MOTION TO DISMISS DENIED: April 19, 2007

MOTION TO DISMISS DENIED: April 19, 2007

CBCA 411, 412

KEY FEDERAL FINANCE,

Appellant,

v.

GENERAL SERVICES ADMINISTRATION,

Respondent in CBCA 411,

and

DEPARTMENT OF COMMERCE,

Respondent in CBCA 412.

Joseph J. Petrillo of Petrillo & Powell, PLLC, Washington, DC, counsel for Appellant.

Michael J. Noble, Office of General Counsel, General Services Administration,

Washington, DC, counsel for Respondent in CBCA 411.

Fred Kopatich, Office of General Counsel, Department of Commerce, Washington,

DC counsel for Respondent in CBCA 412.

Before Board Judges DANIELS (Chairman), STERN, and HYATT.

STERN, Board Judge.

Key Federal Finance (Key or appellant) filed this appeal after the Department of

Commerce’s National Institute of Standards and Technology (Commerce) terminated a

contract for the lease and purchase of computer equipment. The named party on that contract

was James River Technical, Inc. (JRTI), a company with which Key, as is further explained

CBCA 411, 412

2

below, held a teaming agreement for performance of the contract work. Appellant filed a

claim with Commerce. That claim was denied. Appellant also filed a claim with a

contracting officer of the General Services Administration (GSA). To date, GSA has not

issued a final decision on that claim. Key appealed Commerce’s decision and GSA’s failure

to issue a decision to the General Services Administration Board of Contract Appeals

(GSBCA). That board consolidated the two appeals.1 Pursuant to statute all the cases

pending before the GSBCA were transferred to the Civilian Board of Contract Appeals on

January 6, 2007. Pub. L. No. 109-163, § 847, 119 Stat. 3136 (2006).

We have before us Commerce’s Motion to Dismiss for Lack of Jurisdiction.

Commerce alleges that Key is not a “contractor” that entered into a contract or order with the

Government, a requirement for our jurisdiction under the Contract Disputes Act, 41 U.S.C.

§§ 601-613, et seq. (2000). Commerce contends that the Board lacks jurisdiction over the

appeal. For the reasons set forth below we deny Commerce’s motion.

Background

1.

On June 26, 2003, Commerce issued a request for GSA Federal Supply Schedule

(FSS) quotations (RFQ) for high performance computing equipment for use at Commerce’s

Gaithersburg, Maryland, facility. Appeal File, Exhibit 2.2 One of the vendors that was

provided the RFQ was JRTI.

2.

The RFQ (as amended) required the items to be procured to be priced on a thirty-six­

month lease-to-ownership basis. The RFQ also stated that certain equipment compatibility

requirements were set forth so that Commerce could complete “the building and fire safety

investigation of the World Trade Center disaster by September 2004.” Appeal File, Exhibit

2 at 2.

3.

The RFQ emphasized that only GSA FSS contract quotes were sought. The following

additional guidance was provided in the RFQ:

1

The issues in the two cases are identical. We do not now decide whether both

appeals are properly before us.

2

The facts herein are taken from the Appeal File, the pleadings, and the various

other documents, including an affidavit by appellant’s vice president, filed by the parties in

this appeal. The findings herein are solely for the purpose of resolving the subject motion.

CBCA 411, 412

3

(1)

Your company may submit its own GSA FSS Contract quote (i.e., not

be required to enter into a GSA FSS Contractor Teaming Arrangement

with additional GSA FSS Contractor(s)) if your company’s GSA FSS

Contract currently contains all required items AND your company’s

GSA FSS contract contains leasing terms and conditions that could be

used for the items to be procured.

(2)

If each required item is not currently on the company’s GSA FSS

contract and/or if your company’s GSA FSS Contract does not include

appropriate leasing terms and conditions, then your company must enter

into a GSA FSS Contractor Teaming Arrangement with additional GSA

FSS Contractor(s) as part of your quote. All items, terms and

conditions must be satisfied among the collective Contractor Teaming

Arrangement’s GSA FSS Contracts.

