UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_______________________

No. 91-5097

_______________________

RAPIDES REGIONAL MEDICAL CENTER,

Plaintiff, Intervenor-Defendant-Appellee,

versus

SECRETARY, DEPARTMENT OF VETERANS' AFFAIRS,

Defendant, Intervenor-Defendant-Appellant,

and

ST. FRANCES CABRINI HOSPITAL,

Movant, Intervenor-Plaintiff-Appellant.

_________________________________________________________________

Appeals from the United States District Court

for the Western District of Louisiana

_________________________________________________________________

(September 24, 1992)

Before GOLDBERG, JONES, and DeMOSS, Circuit Judges.

EDITH H. JONES, Circuit Judge:

The centerpiece of this dispute is a dual energy linear

accelerator, a sophisticated radiation therapy device used on

cancer patients. Two hospitals in Rapides Parish, Louisiana -- one

private, the other operated by the Department of Veterans Affairs

(VA) -- entered into a "sharing agreement" for the acquisition and

joint use of such an accelerator. Under the agreement, the

Alexandria Veterans Affairs Medical Center (VAMC) would procure the

accelerator, with nearby St. Francis Cabrini Hospital (Cabrini)
 

1 The VAMC-Cabrini agreement consisted of: (1) a Letter of Intent

between the VAMC and Cabrini; (2) a Memorandum of Understanding between the

two facilities ("MOU"), requiring Cabrini to donate one-half the cost of the

accelerator -- approximately $750,000 -- to the VAMC in exchange for housing

and operating it at Cabrini; (3) a proposed sharing agreement, governing the

joint use of the accelerator and providing for Cabrini to render certain

related services to VAMC and its patients; and (4) a cost analysis for the

accelerator. 

 

2 From March 1985 to the period relevant to this lawsuit, the VAMC

contracted with Rapides for radiation therapy using Rapides' accelerator. In

late 1989, VA officials, apparently concerned that Rapides was charging too

much for the use of its accelerator and related services, began exploring

possible alternatives. When the VA learned that Cabrini was planning to

acquire its own accelerator, it entered into negotiations for a possible

sharing agreement, culminating in the signing of the MOU in August 1990. 

Rapides estimates that its contract with the VA accounts for twenty percent

(20%) of its total revenue from radiation therapy services. 

 

3 Rapides Regional Medical Center, No. B-242601, 91-1 C.P.D. ¶ 159

(Feb. 12, 1991), reconsideration denied, Rapides Regional Medical Center --

Reconsideration, No. B-242601.2, 91-1 C.P.D. ¶ 614 (June 28, 1991). 

2

donating one-half the cost of the machine to the VAMC.1 The VAMCowned accelerator would then be housed at Cabrini and available for

use by both institutions. Shortly before negotiations over the

sharing agreements had been completed, neighboring Rapides Regional

Medical Center (Rapides) got wind of the deal and sought to block

it. Rapides, which operates two linear accelerators of its own,

and which currently provides accelerator and related services to

the VAMC,2 charged that the sharing agreement violated the

Competition in Contracting Act of 1984 (CICA), 41 U.S.C. § 251 et.

seq., because it was never subjected to public bidding. After an

administrative appeal dismissed as untimely by the Comptroller

General,3 Rapides won a permanent injunction against the sharing

agreement in district court. Rapides Regional Medical Center v.

Derwinski, 783 F.Supp. 1006 (W.D. La. 1991). Both the VA and
 

4 CICA provides in relevant part: 

(1) Except as provided in subsection (b), (c), and (g) of

this section and except in the case of procurement procedures

otherwise expressly authorized by statute, an executive agency in

conducting a procurement for property or services -- 

(A) shall obtain full and open competition through

the use of competitive procedures. . . and 

(B) shall use the competitive procedure or

combination of competitive procedures that is best suited

under the circumstances of the procurement. 

(2) In determining the competitive procedures appropriate

under the circumstance, an executive agency--

(A) shall solicit sealed bids if-- 

(i) time permits the solicitation, submission,

and evaluation of sealed bids;

(ii) the award will be made on the basis of

price and other price-related factors;

 (iii) it is not necessary to conduct discussions

with the responding sources about their bids; and

(iv) there is a reasonable expectation of

receiving more than one sealed bid; and

(B) shall request competitive proposals if sealed

bids are not appropriate under clause (A). 

