Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-97-05154/USCOURTS-caDC-97-05154-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 14, 1998 Decided May 19, 1998

No. 97-5154

Columbian Rope Company,

Appellant

v.

Togo D. West, Jr., Secretary of the Army, et al.,

Appellees

Appeal from the United States District Court

for the District of Columbia

(No. 96cv01827)

Douglas L. Patin argued the cause and filed the briefs for

appellant.

Glenn P. Harris, Trial Attorney, U.S. Small Business

Administration, argued the cause for appellees, with whom

Wilma A. Lewis, U.S. Attorney, Mark E. Nagle, R. Craig

Lawrence and Wyneva Johnson, Assistant U.S. Attorneys,

were on the brief.

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Before: Silberman, Henderson and Rogers, Circuit

Judges.

Opinion for the Court filed by Circuit Judge Rogers.

Rogers, Circuit Judge: Columbian Rope Company appeals

from the grant of summary judgment rejecting its challenge

to the Small Business Administration's decision that a rival

bidder was eligible under the Small Business Act for a

government contract. Because the contract has been fully

performed and its options have expired, we dismiss the appeal

as moot.

I.

The Small Business Act ("the Act"), 15 U.S.C. ss 631-657

(1994), directs federal agencies to reserve some government

contracts for small businesses, with "[t]he Government-wide

goal for participation by small business concerns ... established at not less than 20 percent of the total value of all

prime contract awards for each fiscal year." Id. s 644(g)(1);

see id. s 644(a). A business can qualify as a "small business

concern" under the Act only if it is "independently owned and

operated" and "not dominant in its field of operation." Id.

s 632(a)(1). The Small Business Administration ("SBA") has

authority to establish criteria to determine whether individual

businesses qualify as small businesses and to apply those

criteria in individual cases. See id. ss 632(a)(2)(A), 637(b)(6).

One statutory rule and one regulatory rule regarding businesses' eligibility under the Act are at issue. Both rules are

designed to ensure that small businesses actually perform a

significant part of the work required by government contracts

that they win. See, e.g., Size Appeal of Nuclear Research

Corp., S.B.A. No. 2828 (1988); cf. Iconco v. Jensen Construction Co., 622 F.2d 1291, 1298 (8th Cir. 1980) ("If a contract set

aside for small businesses has been performed by a concern

that is not small, the intent of Congress has not been advanced."). First, under the "50% Rule," a business cannot

qualify as a small business concern for purposes of a contract

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for procurement of supplies unless it agrees that it "will

perform work for at least 50 percent of the cost of manufacturing the supplies (not including the cost of materials)." 15

U.S.C. s 644(o)(1)(B). Second, through application of the

"Manufacturer Rule," SBA decides whether a particular business qualifies as the manufacturer of the end product that is

the subject of the contract.1 If a business does not satisfy

both the 50% Rule and the Manufacturer Rule, it cannot

receive a contract for the manufacture of supplies reserved

for small business concerns under the Act.

On June 9, 1994, the Department of the Army invited the

submission of bids for a contract for rope assemblies to be

used in connection with helicopter airlift operations. The

Army reserved this contract for small business concerns

under the Act. Columbian Rope Company ("Columbian") and

Ocean Products Research ("Ocean Products") submitted bids,

and the Army awarded the contract to Ocean Products.

Columbian formally protested the award of the contract,

challenging both whether Ocean Products would do a good

job and its eligibility as a small business in light of its

subcontracting of a significant portion of the work to a large

company, American Manufacturing. The SBA Regional Office denied the protest and Columbian appealed to the SBA

Office of Hearings and Appeals ("Hearings and Appeals"),

which ruled that the protest was moot. However, after

Columbian filed suit in the district court, the parties entered

__________

1 At the time of the events in question, the Manufacturer Rule

read:

The following factors are evaluated in determining whether a

concern is the manufacturer for the procurement:

(i) The proportion of total value in the end item added by the

efforts of the concern, excluding costs of overhead, testing,

quality control, and profit; and

(ii) The importance of the elements added by the concern to

the function of the end item, regardless of their relative value.

13 C.F.R. s 121.906(b)(2) (1995). SBA revised its regulations in

January 1996; the Manufacturer Rule can be found in its current

form at 13 C.F.R. s 121.406(b) (1997).

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a stipulated order of dismissal, without prejudice, that Hearings and Appeals would decide the merits of Columbian's

protest.

On November 22, 1995, Hearings and Appeals adopted the

Regional Office's finding that Ocean Products "manufactures

a substantial part of the end product" and thus satisfied the

Manufacturer Rule. Because there was insufficient evidence

in the record on the cost of manufacturing actually performed

by Ocean Products relative to the cost of manufacturing

subcontracted to American Manufacturing, Hearings and Appeals concluded that it could not determine whether Ocean

Products met the 50% Rule and thus remanded that issue to

the Regional Office for further investigation. On remand,

after receiving additional information from Ocean Products on

costs, the Regional Office reaffirmed that Ocean Products

satisfied the 50% Rule. Columbian appealed again and, after

reviewing the cost data that had been submitted, requested

that Hearings and Appeals issue a subpoena for additional

cost information from Ocean Products and hold an evidentiary

hearing. Hearings and Appeals did neither, and on June 6,

1996, issued its second decision, this time upholding the

Regional Office's determination that Ocean Products satisfied

the 50% Rule.