(3)

If your company plans to enter into a GSA FSS Contractor Teaming

Arrangement with one or more other GSA FSS Contractor companies

for this request for quote, it must follow the guidelines set forth at

http://www.gsa.gov/Portal/cont ent/offerings_content.jsp?contentOID=

116432&contentType=1004.

(4)

If your company elects to enter into a GSA Federal Supply Schedules

Contractor Teaming Arrangement for this quote, then your company

must submit a signed copy of that agreement in .pdf format with the

quote. ALL COMPANIES MUST HAVE THEIR OWN

COMPANY GSA FSS CONTRACT TO BE ELIGIBLE TO

ENTER INTO SUCH A GSA FSS TEAMING ARRANGEMENT

WITH ANOTHER GSA FSS CONTRACTOR. The Contractor

Teaming Agreement must include the following information, at a

minimum:

•

Identifies which company that is part of the GSA FSS

Contractor Teaming Arrangement that, for order award purposes

for the Government, should be considered the prime Contractor

•

Identifies participants, Schedules, and services and products

covered by the arrangement and how additions/deletions will

occur

CBCA 411, 412

4

•

Identifies which items being quoted and/or which terms and

conditions are on which of the individual GSA FSS contracts.

•

Defines terms

•

Sets forth each participant’s roles, responsibilities, and

obligations

•

Identifies scope, period of performance (for specific, limited

purposes or longer periods covering several transactions), and

termination of the arrangement

•

Identifies remunerations for functions performed, if any

•

Identifies the process that will be used to quote, accept, and

administer orders. This may include prices, terms and

conditions, invoicing, payment, taxes, reports, etc.

•

Establishes scope and limitations of any licenses or proprietary

rights

•

Establishes representations and warranties among the parties

•

Identifies confidentiality requirements, obligations, disclosures,

and remedies

•

Identifies damages, liability/limitation of liability, and any

indemnification requirements among the parties

•

Addresses administrative requirements (e.g., assignments, how

notices will be conveyed and recognized, how changes or

amendments will occur)

•

Identifies any terms that survive the arrangement or termination

•

Identifies governing laws, venues, etc.

•

Establishes how disputes will be addressed and resolved

CBCA 411, 412

•

(5)

5

Addresses force Majeure

THE GOVERNMENT IS NOT SEEKING A GSA FSS

CONTRACT QUOTE FROM ANY OFFEROR THAT

CONTAINS ANY OPEN MARKET ITEMS;

....

(13)

The quote must state whether any of the items are not currently included

on the Offeror’s GSA FSS Contract; if one or more of the items are not

on the Offeror’s GSA FSS Contract, then the Offeror must enter into a

Contractor Teaming Arrangement with another GSA FSS Contractor

whose GSA FSS Contract does currently include those items for the

quote to be considered;

....

The Government may award a GSA FSS order to the GS FSS Contractor

whose technically acceptable individual quote or technically acceptable

Contractor Team Arrangement quote represents the lowest overall cost to the

Government.

Appeal File, Exhibit 2 (some emphasis omitted).

4.

The guidelines at the Frequently Asked Questions section of the GSA website

regarding Contractor Team Arrangements, referenced in the RFQ by Commerce, provided:

How do GSA Schedule Contractor Team Arrangements (CTAs) differ from

Prime Contractor/Subcontractor Arrangements under Schedule contracts?

In prime/sub arrangements, the relationship is very tightly defined and

controlled by the prime contractor; whereas in CTAs, the roles and

responsibilities are defined by the team, as accepted by the government. The

following chart summarizes key differences:

CBCA 411, 412

6

Contractor Team Prime Contractor/Subcontractor Arrangement

Arrangement (CTA)

Each team member Only the prime contractor must have a GSA

must have a GSA

Schedule contract.

Schedule contract.

Each team member

The prime contractor cannot delegate

is responsible for

duties addressed in responsibility for performance to subcontractors.

the CTA document.

