion to Dismiss (plaintiff’s Response or Pl.’s
Resp.), filed on June 13, 2011, Dkt. No. 13; and Defendant’s Reply in Support of Motion
to Dismiss (defendant’s reply or Def.’s Reply), filed on June 15, 2011, Dkt. No. 15.
The court held a telephonic oral argument on Thursday, June 16, 2011 at 2:00 p.m.
Eastern Daylight Time. 2
Defendant moves to dismiss OVC’s Complaint under Rules 12(b)(1) and 12(b)(6)
of the Rules of the United States Court of Federal Claims (RCFC). Def.’s Mot. 1.
Defendant contends that OVC’s Complaint should be dismissed for five reasons: (1)
OVC lacks standing to bring this bid protest because “OVC was the winning bidder on
the solicitation at issue, and, therefore, cannot demonstrate prejudice;” (2) OVC has
“failed to exhaust its administrative remedies;” (3) “OVC’s claim is not justiciable
because the applicable regulation provides that the Small Business Administration
(‘SBA’) has ‘sole discretion’ to determine whether to reopen a claim;” (4) OVC has
“failed to state a claim because, under the applicable regulation, SBA was required to
deny OVC’s request to reopen SBA’s size determination as untimely;” and (5) “the
[c]ourt does not possess jurisdiction to grant OVC’s request that the [c]ourt enjoin the
agency from terminating the contract for convenience.” Def.’s Mot. 1. For the reasons
discussed below, defendant’s Motion to Dismiss is GRANTED.
On June 7, 2009 DLA issued Solicitation SPM1C1-09-R-0141. Compl. ¶ 4. The
Solicitation requested offers on an Indefinite Delivery, Indefinite Quantity contract for
the manufacture and delivery of two-man combat tents. Compl. ¶ 5. The Solicitation
was a Total Small Business Set-Aside. Compl. ¶ 6.
The oral argument held on Thursday, June 16, 2011 was recorded by the court’s
Electronic Digital Recording (EDR) system. The times noted in citations to the oral argument
refer to the EDR record of the oral argument.
On December 2, 2010 OVC was awarded a contract under the Solicitation.
Compl. ¶ 16. Following the award to OVC, Diamond Brand Products (Diamond), one of
the unsuccessful offerors on the contract, filed a protest with the Government
Accountability Office (GAO), in which it challenged the award to OVC on a number of
grounds. Compl. ¶ 17. One of the grounds for protest was that OVC should not be
classified as a small business because “the end items OVC would be supplying would, in
fact, be produced by a large business” and because “OVC would be subcontracting more
than 50% of its work [to a large business].” Compl. ¶ 17. When Diamond filed its
protest at GAO, OVC’s contract was automatically suspended. June 16, 2011 Oral
Argument (Oral Argument), Argument of Mr. Marc Lamer at 2:14:18-48; see also 48
C.F.R. § 33.104(c)(1) (2010) (stating, with exceptions, that, “[w]hen the agency receives
notice of a protest from the GAO within 10 days after contract award . . . , the contracting
officer shall immediately suspend performance or terminate the awarded contract”).
Because Diamond had failed to file a timely size protest with SBA, GAO
suggested that DLA refer the small business issues in the protest to SBA. Compl. ¶¶ 17,
18. DLA did so, and Diamond withdrew those portions of its GAO protest relating to
OVC’s classification as a small business. Compl. ¶ 18. Diamond’s protest was
dismissed by GAO on March 24, 2011. Compl. ¶ 24. Plaintiff’s counsel stated at oral
argument that, “[w]hen that protest was denied by GAO, the . . . statutory stop work
order . . . was no longer there, but the agency . . . never lifted the stay, so performance is
still suspended,” Oral Argument, Argument of Mr. Marc Lamer at 2:14:34-48, a
statement that was not contradicted, see Oral Argument passim.
On March 2, 2011 OVC received a notification letter from SBA that OVC’s
“status as a small business concern has been protested in connection with the
[Solicitation].” Compl. ¶¶ 19, 20. The SBA letter requested information from OVC,
including a “statement in answer to the allegations of the protest letter with any
supporting evidence.” Compl. ¶ 22. OVC responded to the letter on March 8, 2011.
Compl. ¶ 23. On April 2, 2011 OVC received an email from SBA requesting additional
information about its subcontractor, Johnson Outdoors Gear, LLC (JOG). Compl. ¶¶ 25,
26; see also Compl. ¶ 12 (stating that “[i]n its proposal, OVC identified [JOG] as a
subcontractor, pursuant to a Teaming Agreement”). On April 4, 2011 OVC replied to
SBA, “explaining that JOG is a publicly held large business,” Compl. ¶ 28, but
“reiterat[ing] that [OVC], a small business, would be the manufacturer of the end-item,”
Compl. ¶ 29. On April 6, 2011 SBA “found OVC to be other than small for the particular
procurement” at issue. Compl. ¶ 30.
SBA regulations provide that a party who wishes to appeal an SBA determination
to SBA’s Office of Hearings and Appeals (OHA) must do so within fifteen days of
receipt of the determination. Revised Size Protest Appeal Procedures, 76 Fed. Reg. 5680,
5685 (Feb. 2, 2011) (to be codified at 13 C.F.R. § 134.304(a)). Because OVC received
the determination on April 6, 2011, 3 see Compl. ¶ 34, OVC was required to file its appeal
with OHA by April 21, 2011, see 76 Fed. Reg. at 5685.
On April 21, 2011 counsel for OVC attempted to file OVC’s appeal with OHA
electronically by email, as provided in OHA’s regulations. Compl. ¶¶ 35, 36. Because
OVC’s appeal petition was larger than the maximum file size allowed by SBA, the email
was returned. Compl. ¶ 37. Counsel for OVC then divided the appeal petition into three
parts and sent them separately. Compl. ¶ 38. On April 25, 2011 OVC’s counsel called
OHA and was informed that OHA had not received the appeal petition. Compl. ¶ 40.
