Service Disabled Veteran Owned Small Business Network, Inc. v. United States

United States Court of Federal Claims

No. 12-224

May 6, 2013

PUBLISHED

______________________________________

SERVICE DISABLED VETERAN

OWNED SMALL BUSINESS

NETWORK, INC., Subject matter jurisdiction;

Plaintiff, Bid protest; Standing; Tucker Act

v.

UNITED STATES OF AMERICA,

Defendant.

________________________________

Timothy H. Power, attorney of record for plaintiff.

Christopher L. Krafchek, U.S. Department of Justice, Washington, DC, attorney of

record for defendant.

OPINION AND ORDER

BLOCK, Judge.

The instant bid-protest case is before the court on defendant’s motion to dismiss for lack

of subject matter jurisdiction, pursuant to Rule 12(b)(1) of the Rules of the Court of Federal

Claims (“RCFC”). But this is not a run-of-the-mill jurisdiction case. Indeed, this is a most

unusual case. Typically, parties appear in court because they disagree over something. But here,

the parties agree that no jurisdiction exists. See Defendant’s Motion to Dismiss; Plaintiff’s

Response.

Consequently, this case is “much ado about nothing.” William Shakespeare, Mr. William

Shakespeares Comedies, Histories, & Tragedies 101 (1623). To be sure, the parties disagree on

numerous issues. But these disagreements have nothing to do with the real issue now facing the

court -- this court’s jurisdiction. Because both parties agree that no jurisdiction exists, and

because it appears that they are right, any other issues may not be considered. Mansfield, C. &

L.M. Ry. Co. v. Swan, 111 U.S. 379, 384 (1884) (stating that “the first duty of [the] court is, sua

sponte, if not moved to it by either party, to examine the sufficiency of [the] plea, and thus to

take care that [no court] shall use the judicial power of the United States in a case to which the

[C]onstitution and laws of the United States have not extended that power.”).

As each party notes, dismissal is appropriate because the Network does not make the

required showing that it is an interested party to a specific procurement. D’s Mo.; P’s Res.

Without this showing, the Network cannot establish standing and, therefore, this court cannot

exercise subject-matter jurisdiction over the case. See Distributed Solutions, Inc. v. United

States, 539 F.3d 1340, 1344-45 (Fed. Cir. 2008). Accordingly, the pending motion to dismiss

will be granted.

I. BACKGROUND

A. Factual Overview

Plaintiff, Service Disabled Veteran Owned Small Business Network, Inc. (“the

Network”), is a non-profit organization aimed at “assisting veterans through the maze of

paperwork, individuals, and agencies necessary for them to reach their goal of being a self-

sufficient business.” 1 To this end, the Network hosts monthly meetings for member

organizations and supporters to confer and discuss issues particular to service-disabled veteran-

owned businesses. Id. It also, apparently, litigates issues it determines are of interest to its

constituents. In this case, it set its sights on the way United States Department of Veterans

Affairs’ (“VA”) conducts its procurement processes. Amended Complaint at ¶1.

Specifically, the Network argues that the VA’s current procurement process fails to

properly consider whether certain contracting opportunities should be subject to restricted

competition as small-business set-asides, pursuant to the Veterans Benefits, Health Care, and

Information Technology Act of 2006 (“the Act”) 38 U.S.C. §§ 8127-8128 (2006). Am. Cmpl. at

¶1. The Act mandates that the VA restrict competition “to small business concerns owned and

controlled by veterans if the contracting officer has a reasonable expectation that two or more

small business concerns owned and controlled by veterans will submit offers...” Id. at § 8127(d)

(emphasis added). The Network contends the Act, therefore, imposes a statutory duty on the VA

to conduct market research to determine if there is a reasonable expectation that two or more of

these businesses will submit offers. Am. Cmpl. at ¶9-14. In support of this position, the Network

draws the court’s attention to a Government Accountability Office (“GAO”) recommendation

finding that the VA’s procurement process was in violation of the Act. Amen. Cmpl. at ¶29-31.