Only the prime contractor has privity of contract

Each team member with the government and can interact with the

government. The prime contractor is responsible

has privity of

for its subcontracting activities. (Ordering

contract with the

government and can activities are encouraged to specify in the

interact directly with Request for Quotation (RFQ) that the use of

subcontractors requires prior approval by the

the government.

ordering activities.)

The ordering activity

is invoiced at each The ordering activity is invoiced in accordance

team member's unit with the prime contractor's GSA Schedule

prices or hourly rates contract, including any applicable price

as agreed in the task reductions.

or delivery order or

GSA Schedule BPA.

Total solutions,

otherwise impossible

The prime contractor is limited to the supplies

under individual

and/or services awarded on its GSA Schedule

GSA Schedule

contracts, can be put contract.

together quickly and

easily.

Appeal File, Exhibit 1.

5.

JRTI held an FSS contract for the selling of computer equipment to the Government.

JRTI did not have a provision for leasing in its FSS contract. Appellant, Key Federal

Finance, held an FSS contract for leasing of computer equipment to the Government. Since

CBCA 411, 412

7

Commerce wanted to lease the computer equipment, and because JRTI’s FSS contract did

not provide for such leasing, JRTI and appellant agreed to enter into a teaming arrangement

to provide the sought-after products and services to the Government.

6.

Key’s FSS contract for leasing stated in part:

CONTRACTOR TEAM ARRANGEMENTS

Federal Supply Schedule Contractors may use “Contractor Team

Arrangements” (see FAR [Federal Acquisition Regulation] 9.6) to provide

solutions when responding to customer agency requirements. The policy and

procedures outlined in this part will provide more flexibility and allow

innovative acquisition methods when using the Federal Supply Schedules. See

the additional information regarding Contractor Team Arrangements in this

Schedule Pricelist.

Key Federal Finance agrees to lease equipment listed on GSA schedule

contracts held by contractors other than Key Federal Finance provided that the

other contractor can reach a Teaming Agreement with Key Federal Finance on

terms and conditions satisfactory to Key Federal Finance. The Government

agrees that Key Federal Finance may enter into such Teaming Agreements

without any prior consents or approvals by the Government.

Appeal File, Exhibit 13 (emphasis omitted).

7.

Key’s FSS contract contained two leasing options. Option 1 was for orders issued

under the negotiated terms and conditions of the FSS contract. Orders placed under Option

1 were subject to a termination provision that incorporated the FAR’s termination for

convenience and default clauses. Option 2 was for ordering offices that desired to negotiate

other pricing terms. Under Option 2, an agency could terminate a lease for convenience or

at no cost for non-appropriation of funds. Appeal File, Exhibit 13.

8.

In response to the RFQ, JRTI submitted its proposal to Commerce. JRTI stated:

James River Technical is a platinum-level partner with SGI and is the primary

contact for SGI products and services at NIST [Commerce]. Because of our

experience and relationship at NIST, we fully understand the intent of the

proposed computer upgrade and the goal of replacing the three aging 32 CPU

[central processing unit] SGI servers with a single 96 CPU system at a reduced

overall cost of ownership. The quoted system reduces the support costs and

CBCA 411, 412

8

allows us to provide this upgrade at a cost only slightly higher than the current

support contract. NIST will enjoy a significant performance improvement as

a benefit of this upgraded system.

Included in JRT’s proposal are several leasing options for the requested

equipment and JRT is willing to explore additional options at your request.

The following options have been presented for your consideration:

•

LTO [lease to ownership]-Lease to own as requested in your

RFQ

•

LWOP [lease with option to purchase]-Lease with option to own

(fair market lease) which allows for lower monthly payments

and maintains the flexibility of future technology upgrades

•

Step lease-LWOP lease with a larger initial payment to reduce

the monthly lease costs.

James River Technical has partnered with Key Federal Finance to provide its

leasing options. Key has had a long-term relationship with SGI and has been

very successful in providing these programs to a number of government

agencies.

Appeal File, Exhibit 7.

9.