OVC’s counsel attempted to re-send the appeal petition by email, but OHA did not
receive OVC’s emails. Compl. ¶¶ 41, 42. OVC’s counsel then sent a paper copy of the
appeal petition to OHA by overnight delivery. Compl. ¶ 44.
On April 29, 2011 OVC’s counsel received an Order to Show Cause by email
from OHA directing OVC to show cause why the appeal petition should not be dismissed
as untimely. Compl. ¶ 45. OVC replied to this order on May 6, 2011. Compl. ¶ 46. On
May 17, 2011 OHA dismissed the appeal as untimely filed. Compl. ¶ 47.
On May 18, 2011 OVC requested that SBA reopen the OVC size determination
based upon administrative error, pursuant to 13 C.F.R. § 121.1009(h), citing SBA’s
failure to inform OVC that SBA was considering the ostensible subcontractor rule.
Compl. ¶ 48 (citation omitted). On June 1, 2011 SBA denied the request to reopen the
OVC size determination, finding that under the version of 13 C.F.R. § 121.1009(h) that
took effect on March 4, 2011--two days after the size protest was filed against OVC at
SBA--requests to reopen the determination must be filed within fifteen days after receipt
of the determination. Compl. ¶ 49. Because OVC received the size determination on
April 6, 2011, see Compl. ¶ 34, but had failed to request that SBA reopen the
Plaintiff does not state expressly the date on which it received the size determination
from the Small Business Administration (SBA). See Compl. for Declaratory and Injunctive
Relief (Complaint or Compl.), Dkt. No. 1, passim; Pl.’s Opp’n to Def.’s Mot. to Dismiss
(plaintiff’s Response or Pl.’s Resp.), Dkt. No. 13, passim. However, plaintiff’s receipt of the
size determination on April 6, 2011 is a necessary inference from other facts stated in its
Complaint. See Compl. ¶ 34 (“Pursuant to SBA Regulation, i.e., 13 CFR § 134.304, OVC had
fifteen (15) days to appeal [SBA’s size determination] to the OHA; April 21, 2011 was the 15[th]
day.” (emphasis omitted)). Plaintiff also filed with its Complaint a copy of a facsimile it
received from SBA, dated April 6, 2011, containing the size determination. See Decl. [of J.C.
Egnew] Under Penalty of Perjury, Dkt. No. 6, Ex. H (facsimile from SBA) at 1-11. OVC
received the decision the same day it was made. See Compl. ¶ 30 (stating that SBA made the
size determination on April 6, 2011). Plaintiff does not argue that receipt of the size
determination by facsimile was insufficient to begin the running of the appeal period. See
Compl. passim; Pl.’s Resp. passim.
determination on or before April 21, 2011, SBA found that OVC’s request to reopen was
untimely. See Compl. ¶ 49; see also Decl. [of Marc Lamer] Under Penalty of Perjury,
Dkt. No. 5, Ex. N (Letter from SBA denying request to reopen) at 2-3.
On June 3, 2011 OVC filed its Complaint in this court. OVC requests that the
court “declare that any termination of the contract award to OVC without a reopening of
the [s]ize [d]etermination by [SBA] pursuant to 13 C.F.R. § 121.1009(b) would be
arbitrary and capricious.” Compl. ¶ 55. OVC further requests that the court “enjoin
defendant from terminating the award to OVC and direct[ ] that [SBA] reopen the OVC
[s]ize [d]etermination.” Compl. 11. 4
Defendant moves to dismiss under RCFC 12(b)(1) and RCFC 12(b)(6). Def.’s
Motions to Dismiss Under RCFC 12(b)(1)
Subject matter jurisdiction is a threshold matter that a court must determine at the
outset of a case. Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94-95 (1998); see
PODS, Inc. v. Porta Stor, Inc., 484 F.3d 1359, 1365 (Fed. Cir. 2007). “A party seeking
the exercise of jurisdiction in its favor bears the burden of establishing that such
jurisdiction exists.” Mars Inc. v. Kabushiki-Kaisha Nippon Conlux, 24 F.3d 1368, 1372
(Fed. Cir. 1994) (citing KVOS, Inc. v. Associated Press, 299 U.S. 269, 278 (1936)). The
court must accept as true all undisputed allegations of fact made by the non-moving party
and draw all reasonable inferences from those facts in the non-moving party’s favor.
Henke v. United States, 60 F.3d 795, 797 (Fed. Cir. 1995) (citing Scheuer v. Rhodes, 416
U.S. 232, 236-37 (1974)). However, “[w]hen a party challenges the jurisdictional facts
alleged in the complaint, the court may consider relevant evidence outside the pleadings
to resolve the factual dispute.” Arakaki v. United States, 62 Fed. Cl. 244, 247 (2004)
(citing Reynolds v. Army & Air Force Exch. Serv., 846 F.2d 746, 747 (Fed. Cir. 1988)
and Indium Corp. of Am. v. Semi-Alloys, Inc., 781 F.2d 879, 884 (Fed. Cir. 1985)); 2
James Wm. Moore et al., Moore’s Federal Practice § 12.30 (2011) (“[U]nlike a Rule
In plaintiff’s Response, at 4, plaintiff restates the relief it is seeking:
The nature of Plaintiff’s claim is two-fold. First, there is the issue of how DLA[ ]
(the contracting agency) applies the size determination. In other words, which
version of 13 C.F.R. § 121.1009(g) is applicable to the instant situation, i.e., the
version that took effect on March 4, 2011 and required cancellation (see[ ] (g)(2)),
or the version that was in effect on March 2 which did not. Secondly, Plaintiff is
challenging the refusal of [SBA] to exercise its discretion and reopen the size
determination under the version of § 121.1009(h) in effect on the date the size
protest was filed.