Having lost its administrative appeal, Columbian filed a

complaint in the district court asserting that the SBA decisions of November 22, 1995, and June 6, 1996, violated the

Administrative Procedure Act.2 Furthermore, Columbian

maintained that SBA violated due process by ruling without

conducting a hearing or issuing a subpoena for further cost

data from Ocean Products. Columbian sought a permanent

injunction enjoining the Army from ordering any more rope

under the contract from Ocean Products and a declaratory

judgment that Ocean Products is not a qualified small business manufacturer under the terms of the solicitation, that

the contract award was invalid and should be terminated for

convenience, and that the SBA Regional Office's and Hear-

__________

2 Columbian sued the Secretary of the Army, the Army contracting officer, the Administrator of SBA, and the Acting Area

Director of the SBA.

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ings and Appeals's decisions were arbitrary and capricious,

violated due process, and were not in accordance with law.

The district court granted summary judgment to the government on May 20, 1997, and Columbian filed an appeal on June

13, 1997. On October 11, 1997, all the options on the contract

expired, and thus there can be no further performance under

this particular contract.

II.

On appeal, Columbian contends that the record did not

support SBA's determination that Ocean met the 50% Rule,

that SBA failed to follow its own regulations in concluding

that Ocean satisfied the Manufacturer Rule, and that the

procedures by which SBA denied Columbian's protest violated due process. The threshold issue, however, is whether

this court lacks jurisdiction because the appeal is moot.

Article III of the Constitution restricts federal court jurisdiction to "actual, ongoing controversies." Honig v. Doe, 484

U.S. 305, 317 (1988). "[A]n actual controversy must be extant

at all stages of review, not merely at the time the complaint is

filed." Arizonans for Official English v. Arizona, 117 S. Ct.

1055, 1068 (1997) (quoting Preiser v. Newkirk, 422 U.S. 395,

401 (1975)) (internal quotation marks omitted). Thus, "[e]ven

where litigation poses a live controversy when filed, the

[mootness] doctrine requires a federal court to refrain from

deciding it if 'events have so transpired that the decision will

neither presently affect the parties' rights nor have a morethan-speculative chance of affecting them in the future.' "

Clarke v. United States, 915 F.2d 699, 701 (D.C. Cir. 1990) (en

banc) (quoting Transwestern Pipeline Co. v. FERC, 897 F.2d

570, 575 (D.C. Cir. 1990)).

The work under the contract at issue has been completed,

and all the options to extend the contract have expired.

Columbian would not receive any cognizable benefit if the

court granted the requested relief: neither injunctive relief

preventing the government from making any further orders

on the contract nor declaratory relief on the legality of the

contract would affect the parties in any meaningful way

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because the contract has been fully performed. The sole

possible exception is Columbian's request for a declaratory

judgment that "Ocean Products is not a qualified small business manufacturer under the terms of the solicitation, SBA's

regulations and applicable law." As Columbian notes, the

original Army solicitation upon which the contract was based

still exists, and the Army or some other agency could rely

upon it to issue another solicitation for bids. Columbian does

not explain, however, how this court could possibly declare

that Ocean Products will never qualify for a contract under

the solicitation: even if Columbian is right that SBA mistakenly determined on this record that Ocean Products satisfied

the 50% Rule and the Manufacturer Rule, application of these

rules depends on facts that change over time. Although the

court could declare that the particular size determination in

question was not supported by the record, that issue is moot.

A judicial determination on this record of Ocean Products's

small business eligibility to bid on the rope assembly contract

would not affect its ability to win either a future rope

assembly contract on this solicitation or a contract based on a

different solicitation.3 The expiration of the contract has

made Columbian's requests for relief meaningless; thus, this

court cannot address the merits of the appeal unless some

exception to mootness applies.

The only possibly applicable exception is that for issues

that are capable of repetition yet evading review, see, e.g.,

Honig, 484 U.S. at 317-20, but this exception cannot render

Columbian's case justiciable. The exception applies when "(1)

the challenged action was in its duration too short to be fully

litigated prior to its cessation or expiration, and (2) there was

a reasonable expectation that the same complaining party

would be subjected to the same action again." Murphy v.

Hunt, 455 U.S. 478, 482 (1982) (per curiam) (quoting Weinstein v. Bradford, 423 U.S. 147, 149 (1975)) (internal quotation

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3 The potential of declaratory relief alone cannot save an action

from mootness if the object of the suit is not "some ongoing

underlying policy, but ... an isolated agency action." City of

Houston v. Department of Housing & Urban Dev., 24 F.3d 1421,

1429 (D.C. Cir. 1994).