41 U.S.C. § 253(a). 

3

Cabrini, which had intervened in those proceedings, appealed the

district court's decision, and we granted expedited review. 

I.

STATUTORY BACKGROUND

Before discussing the merits of this case, it may be

helpful to trace its statutory contours. Rapides asserts that the

Competition in Contracting Act governs this action. Appellee

alleges, and the district court agreed, that the VAMC-Cabrini

sharing agreement violates CICA's general requirement that federal

procurement contracts be awarded competitively.4 CICA responded to

Congressional findings that many federal procurement contracts were
 

5 On appeal, Cabrini attempts to avail itself of the exception

provided by § 253(b)(1)(A), which provides:

(b) exclusion of particular source; restriction of solicitation

to small business concerns

(1) An executive agency may provide for the procurement of property or

services covered by this section using competitive procedures but

excluding a particular source in order to establish or maintain any

alternative source or sources of supply for that property or service if

the agency head determines that to do so--

(A) would increase or maintain competition and would

likely result in reduced overall costs for such procurement, or

for any anticipated procurement, of such property or services[.]

By its own terms, however, subsection (b)(1)(A) applies only to agencies that

are already "using competitive procedures." The VA stipulated before the

district court that it did not use competitive procedures when it entered into

the sharing agreement with Cabrini. In any event, Cabrini raises this

argument for the first time on appeal, and we will not consider it here. 

4

awarded on a sole-source basis, resulting in widespread

inefficiencies and wasteful government spending. According to its

drafters, the Act's objectives were "to establish a statutory

preference for the use of competitive procedures in awarding

federal contracts for property or services, to impose restrictions

on the awarding of noncompetitive contracts, and to permit federal

agencies to use the competitive method most conducive to the

conditions of the contract." S. Rep. No. 50, 98th Cong., 2d Sess.,

reprinted in 1984 U.S. Code Cong. & Admin. News 2174, 2180. 

The VA does not contend that its sharing agreement with

Cabrini falls within any of the seven enumerated exceptions to CICA

that permit sole-source procurement.5 However, both Cabrini and

the VA would find refuge in the savings clause to § 253(a)(1),

which exempts from CICA "procurement procedures otherwise expressly

authorized by statute." As asserted proof of this authority,

appellants cite 38 U.S.C. § 8153, empowering the VA to enter into
 

6 Section 8153 provides:

(a) To secure certain specialized medical resources which

otherwise might not be feasibly available or to effectively

utilize certain other medical resources, the Secretary may, when

the Secretary determines it to be in the best interest of the

prevailing standards of the Department medical care program, make

arrangements, by contract or other form of agreement, as set forth

in clauses (1) and (2) below between Department health-care

facilities and other health-care facilities (including organ

banks, blood banks, or similar institutions), research centers, or

medical schools:

(1) for the mutual use, or exchange of use, of

specialized medical resources when such an agreement will

obviate the need for a similar resource to be provided in a

Department health care facility; or 

(2) for the mutual use, of specialized medical

resources in a Department health care facility, which have

been justified on the basis of veterans' care, but which are

not utilized to their maximum effective capacity. 

(b) Arrangements entered into under this section shall

provide for reciprocal reimbursement based on a methodology that

provides appropriate flexibility to the heads of the facilities

concerned to establish an appropriate reimbursement rate after

taking into account local conditions and needs and the actual

costs of the providing facility of the resource involved. Any

proceeds to the Government received therefrom shall be credited to

the applicable Department medical appropriation and to funds that

have been allotted to the facility that furnished the resource

involved. 

. . . 

(e) The Secretary shall submit to the Congress not more

than 60 days after the end of each fiscal year a report on the

activities carried out under this section. 

5

sharing agreements for the acquisition and joint use of advanced

medical technology.6 

Congress initially authorized the sharing program set

forth in § 8153 "for the exchange of use (or under certain

conditions the mutual use) of specialized medical facilities

between Veterans' Administration hospitals and other public and

private hospitals or medical schools in a medical community." S.