12(b)(6) dismissal, the court need not confine its evaluation to the face of the pleadings . .
. .”). If a court determines that it does not have jurisdiction, it must dismiss the claim.
“Standing is a threshold jurisdictional issue that implicates Article III of the
Constitution.” Hoopa Valley Tribe v. United States (Hoopa), 597 F.3d 1278, 1283 (Fed.
Cir. 2010) (quoting S. Cal. Fed. Sav. & Loan Ass’n v. United States, 422 F.3d 1319,
1328 (Fed. Cir. 2005)). The party invoking the court’s jurisdiction bears the burden of
establishing that it has standing. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561
(1992) (citations omitted). “‘[T]he irreducible constitutional minimum of standing
contains three elements:’ injury in fact, causation, and redressability.” Hoopa, 597 F.3d
at 1283 (quoting Lujan, 504 U.S. at 560-61).
In bid protests, the question of standing is framed by 28 U.S.C. § 1491(b)(1)
(2006), which “imposes more stringent standing requirements than Article III.” Weeks
Marine, Inc. v. United States (Weeks Marine), 575 F.3d 1352, 1369 (Fed. Cir. 2009)
(citing American Federation of Government Employees v. United States (AFGE), 258
F.3d 1294, 1302 (Fed. Cir. 2001)). Specifically, § 1491(b)(1) “confers standing on ‘an
interested party objecting to a solicitation by a Federal agency.’” AFGE, 258 F.3d at
1299 (quoting 28 U.S.C. § 1491(b)(1)). The term “interested party” encompasses “actual
or prospective bidders or offerors whose direct economic interest would be affected by
the award of the contract or by failure to award the contract.” Id. at 1302.
Motions to Dismiss Under RCFC 12(b)(6)
RCFC 12(b)(6) governs motions to dismiss for “failure to state a claim upon
which relief can be granted.” RCFC 12(b)(6). “To survive a motion to dismiss, a
complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to
relief that is plausible on its face.’” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009)
(quoting Bell Atl. Corp. v. Twombly (Twombly), 550 U.S. 544, 570 (2007)). “A claim
has facial plausibility when the pleaded factual content allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing
Twombly, 550 U.S. at 556).
In determining whether it should grant a 12(b)(6) motion, the court “must accept
as true all the factual allegations in the complaint” and make “all reasonable inferences in
favor of the non-movant.” Sommers Oil Co. v. United States, 241 F.3d 1375, 1378 (Fed.
Cir. 2001) (internal citations omitted). However, “the tenet that a court must accept as
true all of the allegations contained in a complaint is inapplicable to legal conclusions.”
Iqbal, 129 S. Ct. at 1949. “Threadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice.” Id. (citing Twombly, 550 U.S.
The purpose of Rule 12(b)(6) “is to allow the court to eliminate actions that are
fatally flawed in their legal premises and destined to fail, and thus to spare litigants the
burdens of unnecessary pretrial and trial activity.” Advanced Cardiovascular Sys., Inc. v.
SciMed Life Sys., Inc., 988 F.2d 1157, 1160 (Fed. Cir. 1993) (citing Neitzke v. Williams,
490 U.S. 319, 326-27 (1989)). A failure to state a claim upon which relief can be granted
warrants a judgment on the merits rather than a dismissal for lack of jurisdiction. Gould,
Inc. v. United States, 67 F.3d 925, 929 (Fed. Cir. 1995).
Violations of Statute or Regulation in Connection with a Procurement
The Tucker Act, as amended by the Administrative Dispute Resolution Act
(ADRA), 28 U.S.C. § 1491(b)(1) (2006), confers jurisdiction on this court
to render judgment on an action by an interested party objecting to a
solicitation by a Federal agency for bids or proposals for a proposed
contract or to a proposed award or the award of a contract or any alleged
violation of statute or regulation in connection with a procurement or a
28 U.S.C. § 1491(b)(1). The court reviews a bid protest action under the standards set
out in the Administrative Procedure Act (APA), 5 U.S.C. § 706 (2006). 28 U.S.C.
§ 1491(b)(4); NVT Techs., Inc. v. United States, 370 F.3d 1153, 1159 (Fed. Cir. 2004).
Under the APA standard of review, as applied in Scanwell Labs., Inc. v. Shaffer,
424 F.2d 859 (D.C. Cir. 1970), and now under the ADRA, “a bid award may be set aside
if either (1) the procurement official’s decision lacked a rational basis; or (2) the
procurement procedure involved a violation of regulation or procedure.” Banknote Corp.
of Am. v. United States, 365 F.3d 1345, 1351 (Fed. Cir. 2004) (quoting Impresa
Construzioni Geom. Domenico Garufi v. United States (Impresa), 238 F.3d 1324, 1332
(Fed. Cir. 2001)). Challenges to decisions on the basis of a violation of a regulation or
procedure “must show a clear and prejudicial violation of applicable statutes or
regulations.” Impresa, 238 F.3d at 1333 (internal quotation marks and citation omitted).
OVC Lacks Standing to Bring this Bid Protest
Defendant offers two reasons why OVC lacks standing to bring this bid protest.
First, defendant argues that, as the awardee in this procurement, OVC lacks standing to
bring a bid protest. Def.’s Mot. 4-5. Second, defendant argues that OVC has not alleged
“the kind of ‘actual or imminent’ harm that is necessary for Article III standing.” Def.’s
Mot. 5 (quoting Weeks Marine, 575 F.3d at 1372-73). The implication of both of
defendant’s standing arguments is that an awardee, such as OVC, that faces the potential
termination of its contract must wait for the government to take concrete action before it
may sue. If the government terminates OVC’s contract, OVC may bring a claim under
the CDA. Def.’s Mot. 5. If the government then awards the contract to a different
bidder, OVC may protest the new award. Def.’s Mot. 5. Because the government has
not done either, defendant argues, plaintiff lacks standing. Def.’s Mot. 5. For the reasons
stated below, the court agrees that OVC lacks standing to bring this protest.