Attached to the JRTI submittal was the teaming agreement and Key’s detailed

proposal for leasing to Commerce dated July 3, 2003. Key’s detailed proposal stated that

Key was offering Commerce the lease under option 2 of its FSS contract, that Commerce

agreed that its order would include certain language incorporating Key’s proposal, and that

Key and Commerce had certain obligations regarding payment.

10.

During the period of time between issuance of the RFQ and award of the contract,

numerous e-mail communications regarding the terms and conditions of the procurement

were exchanged between Commerce and JRTI. Appeal File, Exhibits 2, 3, 4, 8-12, 14. The

record does not reflect any Key involvement in these exchanges.

11.

On July 16, 2003, Commerce requested clarifications of various aspects of the JRTI

proposal and pointed out that the teaming arrangement with Key Federal Finance did not

include all elements required by the solicitation. Commerce listed the items that needed to

be added to the teaming agreement. Appeal File, Exhibit 10.

CBCA 411, 412

9

12.

In response to Commerce’s request, modifications were made to the teaming

agreement of July 3, 2003 (Finding 9), and a new teaming agreement between JRTI and Key

was executed on July 24, 2003. JRTI was designated the “Prime Contractor/Seller” and Key

was designated the “Buyer.” The teaming agreement along with a number of other

documents were resubmitted to Commerce by JRTI on July 25, 2003. Key’s proposal to

Commerce that was part of the initial submittal on July 3, 2003, was not resubmitted. The

revised Teaming Agreement stated:

1.1

Prime Contractor [JRTI] shall take principal charge of preparing and

submitting the proposal (the “Proposal”) in response to the RFP and

performing the work entailed in the resulting prime contract (the “Program”).

Buyer [Key] shall prepare those portions of the Proposal relating to, and

provide the services entailed in, the services described in Exhibit A [set forth

below], subject to the assignment of such additional responsibilities by mutual

agreement between the parties from time to time. Buyer shall submit its

portion of the Proposal to Prime Contractor (including all necessary schedules

relating to price, terms and condition, etc.) no later than July 7th, 2003, and

Prime Contractor shall have the final authority for the preparation, evaluation,

and submission of the Proposal to NIST. Prime Contractor shall direct and

coordinate all contacts with NIST pertaining to the preparation of the Proposal.

1.2

The Proposal submitted to NIST shall contain and identify Buyer’s

contribution to the Proposal and shall also indicate that Prime Contractor

intends to team with Buyer for the services identified as Buyer’s responsibility

in Exhibit A hereto. Nothing contained in this Agreement shall preclude or

affect NIST’s ability to procure directly from either Team Member its

respective portion of the requirements contemplated herein.

....

2.1

The division of work and responsibility between the Team Members in

executing the program is set forth in Exhibit A hereto. Cost or pricing data

will be submitted in accordance with the requirements as specified in the RFP.

The cost or pricing data provided by Buyer shall be presented in the format

prescribed by NIST.

....

CBCA 411, 412

10

5.1

This Agreement does not constitute a partnership, joint venture, or any

other form of business association. The relationship between the Team

members shall be that of a contractor team arrangement in accordance with

GSA regulations. Neither Team Member is the agent of the other, and except

as expressly provided in this Agreement, neither may bind the other. No

profits, losses, or costs will be shared under any provision of this Agreement.

There are no fees being paid by either of the Parties to the other which are not

fully disclosed in this Agreement.

Appeal File, Exhibit 14.

13.

The parties set out their responsibilities in “Exhibit A” as follows:

This Exhibit will set forth the responsibilities of the parties.

modifications to this proposal are subject to mutual written approval.

Any

Prime Contractor/Seller:

James River Technical (JRT)

Buyer:

Key Federal Finance, or its assigns (KFF)

Customer:

NIST

Customer Contract:

JRT GSA Schedule for equipment (GS-35F-0392L)

teamed with KFF GSA Schedule for leasing (GS­

35F-0346L) as described in the attached JRT-SGI­

NIST proposal.

Please note that leasing terms, conditions and

responsibilities are defined in the KFF GSA

Schedule.

