Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-94-05219/USCOURTS-caDC-94-05219-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

---

<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 8, 1995 Decided October 27, 1995

No. 94-5219

T&S PRODUCTS, INC.,

APPELLANT

v.

UNITED STATES POSTAL SERVICE,

GENERAL SERVICES ADMINISTRATION,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(94cv00896)

David P. Hendel argued the cause for appellant, with whom Michael

A. Gatje were on the briefs.

Robert L. Shapiro, Assistant United States Attorney, argued the

cause for appellees, with whom Eric H. Holder, Jr., United States

Attorney, and R. Craig Lawrence, Assistant United States Attorney,

were on the brief. John D. Bates, Assistant United States

Attorney, entered an appearance.

Before EDWARDS, Chief Judge, GINSBURG and TATEL, Circuit Judges.

EDWARDS, Chief Judge: The appellant, T&S Products, Inc.

("T&S"), brought a challenge in federal district court to the

prices that the General Services Administration ("GSA") charges the

United States Postal Service ("USPS") for retail packaging

products. USPS entered into a three-phase, nationwide program with

GSA beginning in 1994, whereby USPS agreed to purchase all of its

retail packaging products exclusively from GSA. At the time when

T&S brought its complaint, the program was still in Phase I, which

was a pilot test and covered only USPS post offices in the

USCA Case #94-5219 Document #158818 Filed: 10/27/1995 Page 1 of 9
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

140 U.S.C. § 756(b) (1988) states as follows:

Payment by requisitioning agencies shall be at

prices fixed by the Administrator. Such prices shall

be fixed at levels so as to recover so far as

practicable the applicable purchase price, the

transportation cost, inventory losses, the cost of

personal services employed directly in the repair,

rehabilitation, and conversion of personal property,

and the cost of amortization and repair of equipment

utilized for lease or rent to executive agencies. 

2T&S Products, Inc. v. United States Postal Service, Civ.

Action No. 94-896 (D.D.C. May 26, 1994), reprinted in Joint

Appendix ("J.A.") 358. 

Northeast and New York Metro postal areas. T&S alleged that,

because GSA's prices did not include the full cost of transporting

the packaging products to USPS post offices, GSA was subsidizing

USPS's purchases in violation of 40 U.S.C. § 756 (1988) ("§ 756").1

T&S alleged that it incurred injury as a result of GSA's

underpricing because GSA's lower prices led USPS to select GSA for

its sole-source program instead of T&S, and because GSA's status

under the program as USPS's sole provider of retail packaging

products precludes T&S from making sales to those post offices

covered by the program.

The District Court dismissed T&S's claims against GSA, finding

that T&S had failed to establish the injury-in-fact required for

constitutional standing, and also finding that T&S lacked

prudential standing because the interest sought to be protected by

T&S was not within the "zone of interests" protected or regulated

by § 756.2 Because Phase I of the sole-source program only

involves postal areas where T&S has no existing contracts, and

because progression of the program to areas where T&S does have

contracts is contingent upon the results of a customer satisfaction

USCA Case #94-5219 Document #158818 Filed: 10/27/1995 Page 2 of 9
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

survey that has yet to be conducted, we agree that T&S does not now

face actual or threatened injury-in-fact likely to be redressed by

a ruling of this court. Moreover, T&S's claims against GSA are

premature, because the issue of future injury to T&S may become

moot as USPS makes further decisions as to how to proceed with the

sole-source program. Thus, T&S presently lacks Article III

standing to challenge GSA's prices under the program. In light of

this conclusion, we have no occasion to reach the issue of whether

T&S also lacks prudential standing.

I. BACKGROUND

In 1991, USPS began considering ways to standardize the

appearance, quality, and types of retail packaging products sold at

USPS post offices nationwide, and to simplify and centralize the

method of procuring such products. From the early stages of the

planning process, USPS focused on the ability of GSA, which

operates the General Supply Fund through GSA's Federal Supply

Service, to conduct a nationwide retail packaging products program.

Upon learning of USPS's negotiations with GSA, T&S asked to be

considered for any proposed nationwide contract. T&S is a 47-

employee, family-owned business based in Arlington, Texas, engaging

in the sale and distribution of retail packaging materials. T&S is

currently the largest single supplier of retail packaging products

sold at USPS post offices, having separately negotiated contracts

with thirty-four of USPS's eighty-five district offices, so that

T&S now serves over 20,000 USPS post offices, stations, and

branches around the country. T&S currently has no ordering

agreements to provide regular service for USPS post offices in the

USCA Case #94-5219 Document #158818 Filed: 10/27/1995 Page 3 of 9
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

3GSA included in its prices a 7.6% mark-up for the cost of

transportation, whereas T&S submits that GSA's actual

transportation costs range from 24 to 144%and average 60%of a

Northeast or New York Metro postal areas, but it has occasionally

supplied individual post offices in those areas with packaging

products and would like to expand its regular USPS business into

those areas.