As the Awardee, OVC Is Not an Interested Party
The United States Court of Appeals for the Federal Circuit (Federal Circuit) has
held that the term “interested party” encompasses “actual or prospective bidders or
offerors whose direct economic interest would be affected by the award of the contract or
by failure to award the contract.” AFGE, 258 F.3d at 1302. Once a bidder has received a
contract, it is no longer an actual or prospective bidder or offeror with regard to the
particular procurement. Instead, the bidder has become an awardee, who is not an
interested party for purposes of 28 U.S.C. § 1491(b)(1) and therefore lacks standing to
bring a bid protest to protect its award. See, e.g., Ingersoll-Rand Co. v. United States,
780 F.2d 74, 79 (D.C. Cir. 1985) (“[Plaintiff] is not a disappointed bidder who seeks to
void the award of a contract to another; instead, it complains of wrongful termination of
its own contract with the government.” (citation omitted)); Taylor Consultants v. United
States, 90 Fed. Cl. 531, 545 (2009) (dismissing bid protest claims concerning bad faith
termination of the plaintiff’s contract); ABF Freight Sys., Inc. v. United States, 55 Fed.
Cl. 392, 397 (2003) (“The court does not see how a plaintiff asserting claims pertaining
to a contract it has made with the government could be a ‘disappointed bidder’ for bid
protest purposes.” (citation omitted)); Davis/HRGM Joint Venture v. United States, 50
Fed. Cl. 539, 545 (2001) (“Here, Plaintiff clearly challenges the termination of its
contract. Plaintiff’s characterization of the contracting officer’s decision to terminate the
contract as violating regulations or irrational and arbitrary does not bring the claim within
this Court’s bid protest jurisdiction.”).
Contract awardees such as OVC must instead bring contract claims pursuant to the
Contract Disputes Act of 1978 (CDA), Act of Jan. 4, 2011, Pub. L. No. 111-350, §§
7101-09, 124 Stat. 3677, 3816-26. 5 See CDA § 7103(g) (stating that a contracting
officer’s decision on a claim is “not subject to review by any forum, tribunal, or Federal
Government agency” except as provided by the CDA); Dalton v. Sherwood Van Lines,
Inc., 50 F.3d 1014, 1017 (Fed. Cir. 1995) (“When the Contract Disputes Act applies, it
provides the exclusive mechanism for dispute resolution; the Contract Disputes Act was
not designed to serve as an alternative administrative remedy, available at the
Congress recently reorganized the title of the United States Code that contains the
Contract Disputes Act (CDA). See Act of Jan. 4, 2011, Pub. L. No. 111-350, 124 Stat. 3677.
Although the reorganization makes no substantive changes to the CDA for the purposes of this
case, it does relocate the provisions of the CDA from 41 U.S.C. §§ 601-13 (2006) to 41 U.S.C.
§§ 7101-09. See id. §§ 7101-09.
contractor’s option.” (citations omitted)); Cecile Indus., Inc. v. Cheney, 995 F.2d 1052,
1055 (Fed. Cir. 1993) (“The CDA exclusively governs Government contracts and
Government contract disputes.”) (citing Cascade Pac. Int’l v. United States, 773 F.2d
287, 296 (Fed. Cir. 1985); Gov’t Tech. Servs. LLC v. United States, 90 Fed. Cl. 522, 527
(2009) (“The Federal Circuit has made it crystal clear that the CDA is the ‘exclusive
mechanism’ for the resolution of disputes arising, as here, in contract management.”)
(citing Dalton, 50 F.3d at 1017).
“[P]ure contract claims are not appropriate in a bid protest, even if clothed in the
guise of a protest of an alleged statutory violation occurring in relation to a procurement.”
Frazier v. United States, 79 Fed. Cl. 148, 160 (2007) (citation omitted); see also Data
Monitor Sys., Inc. v. United States, 74 Fed. Cl. 66, 72 (2006) (rejecting the proposition
that “a claim redressable under the CDA may be refocused as a claim for injunctive relief
under the court’s bid protest jurisdiction”).
Plaintiff contends that “several decisions of this Court have held that a contract
awardee . . . can invoke the Court’s bid protest jurisdiction by contending that
cancellation of its contract would be arbitrary and capricious.” Pl.’s Resp. 1. The cases
cited by plaintiff, however, are inapplicable to plaintiff’s post-award bid protest.
“This Court has held that where a plaintiff, as the contract awardee, files a protest
challenging an agency’s decision to resolicit a proposal, the plaintiff’s protest is in the
nature of a pre-award claim.” Ceres Gulf, Inc. v. United States, 94 Fed. Cl. 303, 315
(2010) (internal quotations omitted). In each of the cases cited by plaintiff, this court
found that contract awardees had standing to bring pre-award bid protests because the
government resolicited or began to resolicit the contract. See Jacobs Tech., Inc. v. United
States, No. 11-180 C, 2011 WL 2044581, at *6 (Fed. Cl. May 26, 2011) (“In this case,
the ‘stay’ of the award to Jacobs and the resolicitation under different terms is a de facto
rescission of the award to Jacobs . . . .”); Centech Grp., Inc. v. United States, 78 Fed. Cl.