Rep. No. 1727, 89th Cong., 2d Sess., reprinted in 1966 U.S. Code
 

7 Congress authorized the expanded sharing program, which is

officially known as the Advanced Technology Medical Equipment Acquisition and

Sharing Program, in 1990. See Pub. L. 101-366, Title II, § 202 (b), Aug. 15,

1990, 104 Stat. 438. However, the above-cited Conference Report, see Conf.

Rep. No. 363, id., indicates that Congress began funding the sharing program

as early as 1985 -- nearly five years before it was formally authorized. 

6

Cong. & Admin. News 4210, 4219-20. In 1985, after CICA's

enactment, Congress expanded the sharing program to other medical

facilities, appropriating up to $10 million for a pilot program in

which VA facilities would purchase advanced medical equipment so

long as non-federal sources agreed to finance at least fifty

percent (50%) of the acquisition costs. Conf. Rep. No. 363, 99th

Cong., 1st Sess. 22 (Nov. 8, 1985). According to the Senate

Appropriations Committee:

The purpose of this funding is to help the VA to acquire

costly, advanced state-of-the-art medical equipment more

easily and to provide a means of using that equipment to

maximum effectiveness by encouraging long-term sharing

with community institutions. . . . The Committee

recognizes that there are limits to what medical

communities and the Federal Government can individually

accomplish, but believes that this proposed arrangement

will provide VA beneficiaries and the VA medical centers

and community medical institutions with access to

prohibitively expensive major medical equipment which

would otherwise not be available to either. 

S. Rep. No. 99-129, 99th Cong., 1st Sess. 82, 88-89 (Aug. 28,

1985).7 

Shortly after Congress began funding the sharing program,

the Veterans Administration (predecessor to the Department of

Veterans Affairs) promulgated interim rules to implement CICA. See

51 Fed. Reg. 23065-73 (June 25, 1986). Significantly, the VA

stipulated that "[s]haring contracts negotiated under 38 U.S.C.

§ 5053 are approved for other than full and open competition." Id.
 

8 38 U.S.C. § 5053 was later recodified as § 8153. See Pub. L. 102-

40, Title IV, § 402(b)(1), May 7, 1991, 105 Stat. 238. As earlier noted, the

1990 program set forth in what is now § 8153 is an expansion of the original

VA sharing program, first enacted in 1966 as § 5053. 

 

9 See also 48 C.F.R. 806.302-5(b) (1991). 

7

at 23066.8 The VA explained that its "[j]ustification and approval

procedures for proposed noncompetitive acquisitions . . . are

critical in effectively implementing the CICA and will provide the

basis for compiling the VA annual report to Congress." Id. at

23065. The VA's interim rules were finalized and implemented in

1987. See 52 Fed. Reg. 28559, 28560 (July 31, 1987).9

To summarize: Congress first adopted the VA sharing

program in 1966. The program as enacted did not address

competitive procurement procedures. Congress enacted CICA in 1984,

creating a statutory presumption in favor of competition "except in

the case of procurement procedures . . . expressly authorized by

statute." The following year, Congress expanded the sharing

program by appropriating funds to finance the acquisition and joint

use of advanced medical equipment along the lines of the VAMCCabrini agreement. In response, the VA in 1987 implemented

regulations providing that despite CICA's enactment, the sharing

program did not require full and open competition. Finally,

Congress amended the sharing program in 1990 at what is now § 8153,

expanding the existing program substantially but making no mention

of CICA. 

Against this statutory backdrop, the district court

permanently enjoined the VAMC-Cabrini agreement after holding that
8

Congress did not explicitly exempt the sharing program from CICA

when it amended § 8153 in 1990. While acknowledging the VA

regulation set forth at 48 C.F.R. 806.302-5(b), which exempts the

sharing program from CICA, the court noted:

48 C.F.R. 806.302-5(b) . . . antedates [sic]

the rather precise statutory language of

"otherwise expressly authorized by statute" as

founded in 41 U.S.C. § 253(a). Congress said

that the public bid law can be circumvented by

express language contained in a statute. The

regulation from the Veterans Administration is

not a statute. Congress created the measuring

stick and retained the power to delete public

bid law requirements from contracts for goods

and services. The VA is powerless to change

the clear procedure set by Congress.