In early 1994, USPS decided to implement a three-phase,

nationwide program under which all of USPS's retail packaging

products would be supplied and delivered by GSA. Throughout Phase

I, which was still in progress at the time of the District Court

action, all USPS post offices in the Northeast and New York Metro

postal areas were to obtain their retail packaging products

directly from GSA customer supply centers. At the end of Phase I,

USPS plans to enlist a market research contractor to perform a

customer satisfaction survey. After USPS analyzes the survey

results, it will determine whether and how to proceed with the

second and third phases of the nationwide program. Under the

existing plan, Phase II would extend the sole-source program to

USPS post offices in the Pacific postal area, and Phase III would

extend the program to the seven remaining postal areas.

Despite T&S's repeated overtures, USPS never seriously

considered T&S for the nationwide program, which T&S attributes to

the fact that the prices proposed by GSA were lower than the prices

that USPS assumed T&S would charge. T&S alleges that the prices

GSA agreed to charge USPS are unduly low because they do not

rationally account for the full cost of transporting the packaging

products to the individual post offices.3 Thus, T&S argues that

USCA Case #94-5219 Document #158818 Filed: 10/27/1995 Page 4 of 9
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

given item's cost to GSA. Brief of Appellant at 6-7. 

4T&S Products, Inc. v. United States Postal Service, Civ.

Action No. 94-896, slip op. at 5-14 (D.D.C. May 26, 1994),

reprinted in J.A. 362-71. 

5Brief of Appellant at 1. 

GSA is subsidizing USPS's procurement of retail packaging products

in violation of the full-cost-recovery provision in § 756, which

directs GSA to set its prices so as to include the cost of

transporting the products it supplies to government agencies. 40

U.S.C. § 756(b) (1988). T&S further alleges that USPS would have

selected T&S as the supplier for the nationwide program but for the

discrepancy USPS perceived between GSA's and T&S's prices.

T&S brought suit in the District Court to enjoin USPS from

pursuing its sole-source program with GSA and to enjoin GSA from

charging prices that fail to recover the full cost of products it

provides to USPS. On cross-motions for summary judgment, the

District Court dismissed T&S's claims against both USPS and GSA,

finding that T&S had failed to establish that it suffered

injury-in-fact under Phase I of the sole-source program, and that

T&S's allegation of threatened harm under Phases II and III was

speculative and not yet ripe for review.4 The present appeal

concerns only the District Court's dismissal of T&S's claims

against GSA.5

II. ANALYSIS

As the Supreme Court has held, "[t]he doctrine of standing is

"an essential and unchanging part of the case-or-controversy

requirement of Article III.' " Northeastern Fla. Chapter,

Associated Gen. Contractors of America v. City of Jacksonville, 113

USCA Case #94-5219 Document #158818 Filed: 10/27/1995 Page 5 of 9
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

6Attachment to letter from Michael T. McDonald, Manager,

Field Customer Support, Purchasing, USPS, to Darrah C. Porter,

Vice President, Purchasing, USPS (Apr. 8, 1994), reprinted in

S. Ct. 2297, 2301 (1993) (quoting Lujan v. Defenders of Wildlife,

504 U.S. 555, 560 (1992)). The doctrine dictates that a party

seeking to invoke a federal court's jurisdiction must meet three

requirements. First, the party must suffer "injury in fact" that

is concrete and particularized, and is also actual or imminent, as

opposed to hypothetical or conjectural. Second, the injury must be

fairly traceable to the action challenged. Third, there must be a

"likelihood," as opposed to mere speculation, that the injury will

be redressed by a favorable decision. Id. at 2301-02. T&S submits

that USPS's decision to institute its sole-source program with GSA

is directly attributable to GSA's alleged violation of § 756, and

that GSA's status as USPS's sole provider of retail packaging

products under the program subjects T&S to various forms of

competitive injury sufficient to satisfy the elements of Article

III standing. We disagree.