Structure:

Seller will sell and assign to Buyer good and

unencumbered title to the equipment described in

the User Contract and the contract lease or service

contract payments relating thereto. The closing

will occur approximately 30 days after Buyer

receives the unconditional acceptance by the User

of the equipment.

Equipment Cost:

Approximately $1,434,416.38

CBCA 411, 412

Lease Rates:

11

Proposals with requested leasing options and

pricing would be submitted to Customer by Prime

Contractor.

....

Maintenance:

The equipment will remain under a Prime

Contractor sponsored maintenance program for

the full duration of the User Contract.

Seller Liaison:

Seller will serve as Buyer’s representative and

agent with respect to issues involving the

equipment, and will serve as a Liaison between

the User and Buyer for all service, warranty or

other claims made by the User in connection with

the equipment.

Remarketing:

Seller will provide for the reinstallation and

removal of the equipment in the event of early

termination of the User Contract and will assist

buyer through a best efforts remarketing

convenant.

Insurance:

Seller will keep in force all-risk property and

liability insurance policies naming Buyer and its

assigns as loss payee and additional insured. Or

may purchase such insurance from Buyer.

Taxes:

Seller will be responsible for payment of all

applicable federal, state and local taxes for the

duration of the User Contract.

Right to Finance:

Buyer will have the exclusive right to provide

financing for all equipment ordered under the User

Contract, including all amendments, modifications,

and extensions, and by its execution and return of

this letter or a telecopy hereof, Seller hereby grants

Buyer such right.

CBCA 411, 412

Ordering Procedures:

12

When NIST expresses an interest in leasing a

product(s), the Contract[ing] Officer will provide

the following information to the Prime Contractor:

(i)

(ii)

(iii)

(iv)

(v)

(vi)

(vii)

Which product(s) is (are) required.

The required delivery date.

The proposed lease plan and term of

the lease.

Where the product will be located.

Description of the intended use of the

product.

Source and type of appropriations to

be used.

Agreement to assign payment stream

to Buyer.

Appeal File, Exhibit 14.

14.

Based on the submission, Commerce on July 31, 2003, issued an order to JRTI in the

amount of $455,000 for the “lease to own” of computer equipment for the base period of

September 1, 2003, to September 30, 2004, and the option periods of October 1, 2004, to

September 30, 2005 (Option 1), and October 1, 2005, to September 30, 2006 (Option 2).

Appeal File, Exhibit 16. The order stated, “This is a firm-fixed-price lease, with an option

to purchase, of the items referenced in the Schedule section of this delivery order.” Id. The

order also referred to the “Contractor Teaming Arrangement between James River Technical,

Inc. and Key Federal Finance[.]” Id. The order did not incorporate the terms and conditions

of Key’s proposal dated July 3, 2003. See Finding 9.

15.

Upon receipt of the order, the executive vice president of JRTI sent an e-mail

communication to Commerce stating:

I have done a quick review of the Purchase Order and I do not see any

language which addresses the assignment of lease payment stream to Key

Federal Financial. I had assumed that such would be indicated in the body of

the Purchase Order. Please give me a quick read on this.

Appeal File, Exhibit 17.

CBCA 411, 412

16.

Commerce replied:

Since the award can only be made to one company, I asked, in the solicitation,

that the proposal specify which company would be the [P]rime Contractor for

award purposes since, for any contract, there can only be one company

specified as the prime contractor (and, for legal reasons absent an assignment

of claims, that is the only company that can invoice and receive payment). The

JRT proposal specified that the prime would be JRT. Therefore, the award

was made to JRT, but recognized the Contractor Team Arrangement between

JRT and KFF.

As noted in the assignment of claims regs, assignment of claims can be made

to a financial institution. The regs say that the Contractor can pursue an

assignment of claims for a particular contract awarded to them. (“Contractor”

is a post award word . . . companies are referred to as “offerors” in the

preaward phase.) Also, before award, the Government would not ask for

assignment of claims paperwork because no Contractor would have been

selected before an actual award is made, and it would pose unnecessary

administrative burden and cost on unsuccessful offerors. The Government

always strives to eliminate or reduce incurrence of unnecessary costs for

unsuccessful offerors.