783 F.Supp. at 1008. The district court did not address the preCICA legislative history of § 8153, nor did it review the 1985

appropriations legislation expanding the existing sharing program

to private hospitals. 

Cabrini and the VA argue that Congress never intended the

Competition in Contracting Act to apply to a sharing program that

has been on the books since 1966. The program is either exempted

from the Act by § 8153, they contend, or falls outside CICA because

sharing agreements do not involve the "procurement" of equipment.

Appellants also challenge Rapides' standing to sue. We address

these arguments in reverse order. 

II.

STANDING

Cabrini and the VA first contend that the district court

erred in failing to enter a specific finding that Rapides has

standing to bring this lawsuit. They insist on a remand or, in the
 

10 The disappointed bidder requirement stems from the familiar "zone

of interests" test mandated by the Administrative Procedure Act. The APA

waives the sovereign immunity to which government agencies would otherwise be

entitled for all persons "adversely affected or aggrieved by agency action

within the meaning of a relevant statute. . . ." 5 U.S.C. § 702. In its

complaint, Rapides premised jurisdiction on 28 U.S.C. § 1331 (federal question

jurisdiction) and 31 U.S.C. § 3556 (permitting "any interested party" to

challenge alleged violations of federal procurement law). The VA suggests

that Rapides erred by failing to tie jurisdiction in this case directly to the

APA. But as the VA candidly admits elsewhere in its brief, "it does not

matter whether the suit is thought of as an APA action or an action brought

directly under CICA, so long as it is clear that the plaintiff must be an

actual or prospective bidder in order to have standing." See, e.g., Waste

Management of North America v. Weinberger, 862 F.2d 1393, 1397-98 (9th Cir.

1988); and MCI Telecommunications Corp. v. United States, 878 F.2d 362, 365

(Fed. Cir. 1989). Neither the VA nor Cabrini challenges Rapides'

constitutional standing to bring this action. See generally Scanwell

Laboratories, 424 F.2d at 871-73.

9

alternative, a ruling that as a matter of law Rapides lacks

standing to sue. Appellants acknowledge that disappointed bidders

have prudential standing under the Administrative Procedure Act to

challenge agency violations of federal procurement requirements.

See Scanwell Laboratories, Inc. v. Shaffer, 424 F.2d 859, 873 (D.C.

Cir. 1970); Hayes International Corp. v. McLucas, 509 F.2d 247, 257

(5th Cir.), cert. denied, 423 U.S. 864, 96 S. Ct. 123, 46 L.Ed.2d

92 (1975) (adopting Scanwell). They maintain, however, that

Rapides lacks standing because it is neither an actual nor a

prospective bidder on the VA's plan to acquire a linear

accelerator.10 Establishing prudential standing to challenge a

government contracting decision requires: (1) an allegation of

injury in fact; (2) a claim that CICA was "arguably" intended to

prevent the agency's action; and (3) the absence of Congressional

intent to withhold judicial review. Contractors Engineers

International, Inc. v. Dept. of Veterans Affairs, 947 F.2d 1298,

1300 n.9 (5th Cir. 1991); Gull Airborne Instruments, Inc. v.
 

11 Baldridge has since been questioned by Clarke v. Securities

Industry Ass'n., 479 U.S. 388, 107 S. Ct. 750, 93 L.Ed.2d 757 (1987), on

grounds that are not relevant here. 

10

Weinberger, 694 F.2d 838 (D.C. Cir. 1982) (citing Control Data

Corp. v. Baldridge,

11 655 F.2d 283, 288-89 (D.C. Cir.), cert.

denied, 454 U.S. 881, 102 S. Ct. 363, 70 L.Ed.2d 190 (1981)). We

are convinced that "[s]atisfaction of the first factor is clear

from the preceding discussion, and there is no clear and convincing

Congressional intent to withhold judicial review." Abel

Converting, Inc. v. United States, 679 F.Supp. 1133, 1137 (D.D.C.