On October 11, 2011, the GAO issued a recommendation sustaining two bid protests, B-

405271 and B-405524, on behalf of Aldevra, a food service and medical equipment supplier that

does not appear to be a member of the Network. 2 The GAO found that the VA’s use of the

General Services Administration Federal Supply Schedule without first conducting market

research violated the Act. Id. The GAO believed this research was necessary for the VA

contracting officers to know if a reasonable expectation that two or more service-disabled

veteran-owned small businesses would submit qualifying offers was appropriate. Id.

However, on October 20, 2011, the VA’s Deputy Assistant Secretary for Acquisition and

Logistics sent an email to the VA’s acquisition and procurement personnel instructing that:

[the] VA [has] determined this GAO recommendation, Aldevra, B-405271 and B-

405524, dated October 11, 2011, shall not be followed. We expect this issue ultimately

will be decided by the courts. Therefore, VA acquisition and procurement professionals

1

See http://www.sdvosbnetwork.org/.

2

This decision is available online at http://www.gao.gov/decisions/bidpro/405271.htm.

are to continue using the Federal Supply Schedules Program, when necessary and

appropriate. The GAO recommendation does not change how VA will acquire goods and

services in support of its mission.

Compl. at ¶ 30. Further, on October 28, 2011, the VA issued a press release announcing it would

not follow the GAO recommendation. Amen. Cmpl. at ¶ 31. Because the GAO proceeding did

not result in any change to the VA’s procedures, plaintiff sought another avenue for relief.

B. Procedural Overview

The Network originally filed their complaint in the District Court for the Northern

District of California on December 6, 2011. They sought both declaratory and injunctive relief

against the VA under the Administrative Procedures Act (“APA”) §§ 702-706. 5 U.S.C. §§702-

706; Amen. Cmpl. at ¶ 1. Specifically, they requested the court declare that the VA’s

procurement process was in violation of the Act due to its failure to perform market research and

direct the VA to perform such research in future procurement processes.

Although the parties do not go to any great lengths to explain the procedural history of

the case at the district court level, it appears events transpired as follows. On March 15, 2012,

the District Court issued a stay on the case, directing plaintiff to file its claim in the Court of

Federal Claims. The district court was concerned that the Network might be an interested party

through associational standing and, thus, subject to this court’s jurisdiction. D’s Mo. at 2-3.

Defendant filed a motion for reconsideration, arguing that 28 U.S.C. §1500 prevented the stay.

P’s Resp. at 3-4. On March 30, 2012, the District Court granted the motion for reconsideration,

reversed its March 15 order, and lifted the stay. Id. The district court then transferred the case to

this court based upon a want of jurisdiction. Id. On July 10, 2012, the Network filed their

complaint with this court.

II. DISCUSSION

A. Jurisdictional Standards

Pursuant to RCFC 12(b)(1), defendant moves to dismiss the Network’s claim for lack of

subject matter jurisdiction. As the plaintiff, the Network generally bears the burden of

establishing subject matter jurisdiction. Myers Investigative & Sec. Servs., Inc. v. United States,

275 F.3d 1366, 1369 (Fed. Cir. 2002). In evaluating a motion to dismiss, this court presumes all

factual allegations in the complaint to be true and draws all reasonable inferences in favor of the

non-moving party. Beure-Co. v. United States, 16 Cl. Ct. 42 (1988).

This court’s bid protest jurisdiction is founded upon § 1491(b)(1) of the Tucker Act, as

amended by the Administrative Dispute Resolution Act of 1996. 28 U.S.C. § 1491(b)(1); Pub. L.

No. 104-320, 110 Stat. 3870 (1996). This amendment confers jurisdiction over bid protest cases,

defined as an objection by an interested party “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

violation of statute or regulation in connection with a procurement or a proposed procurement.”

Id.

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B. Analysis

As Justice Powell once penned, “In essence the question of standing is whether the

litigant is entitled to have the court decide the merits of the dispute or of particular issues . . .

whether the plaintiff has ‘alleged such a personal stake in the outcome of the controversy’ as to

warrant his invocation of federal-court jurisdiction and to justify exercise of the court's remedial

powers on his behalf.” Warth v. Seldin, 422 U.S. 490, 498 (1975) (quoting Baker v. Carr, 369

U.S. 186, 204 (1962)). The issue of standing is at the core of the broader concept of justicability,

that is, the power of courts to lawfully hear cases and dispense judgments. The elements of

standing “are not mere pleading requirements but rather an indispensable part of the plaintiff's

case.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992). Clearly the Network must

establish standing under the Tucker Act to sustain its complaint in this court. 28 U.S.C. §

1491(b)(1).