496, 504 (2007) (“Because Centech was stripped of its status as the successful awardee
de facto and relegated to competing anew, it does not remain the successful awardee.”); 6
Turner Constr. Co. v. United States, 94 Fed. Cl. 561, 585 (2010) (“Turner has been
stripped of a $300 million contract and been barred from competing in the re6
The court’s decision in Centech Grp., Inc. v. United States, 78 Fed. Cl. 496, 498 (2007)
addressed two motions to dismiss. In a later decision, the court largely denied the plaintiff’s
claims. See Centech Grp., Inc. v. United States, 79 Fed. Cl. 562, 577-78 (2007). On appeal, the
United States Court of Appeals for the Federal Circuit (Federal Circuit) did not address the issue
of standing. See Centech Grp., Inc. v. United States (Centech), 554 F.3d 1029 passim (Fed. Cir.
2009). The Federal Circuit “must always determine for itself whether it has jurisdiction to hear
the case before it, even when the parties do not raise or contest the issue.” Avid Identification
Sys., Inc. v. Crystal Import Corp., 603 F.3d 967, 971 (Fed. Cir. 2010) (citations omitted). The
Federal Circuit did not question plaintiff’s standing in its Centech opinion. See Centech, 554
procurement of that contract.”); Sheridan Corp. v. United States, 95 Fed. Cl. 141, 149
(2010) (“Indeed, it is difficult to imagine a party that is more economically interested
than Sheridan who, having been selected and awarded the contract, would have to wait to
receive the Government’s new decision following the resolicitation of proposals.”).
In this case, OVC’s award has been stayed, see Oral Argument, Argument of Mr.
Marc Lamer at 2:14:34-48 (stating that DLA has not lifted the automatic stay that began
when Diamond filed its protest at GAO), but OVC does not allege that the government
has resolicited the contract or that it intends to do so, see Compl. passim; see also Pl.’s
Resp. 3 n.1 (“Plaintiff would point out that it will not be able to compete for the award as
there will be no re-solicitation in this case.”). Because there has been no resolicitation-as there was in the cases cited by plaintiff--OVC’s protest is not in the nature of a preaward claim. Therefore, OVC has failed to establish that it is an interested party with
standing to bring this bid protest. See AFGE, 258 F.3d at 1299 (stating that standing to
bring bid protests is limited to interested parties) (citation omitted); see also Lujan, 504
U.S. at 561 (stating that the party invoking the court’s jurisdiction bears the burden of
establishing that it has standing) (citations omitted).
OVC Alleges a Conjectural or Hypothetical Harm
Defendant argues that OVC lacks standing because OVC “merely speculates what
the agency will do in response to SBA’s determination,” rather than establishing “the
kind of ‘actual or imminent’ harm that is necessary for Article III standing.” Def.’s Mot.
5 (quoting Weeks Marine, 575 F.3d at 1372-73). 7
To establish that it has standing, OVC must demonstrate “an invasion of a legally
protected interest which is (a) concrete and particularized, and (b) actual or imminent, not
conjectural or hypothetical.” Lujan, 504 U.S. at 560 (footnote, citations and quotation
marks omitted). OVC does not allege that the government has terminated its award or
resolicited the contract. See Compl. passim; Pl.’s Resp. 3 n.1 (“Plaintiff would point out
that it will not be able to compete for the award as there will be no re-solicitation in this
case.”). Rather, OVC alleges that “[b]ecause [SBA’s] [s]ize [d]etermination was as a
result of a GAO Protest . . . DLA[ ] may now be required to terminate the award to
OVC.” Compl. ¶ 54 (citation omitted) (emphasis added). A harm that OVC itself
describes as something that “may” occur is neither concrete and particularized nor actual
or imminent. See Lujan, 504 U.S. at 560 (citations omitted). Therefore, the court agrees
In the alternative, defendant states, without analysis, “the case is not ripe for review.”
Def.’s Mot. to Dismiss (Def.’s Mot.), Dkt. No. 12, at 6 (citing Ryan v. United States, 71 Fed. Cl.
740, 743 (2006)); see also Def.’s Reply in Support of Mot. to Dismiss, Dkt. No. 15, at 4 (“In any
event, the agency has not terminated the contract.”) (citing Madison Servs., Inc. v. United States,
90 Fed. Cl. 673, 679 (2009)). Because the court agrees with defendant’s argument that plaintiff
lacks standing to bring this bid protest, the court does not reach the ripeness issue.
with defendant that OVC has alleged a harm that is conjectural or hypothetical and that
does not confer upon OVC standing to bring this bid protest.
The Court Lacks Jurisdiction to Review SBA’s Decision Not to Reopen
Defendant argues that “[t]he [c]ourt also lacks jurisdiction to entertain OVC’s
claim because SBA’s decision whether to reopen a size determination is committed to
agency discretion.” Def.’s Mot. 7. The court agrees and finds that, because the decision
whether to reopen a size determination is in SBA’s sole discretion, and because there are
no guidelines for SBA to follow, the court lacks jurisdiction to review SBA’s decision.
Defendant states that “[t]he United States Supreme Court [(Supreme Court)] has
explained that an action is committed to agency discretion if the underlying regulations
upon which that action is based are ‘drawn so that a court would have no meaningful
standard against which to judge the agency’s exercise of discretion.’” Def.’s Mot. 7
(quoting Heckler v. Chaney, 470 U.S. 821, 830 (1985)). Defendant argues that the
regulation governing the reopening of size determinations allows SBA to determine “in
its sole discretion” whether to reopen a size determination and offers no factors for SBA
to consider. Def.’s Mot. 7-8 (citations omitted). Plaintiff responds that “it is well-settled
that even where a matter is committed to agency discretion, this [c]ourt may act where
the discretion is abused.” Pl.’s Resp. 6 (citations omitted).