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marks omitted); see also Clarke, 915 F.2d at 704. Even

assuming that the length of a contract based on the Army

solicitation might be too short to allow an effective challenge

to the award of that contract, there is no "reasonable expectation" that Columbian will suffer this same injury. Columbian

maintains that it may have to compete with Ocean Products

in the future for contracts based on the same military specification, and thus that it may suffer once more if SBA again

determines that Ocean Products qualifies as a small business

concern. However, any determination made by this court

regarding Ocean Products's size would only apply to the

completed contract. The record does not indicate whether

the government will again seek to purchase more rope assemblies for helicopter airlift operations under the same specifications. That possibility is therefore too speculative an interest

upon which to base Article III jurisdiction.4 See Clarke, 915

F.2d at 701-03. There is no "reasonable expectation" that

Columbian will suffer again in a similar way and, hence, no

jurisdictional basis for this court to issue a decision on the

merits.

III.

When a case has become moot during the pendency of

appeal "due to circumstances unattributable to any of the

parties," the standard practice is to vacate the decision of the

district court. U.S. Bancorp Mortgage Co. v. Bonner Mall

Partnership, 513 U.S. 18, 23, 25 n.3 (1994) (quoting Karcher

v. May, 484 U.S. 72, 83 (1987)) (internal quotation marks

omitted); see Arizonans for Official English, 117 S. Ct. at

1071; United States v. Munsingwear, Inc., 340 U.S. 36, 39 &

n.2 (1950); Clarke, 915 F.2d at 706. Otherwise, the party

who lost in the district court, who cannot gain direct review

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4 Columbian's request for a remand for Columbian to introduce

evidence regarding the likelihood of repetition is not appropriate.

If the issues are capable of repetition, that very fact would counsel

against any need for remand in order to allow this case to continue:

if the issues recur, Columbian will have the opportunity then to

develop the record as it pleases; if not, Columbian has no need for a

remand.

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on appeal because of mootness, might be precluded from

relitigating the issues in a future proceeding. See Munsingwear, 340 U.S. at 39-40. Similarly, a court declining to

review an agency order on the ground of intervening mootness should vacate that order, at least when the mootness is a

result of happenstance. See, e.g., A.L. Mechling Barge Lines,

Inc. v. United States, 368 U.S. 324, 329 (1961); American

Family Life Assurance Co. of Columbus v. FCC, 129 F.3d

625, 630-31 (D.C. Cir. 1997). Because the instant case has

become moot due to the expiration of the contract, vacatur is

appropriate, and, as ordered, meets Columbian's concerns

regarding the possible preclusive effect of the district court

judgment and SBA decisions.5

__________

5 Columbian has not requested vacatur inasmuch as its position

is that the appeal is not moot in light of the possible preclusive

effects of the district court and SBA decisions. While the Supreme

Court confirmed in U.S. Bancorp that vacatur is an equitable

remedy, see U.S. Bancorp, 513 U.S. at 25; see also National Black

Police Ass'n v. District of Columbia, 108 F.3d 346, 354 (D.C. Cir.

1997), it did not thereby undo the established precedential backdrop

of Munsingwear, in which the Supreme Court affirmed that vacatur

is "the duty of the appellate court" when a case has become moot

through happenstance while appeal was pending. Munsingwear,

340 U.S. at 40 (quoting Duke Power Co. v. Greenwood County, 299

U.S. 259, 267 (1936)) (internal quotation marks omitted); see also

Ramallo v. Reno, 114 F.3d 1210, 1214 (D.C. Cir. 1997); American

Library Ass'n v. Barr, 956 F.2d 1178, 1186-87 (D.C. Cir. 1992).

Pursuant to that duty, this court should order vacatur "sua sponte

to preserve the rights of the parties." Weaver v. United Mine

Workers of America, 492 F.2d 580, 587 n.36 (D.C. Cir. 1973).

Furthermore, Columbian errs when it contends that the court

lacks authority to vacate the SBA decision. See, e.g., Anderson v.

Morgan, 263 F.2d 903, 904 (D.C. Cir. 1959) (per curiam); cf.

Arizonans for Official English, 117 S. Ct. at 1072 ("[V]acatur down

the line is the equitable solution."). Columbian's position makes no

sense: if the district court has the authority to vacate the SBA's

order, which Columbian does not dispute, and this court has the

authority both to vacate the district court's order and to "remand

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Accordingly, we dismiss the appeal as moot, vacate the

judgment and order of the district court, and remand the case

to the district court with instructions to dismiss the complaint

and vacate the SBA decisions of November 22, 1995, and June

6, 1996.

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the cause and direct the entry of such appropriate judgment,

decree, or order, or require such further proceedings to be had as

may be just under the circumstances," 28 U.S.C. s 2106, another

proposition undisputed by Columbian, simple addition dictates that

this court can direct the district court to vacate the agency orders

on review.

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