Standing in bid-protest cases under the Tucker Act requires two elements. A plaintiff

must (i) be an interested party and (ii) allege a statutory or regulatory violation in connection

with a procurement or a proposed procurement. 28 U.S.C. § 1491(b)(1); See also Distributed

Solutions 539 F.3d at 1340. The Federal Circuit has defined “interested party” as an “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.” Am. Fed'n of Gov't Employees, AFL-CIO v.

United States, 258 F.3d 1294, 1302 (Fed. Cir. 2001).

The Network does not satisfy either of these elements. They do not cite a specific

procurement action in their complaint and they do not identify any of the Network’s constituents

as actual or prospective bidders or offerors to a government contract. Instead, they seek

declaratory relief that the VA’s current procurement procedure is unlawful and an injunction

preventing its use in unspecified future procurements. Compl. at ¶ 1.

The parties concur that the Network lacks standing to pursue a bid protest action in this

court. See Def’s Mo.; P’s Res. In fact, plaintiff’s response goes so far as to state that they find

themselves “in the unusual position of agreeing with most of the positions in Def’s Mo. to

Dismiss.” Pl.’s Resp. at 5. To be sure, they appear to be correct. E.g., Hunt v. Washington State

Apple Adver. Comm'n, 432 U.S. 333, 343 (1977). The source of disagreement between the

parties, instead, centers on the unrelated issue of whether the district court possesses power to

grant remedy under the Administrative Procedures Act.

Plaintiff contends that the district court misapplied the general rule of associational

standing, incorrectly concluding that the Network might be an interested party on the basis that

one or more of its members might qualify for that status. P’s Res. at 5. They opposed the district

court’s transfer and request that this court dismiss the case for lack of subject matter jurisdiction

so they can pursue an APA claim in the district court. Id.

Defendant disputes the availability of an APA remedy in the district court. Def’s Rep. at

6-7. They argue that an APA remedy is only appropriate when there is no other adequate remedy

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in court. Id. at 5. In their view, the Tucker Act provides such an adequate remedy and thus

precludes any APA review. Id. Essentially, they contend that the Tucker Act provides the sole

avenue for challenge of the VA’s procurement procedures.

Defendant also argues that the sunset provision for federal district courts’ bid protest

jurisdiction in § 12(d) of the Administrative Dispute Resolution Act of 1996 eliminated Tucker

Act jurisdiction in federal district courts for matters arising after 2001. Id. at 3-4. Their position

is that the VA’s current procedure relates to the procurement process and falls within the bid

protest jurisdiction of the Tucker Act and, hence, solely in the Court of Federal Claims. In sum,

their position is that this case is in the right court but brought by the wrong plaintiff.

The result of all this is that the parties agree on the determinative issue - that this court

does not have subject-matter jurisdiction to hear this case. What they disagree about is whether a

different sort of remedy should be granted by a different court. However, again, as Shakespeare

put it: that is much ado about nothing.

This court does not reach the question of whether an APA remedy is available in district

court because it finds plaintiff lacks the standing necessary to sustain a bid protest. It is clear

that “standing is a threshold jurisdictional issue.” Myers 275 F.3d at 1369 (citing Steel Co. v.

Citizens for a Better Env't, 523 U.S. 83, 102–04 (1998)). Because this case cannot cross the

threshold, this court sees no reason to expound on another court’s jurisdiction and powers to

grant remedy. Plaintiff’s claim is hereby dismissed for lack of subject matter jurisdiction

pursuant to RCFC 12(b)(1).

III. CONCLUSION

Accordingly, this court finds in favor of defendant. Defendant’s MOTION to dismiss

for lack of subject matter jurisdiction pursuant to RCFC 12(b)(1) is GRANTED. The Clerk is

hereby directed to take the necessary steps to dismiss this matter.

IT IS SO ORDERED

/Lawrence J. Block

s

Lawrence J. Block

Judge

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