When deciding a bid protest, the court reviews an agency decision under the
standards set out in the APA. 28 U.S.C. § 1491(b)(4) (“In any action under this
subsection, the courts shall review the agency’s decision pursuant to the standards set
forth in section 706 of title 5.”); NVT Techs., 370 F.3d at 1159. The APA precludes
judicial review to the extent that “agency action is committed to agency discretion by
law.” 5 U.S.C. § 701(a)(2). Therefore, if the decision whether to reopen a size
determination is “committed to agency discretion by law,” id., the decision is
“presumptively unreviewable” under the APA, Heckler, 470 U.S. at 832; see also Salmon
Spawning & Recovery Alliance v. U.S. Customs and Border Prot., 550 F.3d 1121, 112829 (Fed. Cir. 2008) (stating that 5 U.S.C. § 701(a)(2) precludes judicial review under the
APA when agency action is committed to agency discretion by law) (citations omitted).
The presumption of unreviewability may be rebutted only by a showing that “the
substantive statute has provided guidelines for the agency to follow in exercising its
enforcement powers.” 8 Heckler, 470 U.S. at 832-33.
Applying Heckler, the Supreme Court has held that “where a party petitions an
agency for reconsideration on the ground of ‘material error,’ i.e., on the same record that
The United States Supreme Court “express[ed] no opinion” on whether a decision by an
agency not to institute proceedings based on the agency’s belief that it lacked jurisdiction is
reviewable under 5 U.S.C. § 701(a)(2). Heckler v. Chaney, 470 U.S. 821, 833 n.4 (1985).
was before the agency when it rendered its original decision, ‘an order which merely
denies rehearing of . . . [the prior] order is not itself reviewable.’” Interstate Commerce
Comm’n v. Brotherhood of Locomotive Engineers (Locomotive Engineers), 482 U.S.
270, 280 (1987) (alteration in original) (quoting Microwave Commc’ns, Inc. v. Fed.
Commc’ns Cmm’n, 515 F.2d 385, 387 n.7 (D.C. Cir. 1974)); see also Your Home
Visiting Nurse Servs., Inc. v. Shalala, 525 U.S. 449, 457 (1999) (characterizing the
holding of Locomotive Engineers as: “the decision whether to reopen, at least where no
new evidence is at issue, is ‘committed to agency discretion by law’ within the meaning
of the Administrative Procedure Act, and hence unreviewable”) (quoting Locomotive
Engineers, 482 U.S. at 282) (internal quotation marks omitted).
The regulation at issue here provides no indication that the holding of Locomotive
Engineers does not apply:
(h) Limited reopening of size determinations. SBA may, in its sole
discretion, reopen a formal size determination to correct an error or
mistake, provided it is within the appeal period and no appeal has been filed
with OHA. Once the agency has issued a final decision (either a formal
size determination that is not timely appealed or an appellate decision),
SBA cannot re-open the size determination.
76 Fed. Reg. at 5683 (to be codified at 13 C.F.R. § 121.1009(h)) (second emphasis
added). The regulation grants SBA sole discretion to decide whether to reopen a size
determination and provides no guidelines for SBA to follow. See id.
An otherwise unreviewable agency decision does not become reviewable merely
because the agency states a “reviewable” reason for its decision. In Locomotive
Engineers, the Supreme Court, drawing an analogy to prosecutorial discretion, noted that
a prosecutor may exercise his or her discretion not to prosecute a particular violation
based on a belief that the law will not support a conviction. Locomotive Engineers, 482
U.S. at 283. “That is surely an eminently ‘reviewable’ proposition, in the sense that
courts are well qualified to consider the point; yet it is entirely clear that the refusal to
prosecute cannot be the subject of judicial review.” Id. Here, SBA stated that it would
not reopen the size determination because it was barred from doing so under either
version of 13 C.F.R. § 121.1009(h). Compl. ¶¶ 49-50. Although SBA stated this
“reviewable reason” for its decision, see Locomotive Engineers, 482 U.S. at 283, the
decision not to reopen is committed to agency discretion and is not subject to judicial
review, see id. at 280. 9 The court lacks jurisdiction to review SBA’s decision not to
The regulation governing the reopening of size appeals prohibits SBA from granting
untimely requests to reopen. See Revised Size Protest Appeal Procedures, 76 Fed. Reg. 5680,
5683 (Feb. 2, 2011) (to be codified at 13 C.F.R. § 121.1009(h)) (stating that SBA may “in its
sole discretion” reopen a size determination “provided it is within the appeal period and no
appeal has been filed with OHA”). This case does not present the question of whether the court
reopen the size determination. 10 See Locomotive Engineers, 482 U.S. at 282; Heckler,
470 U.S. at 832. 11
OVC Has Failed to State a Claim Upon Which Relief May be Granted
The court has determined that it lacks jurisdiction to hear plaintiff’s claims. See
supra Parts III.A-B; see also Steel Co., 523 U.S. at 94 (“Without jurisdiction the court
cannot proceed at all in any cause. Jurisdiction is power to declare the law, and when it
ceases to exist, the only function remaining to the court is that of announcing the fact and
dismissing the cause.”) (quoting Ex Parte McCardle, 74 U.S. (7 Wall) 506, 514 (1868)).
For purposes of judicial economy and efficiency, however, given the possibility that the
court’s view of its jurisdiction might not prove persuasive to a reviewing court, the court
addresses defendant’s argument that plaintiff has failed to state a claim upon relief can be
granted with regard to SBA’s decision not to reopen.
Plaintiff requests “that the [c]ourt declare that any termination of the contract
award to OVC without a reopening of the [s]ize [d]etermination by SBA” would be a
violation of statute or regulation in connection with a procurement. 12 Compl. 10.
has jurisdiction to review a decision by SBA to grant an untimely request to reopen a size
determination despite the proviso barring SBA from doing so.
Defendant argues that plaintiff failed to exhaust its administrative remedies before
seeking judicial review of SBA’s decision not to reopen the size determination. See Def.’s Mot.