I can do a mod to the order, if need be, to recognize KFF’s GSA Schedule

Contract Number as part of the Contractor Team Arrangement. I’d have no

problem doing that. I’d have to do that as Modification No. 0001 to the order,

though, since I can’t modify the format or content of the original order that has

already been generated. Let me know if that option appeals to you.

Insofar as we get the assignment of claims documentation that is required by

FAR 32.8, there should be no problem, at all, in us executing the assignment

of claims. We do these routinely, and by DOC [Department of Commerce]

regulation, we have to have them reviewed by the DOC Office of General

Counsel, Contracts Law Division. They’re simply going to do the same thing

I do when I receive it . . . make sure it complies with FAR 32.8 requirements.

It may take 30 days to get an assignment of claims done after we get the

required documentation, so I’d request that it be sent to us as soon as possible.

Appeal File, Exhibit 18.

13

CBCA 411, 412

17.

14

JRTI answered Commerce that Key was concerned -­

that there was no reference to their “proposal” (aside of [sic] the teaming

agreement) in the Purchase Order. They believe that such is a requirement for

the use of the Key GSA schedule. I do not purport to be an expert on such

technicalities so I am seeking your guidance in such. I understand that the

assignment documents do come after the [Purchase Order].

Appeal File, Exhibit 19.

18.

On September 2, 2003, JRTI executed a “Notice of Assignment,” assigning moneys

due or to become due under the contract, to Key. Appeal File, Exhibit 20. The actual

“Instrument of Assignment” between JRTI and Key assigned all monies due under the

contract to Key and further stated that Key “shall not be held responsible for the performance

of any obligations of JRTI under the contract.” Id. The contracting officer signed an

acknowledgment of the assignment on September 10, 2003. Id.

19.

Although this assignment was executed, the delivery order was not modified to

include Key as the contractor. As set forth above, JRTI was listed as the prime contractor.

On July 30, 2004, Commerce notified JRTI that it would not exercise its option for 2005, and

that the lease would terminate on September 30, 2004. Appeal File, Exhibit 33. Commerce

provide the same notice to Key on August 4, 2004. Id., Exhibit 34. JRTI and Key responded

that this action was a termination for convenience. Id., Exhibit 36. On September 30, 2004,

Commerce advised JRTI that the order was being terminated, for non-appropriation of funds,

at no cost to the Government. Id., Exhibit 40. This termination was purportedly exercised

under the authority of a clause in Key’s FSS contract. Key maintained that the termination

for non-appropriation was erroneous. Later, Commerce wrote JRTI that the termination was

also appropriate on other grounds. Id., Exhibit 46. Key then filed its claims with both

Commerce and GSA.

Contentions of the Parties

Commerce argues for dismissal on the basis that Key is not a “contractor” authorized

to file an appeal under the Contract Disputes Act of 1978 (CDA), 41 U.S.C. §§ 601-613

(2000). Commerce claims that the structure of the transaction made JRTI the contractor and

the only company in privity of contract with the Government.

Key replies that the delivery order incorporated the teaming arrangement. Key claims

that this placed it in privity with Commerce. Key maintains it has standing to file this appeal.

CBCA 411, 412

15

In the alternative, Key requests reformation of the contract to reflect the intent of the parties,

which it alleges was that Commerce and Key would be in privity.

Discussion

In deciding this motion to dismiss for lack of jurisdiction, we accept as true the facts

alleged by the non-moving party (appellant). If, based on those facts, Key might prevail, we

must deny the motion. W. R. Cooper General Contractor, Inc. v. United States, 843 F.2d

1362, 1364 (Fed. Cir. 1988); see Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); Reynolds v.

Army & Air Force Exchange Service, 846 F.2d 746, 747 (Fed. Cir. 1988). However,

appellant bears the burden of proving jurisdiction. Reynolds, 846 F.2d at 748.

The issue here is whether Key is a contractor within the meaning of the CDA. As a

general rule, the contractor is the party named on the contract with the Government. Under

the CDA only that contractor can bring an action against the Government before this Board.