First, there is no evidence that USPS would have contracted

with T&S rather than GSA but for GSA's alleged subsidization of its

sales to USPS. The record discloses that USPS approached GSA from

the early stages of its consideration of the sole-source program

and identified a range of benefits from using GSA, including some

benefits that companies such as T&S could not offer. For example,

GSA has far greater purchasing power because it already supplies

the needs of most federal agencies. In addition, GSA agreed to

delivery terms under which GSA would remain responsible for the

products until they arrived at the destination post offices.6 The

USCA Case #94-5219 Document #158818 Filed: 10/27/1995 Page 6 of 9
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

J.A. 132. GSA agreed to deliver the products "f.o.b. destination

via U.S. Mail." Id. USPS considered that GSA's delivery terms

obviated the need for USPS to issue penalty labels, which, when

issued, place on USPS responsibility for loss or damage of a

product as soon as the product is deposited in the mail stream. 

Id. T&S, on the other hand, has only sold its products to the

Postal Service if USPS provided penalty labels, a practice that

obscures the true cost to USPS of products purchased from T&S. 

Letter from Pete Dolder, Manager, USPS, to Don Anna, Purchasing

Counsel, USPS (Apr. 1, 1994), reprinted in J.A. 133. 

record reflects, therefore, that USPS based its decision to use GSA

for the sole-source program on a variety of considerations; there

is no evidence to suggest that USPS would have selected T&S over

GSA even if GSA's prices had included a higher mark-up for

transportation costs. Thus, T&S has failed to establish

injury-in-fact. Moreover, even if T&S had established

injury-in-fact through evidence that USPS originally would have

selected T&S over GSA had GSA's prices been higher, there is no

evidence that USPS now would abort its sole-source program with GSA

and institute a program with T&S if the court required GSA to raise

its prices. Thus, since the issue at hand concerns only T&S's

attempt to enjoin GSA to charge higher rates, T&S's first claim

also fails to establish the redressibility required for Article III

standing.

T&S's second and third claims of injurythat implementation of

Phase I of the sole-source program with GSA prevents T&S from

making further sales to existing customers in the Northeast and New

York Metro postal areas, and that Phase I moots T&S's plans to

expand its regular business into those areasalso lack support in

the record and fail for want of injury-in-fact. Despite a vague

assertion that T&S has in the past occasionally supplied retail

USCA Case #94-5219 Document #158818 Filed: 10/27/1995 Page 7 of 9
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

7First Supplemental Declaration of Tom Stewart ¶ 8,

reprinted in J.A. 236. 

packaging products to post offices in the Northeast and New York

Metro postal areas,

7 there is no indication that T&S had on-going

customer relations with particular post offices in the Phase I

areas at the time USPS began its test program with GSA. Moreover,

it is pure speculation that T&S would be able to expand its

business into the Phase I areas but for continued implementation of

the sole-source program with GSA. Thus, any alleged injury based

on the impact of the sole-source program on T&S's hypothetical

sales to post offices in the Phase I areas is insufficiently

concrete to satisfy the injury-in-fact requirement of Article III

standing. See Energy Transp. Group, Inc. v. Maritime Admin., 956

F.2d 1206, 1215 (D.C. Cir. 1992) (The court found the potential

competitive harm "too speculative to satisfy Article III's

requirement" of concrete injury-in-fact where an unsuccessful

bidder challenged the qualification of purchasers who acquired from

Maritime Administration tankers for transporting natural gas to the

United States, but where the bidder, although in the business of

operating commercial vessels for transporting natural gas, did not

at that time carry shipments of natural gas to the United States

and did not claim to have made particular arrangements enabling it

to do so in the future.).

Certainly, as T&S submits, T&S will lose sales if USPS elects

to move forward with Phases II and III of the sole-source program

with GSA, which would involve postal areas where T&S has district

ordering agreements. But Phase I of the program is only a test

USCA Case #94-5219 Document #158818 Filed: 10/27/1995 Page 8 of 9
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

run, and it is uncertain whether or how USPS will decide to proceed

with the sole-source program once it has reviewed the results of

the customer satisfaction survey to be conducted at the conclusion

of Phase I. T&S's claims that GSA's status under the sole-source

program has interfered with T&S's dealings with its customers are

thus premature because such claims may become moot depending on

decisions USPS has yet to make. Moreover, even if the injury to

T&S's customer base were actual or imminent, T&S still would lack

redressibility because there is no evidence that USPS would abort

the sole-source program with GSA even if GSA were enjoined to raise

its prices. Thus, just as T&S is unable to establish

constitutional standing based on its claim that USPS would have

chosen T&S for the sole-source program but for GSA's pricing

practices, T&S is also unable to meet the requirements of Article

III based on its allegations that the sole-source program with GSA

unfairly impinges on T&S's existing business relationships.

III. CONCLUSION

For the reasons set forth above, the judgment of the District

Court is affirmed.

So ordered.

USCA Case #94-5219 Document #158818 Filed: 10/27/1995 Page 9 of 9