1, 6-7. Because the court has determined that it lacks jurisdiction to review SBA’s decision not
to reopen, this argument is moot.
Defendant argues that, in the alternative, the lack of “factors or restrictions against
which the [c]ourt can measure SBA’s decision not to reopen the formal size determination”
makes the decision nonjusticiable. Def.’s Mot. 9. Justiciability is a ground of dismissal distinct
from jurisdiction and concerns “whether the duty asserted can be judicially identified and its
breach judicially determined, and whether protection for the right asserted can be judicially
molded.” Baker v. Carr, 369 U.S. 186, 198 (1962). Because the court finds that it lacks
jurisdiction to review the refusal to reopen, it does not reach the question of whether the decision
was also nonjusticiable.
Although plaintiff requests that the court declare that a decision by the contracting
officer to terminate the contract without SBA having first reopened the size determination would
be arbitrary and capricious, Compl. for Declaratory and Injunctive Relief (Compl.), Dkt. No. 1,
at 10, the court understands plaintiff’s argument to be that the decision not to reopen the size
determination was a “violation of statute or regulation in connection with a procurement,” 28
U.S.C. § 1491(b)(1). The focus of plaintiff’s argument is that SBA applied the incorrect version
of the regulation governing reopening of size determinations and that SBA misinterpreted both
versions of the regulation. Pl.’s Resp. 4-6. Plaintiff does not argue that the contracting officer’s
reliance on an SBA size determination would be arbitrary or capricious. See id.
Defendant contends that OVC has “failed to state a claim because, under the applicable
regulation, SBA was required to deny OVC’s request to reopen SBA’s size determination
as untimely.” Def.’s Mot. 1. The court agrees with defendant that SBA was required to
deny OVC’s request to reopen the size determination.
SBA is authorized to reopen size determinations by 13 C.F.R. § 121.1009(h).
While the size protest against OVC was underway at SBA, a final rule went into effect
that changed the time period within which a request to reopen may be filed. See 76 Fed.
Reg. at 5680. On March 2, 2011, when OVC was notified that a size protest had been
filed, Compl. ¶ 19, the version of 13 C.F.R. § 121.1009(h) in effect stated as follows:
(h) Limited reopening of size determinations. In cases where the size
determination contains clear administrative error or a clear mistake of fact,
SBA may, in its sole discretion, reopen the size determination to correct the
error or mistake, provided no appeal has been filed with OHA.
13 C.F.R. § 121.1009(h) (2011). However, a final rule containing the following amended
version of 13 C.F.R. § 121.1009(h) took effect on March 4, 2011:
(h) Limited reopening of size determinations. SBA may, in its sole
discretion, reopen a formal size determination to correct an error or
mistake, provided it is within the appeal period and no appeal has been filed
with OHA. Once the agency has issued a final decision (either a formal
size determination that is not timely appealed or an appellate decision),
SBA cannot re-open the size determination.
76 Fed. Reg. at 5683.
Defendant argues that, because OVC requested that SBA reopen its size
determination on May 18, 2011--well after the appeal period had ended on April 21,
2011--SBA was required under the new version of 13 C.F.R. § 121.1009(h) to deny the
request as untimely. Def.’s Mot. 9-10. Therefore, defendant contends, SBA did not
violate its regulations. Def.’s Mot. 10.
Plaintiff responds that “regulatory changes that affect substantive rights are only
effective for solicitations issued after they become effective and regulatory changes that
are procedural in nature are only effective for proceedings commenced after their
effective date.” Pl.’s Resp. 5 (emphasis omitted). Plaintiff cites GASL, Inc., SBA No.
SIZ-4191 (June 20, 1996), for the proposition that regulatory changes affecting procedure
affect only proceedings filed after their effective date. In GASL, OHA stated:
SBA recently has revised its size and SIC regulations, and the procedural
regulations for this Office. See 13 C.F.R. Parts 121 and 134 (1996). The
revised procedural regulations are effective for all cases filed with this
Office after March 1, 1996. 61 Fed. Reg. 2682 (January 29, 1996). The
appeal therefore is timely under the new regulations. 13 C.F.R. Section
GASL, SBA No. SIZ-4191. Plaintiff argues that, pursuant to GASL, the earlier version
of the regulation was in effect when plaintiff filed its request to reopen the size
determination. Pl.’s Resp. 5-6. Because the earlier version of the regulation did not
require requests to reopen to be filed within the appeal period, plaintiff argues, SBA
abused its discretion in refusing to reopen the size determination. See Pl.’s Resp. 5-6.
However, regardless of which version of 13 C.F.R. § 121.1009(h) applied,
plaintiff’s request to reopen the size determination would have been untimely. The letter
OVC received from SBA denying OVC’s request to reopen the size determination
“asserted that the request for reopening would have been denied under the prior version
of 13 [C.F.R.] § 121.1009(h), which did not set any time limit for reopening, because that
version stated that a size determination could be reopened provided no appeal had been
filed with the OHA[,] and OVC had filed an appeal with the OHA (i.e., the untimely
appeal that OHA had dismissed).” Compl. ¶ 50.
Moreover, the court finds that the new version of 13 C.F.R. § 121.1009(h) was
properly applied to plaintiff’s request to reopen the size determination. The Federal
Register notice at issue in GASL clearly stated that “[t]his rule is effective February 28,
1996. This rule applies with respect to all cases filed with OHA on or after February 28,
1996.” 13 Rules of Procedure Governing Cases Before the Office of Hearings and
Appeals, 61 Fed. Reg. 2682 (Jan. 29, 1996). In contrast, the Federal Register notice at
issue in this case simply states: “Effective date: March 4, 2011.” 76 Fed. Reg. at 5680.