41 U.S.C. § 606. The CDA defines a “contractor” as “a party to a Government contract other

than the Government.” Id. § 601(4). Waivers of sovereign immunity are strictly construed.

United States v. Mitchell, 445 U.S. 535, 538 (1980). Thus, subcontractors are generally

barred from filing a direct appeal under the CDA. United States v. Johnson Controls, Inc.,

713 F.2d 1541 (Fed. Cir. 1983). However, there have been exceptions to this rule. For

example, in D & H Distributing Co. v. United States, 102 F.3d 542 (Fed. Cir. 1996), the

court found that the third-party beneficiary could enforce the payment provision of the

contract in a direct action against the Government. In another case, the court found privity

between the Government and a subcontractor where the prime contractor was determined to

be a mere government agent. Kern-Limerick, Inc. v. Scurlock, 347 U.S. 110 (1954). In Kern,

the contractor was acting as a purchasing agent for the Government, the contract clearly

stated the agency relationship, and the contract made the Government directly liable to the

subcontractor for the purchase price. As in Kern, the relationship between Commerce and

Key went substantially beyond that of the normal contractor/subcontractor.

Commerce sought to lease and possibly purchase computer equipment solely from

vendors that held existing FSS contracts. It sent its request for a contract quotation to JRTI

and other vendors. However, JRTI’s FSS contract did not permit leasing, a requirement of

the solicitation. Commerce was aware that some offerors would have to enter into teaming

arrangements to satisfy its requirements. Thus, the solicitation specifically stated that if an

offeror’s FSS contract did not contain leasing provisions, that offeror would have to enter

a “GSA FSS Contracting Teaming Arrangement” with one or more additional contractors

whose FSS contracts would permit leasing to Commerce. Commerce dictated the

requirements of the teaming arrangement, including identification of the company that would

be considered the “prime” contractor, the “roles, responsibilities, and obligations,” of each

CBCA 411, 412

16

teaming party, the processes for orders, the warranties and liabilities between the parties, the

terms that would survive a termination, and the method for handling disputes. Commerce

needed to approve the teaming arrangement before award.

Commerce also notified offerors that they should visit the GSA website for additional

guidance on teaming arrangements. That website informed the offerors of the distinction

between teaming arrangements and prime contractor/subcontractor agreements. That website

stated that under a prime contractor/subcontractor arrangement, only the prime contractor has

privity of contract and can interact with the Government, while under a contractor team

arrangement, each team member has privity and can interact with the Government. We find

that by reference to this website, Commerce incorporated this representation into the

solicitation.

With this background, Commerce placed the order (contract) to lease that is the

subject of these appeals. The order identified JRTI as the “prime contractor.” However,

Commerce later stated that either company could have been identified as the “prime” and that

it would have awarded the contract to whichever party had been designated as prime

contractor in the teaming arrangement. Finding 16. The order made specific reference to the

“Teaming Arrangement between James River and Key Federal Finance.” Subsequently,

Commerce recognized the assignment to issue all money due under the contract to Key.

Ultimately, the contract was terminated by GSA’s reference to a clause in Key’s FSS

contract.

The circumstances of this case indicate that a special relationship was created between

Commerce and Key that went beyond the normal contract structure in which the Government

only deals with the named contractor and that contractor deals with its subcontractor. Both

the requirements of the solicitation and Commerce’s actions before and after award created

a contractual relationship between it and Key and permitted the two parties to deal directly

with each other. By these actions, the parties indicated an intent to be in privity under this

contract. Commerce may not now deny the relationship it created. Key is in privity with

Commerce under this purchase order. Key is a contractor as that term is used in the CDA.

The Board has jurisdiction over this appeal.

Decision

Commerce’s motion is DENIED.

__________________________

JAMES L. STERN

Board Judge

CBCA 411, 412

17

We concur:

___________________________

STEPHEN M. DANIELS

Board Judge

__________________________

CATHERINE B. HYATT

Board Judge