The Federal Register notice provides that certain amendments to the regulations apply
only to solicitations issued on or after March 4, 2011, but the amendments to 13 C.F.R. §
121.1009 are not among those amendments. See id. (“Applicability date: The
amendments to 13 CFR 121.402(b), 121.404(a), and 121.407 apply to solicitations issued
on or after March 4, 2011.”). Therefore, the Federal Register provides that the
amendment to 13 C.F.R. § 121.1009(h) became effective on March 4, 2011. The Federal
Register provision relied upon by OVC in GASL shows that SBA “knows how to draft a
Federal Register notice such that the new regulations only apply to cases filed with OHA
after a certain time.” Def.’s Reply 9. SBA opted not to do so here.
The Office of Hearings and Appeals did not explain the discrepancy between the
effective date cited in its opinion and in the Federal Register notice. Compare GASL, Inc., SBA
No. SIZ-4191 (June 20, 1996) (stating, without explanation, that the revised regulations were
effective for all cases filed after March 1, 1996), with Rules of Procedure Governing Cases
Before the Office of Hearings and Appeals, 61 Fed. Reg. 2682 (Jan. 29, 1996) (“This rule applies
with respect to all cases filed with OHA on or after February 28, 1996.”).
Plaintiff contended at oral argument that, because there is a presumption against
applying a newly-enacted law or regulation retroactively, SBA was incorrect to apply the
amended regulations to plaintiff’s request to reopen. See Oral Argument, Argument of
Mr. Larc Lamer at 2:29:50-2:30:02 (quoting CCA Assocs. v. United States, 91 Fed. Cl.
580, 596 (2010)). In CCA Associates, the United States Court of Federal Claims (Court
of Federal Claims) stated that “[r]etroactive application of a law or regulation is generally
disfavored and usually requires an express Congressional statement that a law or
regulation is intended to apply retroactively.” CCA Assocs., 91 Fed. Cl. at 596 (citations
Plaintiff’s reliance upon CCA Associates, however, is misplaced because SBA’s
application of the new regulations was not retroactive. “The inquiry into whether a
statute operates retroactively demands a commonsense, functional judgment about
whether the new provision attaches new legal consequences to events completed before
its enactment.” Immigration & Naturalization Serv. v. St. Cyr, 533 U.S. 289, 321 (2001)
(internal quotations omitted).
OVC received the size determination on April 6, 2011. See Compl. ¶ 34; supra
note 3. Therefore, the first date that OVC could have requested that SBA reopen its size
determination was April 6, 2011. The amended regulations became effective more than
one month earlier, on March 4, 2011. See 76 Fed. Reg. at 5680. Because the regulations
were already in effect--and had been for a month--on the date plaintiff could first file its
request for reconsideration, their effect on plaintiff’s case was prospective; the
regulations did not attach “new legal consequences to events completed before” their
effective date. See St. Cyr, 533 U.S. at 321. The effect of the new procedures was not
retroactive merely because the size protest was pending when the new procedures went
The court also notes that when there is a change in the procedural rules of the
Court of Federal Claims or the United States district courts, the new rule is applied to
pending cases unless doing so is infeasible or unjust. Rule 86 of the Federal Rules of
Civil Procedure states:
(a) These rules and any amendments take effect at the time specified by the
Supreme Court . . . . They govern:
(1) proceedings in an action commenced after their effective date;
(2) proceedings after that date in an action then pending unless:
(A) the Supreme Court specifies otherwise; or
(B) the court determines that applying them in a particular
action would be infeasible or work an injustice.
Fed. R. Civ. Proc. 86(a). Similarly, RCFC 86 was rewritten in 2006 “to clarify the rule’s
essential purpose: that amendments to the court’s rules apply to all pending proceedings
unless the application of such amendments would not be feasible or would work
injustice.” RCFC 86 Rules Committee Note (2006). It does not appear to the court to be
infeasible or unjust for SBA to apply the procedures that became effective on March 4,
2011 to a request to reopen an April 6, 2011 size determination. SBA’s decision to do so
was consistent with the manner in which a federal district court or the Court of Federal
Claims would apply a change in its own procedural rules.
Because OVC filed its request to reopen the size determination after filing an
appeal and after the close of the appeal period, SBA did not violate the applicable
regulation when it denied OVC’s request. Based on the allegations in the Complaint,
plaintiff has failed to state a claim regarding SBA’s actions upon which relief can be
granted. See RCFC 12(b)(6).
The Court Does Not Reach the Issue of the Relief Available to OVC
Because the court has determined that it lacks jurisdiction to hear plaintiff’s
claims, the court does not reach the issue of what relief might otherwise be available to
plaintiff. Compare Compl. 11 (“Plaintiff Outdoor Venture Corp. respectfully requests
that the [c]ourt enjoin defendant from terminating the award to OVC . . . .”), with Def.’s
Mot. 10 (arguing that “the [c]ourt cannot enjoin DLA from terminating the contract at
issue for convenience”), and Oral Argument, Argument of Mr. Marc Lamer at 2:14:522:15:01 (“I would agree . . . . The court could not enjoin a termination. The court could
enjoin an award to anybody else.”).
Because the court determines that plaintiff lacks standing to bring this bid protest,
and because SBA’s decision not to reopen its size determination is not reviewable by this
court, the court is without jurisdiction to hear plaintiff’s claims. Further, plaintiff’s
allegation that SBA violated a statute or regulation in connection with a procurement by
refusing to reopen the size determination fails to state a claim upon which relief can be
granted. For the foregoing reasons, defendant’s Motion to Dismiss is GRANTED. The
Clerk of Court shall ENTER JUDGMENT dismissing plaintiff’s Complaint.
Motion of Diamond Brand Products to Intervene, filed on June 14, 2011, Dkt. No.
14, is DENIED as MOOT.
IT IS SO ORDERED.
s/ Emily C. Hewitt
EMILY C. HEWITT
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