1988). As for the second requirement, assuming that the sharing

agreement was covered by CICA, that statute supplies its own

answer: 

'Interested party', with respect to a contract

or proposed contract . . . means an actual or

prospective bidder or offeror whose direct

economic interest would be affected by the

award of the contract or by failure to award

the contract[.] 

31 U.S.C. § 3551(2) (emphasis added). 

Thus, to object to the award of a contract allegedly

covered by CICA, Rapides must demonstrate that it was an actual or

prospective bidder or offeror on the sharing agreement. Because

Rapides was not an actual bidder, the prudential standing issue

turns on its claimed status as a prospective bidder. Appellants

insist that the district court never addressed this issue,

asserting that Rapides would not have bid on the sharing agreement

had it been given the opportunity to do so. This is unpersuasive.

Implicit in the district court's holding that Rapides was denied
 

12 Admittedly, Rapides sought to block the VAMC-Cabrini agreement

after it had been executed, writing letters to Members of Congress and others

asserting that the new linear accelerator was duplicative and unnecessary. 

But this last-ditch lobbying effort does not controvert Rapides' contention

that it would have bid on the sharing agreement at the outset, before the

negotiations were a fait accompli. 

11

the opportunity to participate in the sharing agreement is the

recognition that Rapides would have done so if given the chance.

There is sufficient evidence in the record that Rapides stood ready

and willing to participate in the sharing program had it been

offered the opportunity to do so. In suggesting otherwise,

appellants ignore not only the specific allegations in Rapides'

verified complaint, but the affidavit of its president, James T.

Montgomery, who stated that "[h]ad Rapides Regional been given the

opportunity, Rapides Regional would have submitted a proposal to

VAMC in connection with consideration of submissions under the 1990

Advanced Medical Equipment Share Acquisition Program. . . ."12

While appellants point to some evidence that might be interpreted

as disproving Rapides' intent to participate in the sharing

agreement with the VAMC if offered the chance, the district court's

implied factfinding is not clearly erroneous. Anderson v. Bessemer

City, 470 U.S. 564, 573, 105 S. Ct. 1504, 1511, 84 L.Ed.2d 518

(1985). Had the district court been convinced that Rapides' real

motive was to block the VA-Cabrini deal rather than to make a

competing offer, it would have had to deny standing, because

Rapides would not then be an actual or prospective bidder. This
 

13 We need not and do not here decide that any prospective or actual

bidder necessarily has standing to challenge a government procurement decision

arguably governed by CICA. Compare Waste Management of N. America v.

Weinberger, 862 F.2d 1393, 1397-98 (9th Cir. 1988). Affirmance of the

district court is based on Rapides' evidence that it could and would

participate in the program if offered the opportunity and that its selfinterest dictated such a decision because of its previous arrangement to

supply other radiation therapy services to the VA. Cabrini also argues that

Rapides waived its claim by failing to file a timely protest with the

Comptroller General, the federal official charged with hearing bid protests at

the administrative level. This argument wrongly assumes that the Comptroller

General has exclusive jurisdiction to hear CICA protests. In fact, the

statute expressly provides otherwise. See 31 U.S.C. § 3556 (stating that

administrative remedies under CICA are non-exclusive).

 

14 As defined by 38 U.S.C. § 8152(2): 

The term "specialized medical resources" means medical

resources (whether equipment, space, or personnel)

which, because of cost, limited availability, or

unusual nature, are either unique in the medical

community or are subject to maximum utilization only

through mutual use. 

 

15 CICA applies only to an executive agency conducting a "procurement

for property or services." 41 U.S.C. § 253(a)(1). 

 

16 See Jefferson Bank & Trust, No. B-228563, 87-2 C.P.D. ¶ 390 (Oct.

23, 1987) (government agency's leasing of government-owned office space is not

a procurement and therefore subject to CICA); Crystal Cruises, Inc., No. B238347, 90-1 C.P.D. ¶ 141 (Feb. 1, 1990) (government award of a concession

permit allowing a shipping company to operate within a national park is a

license to enter government property, not a procurement of property or

services under CICA); and Columbia Communications Corp., No. B-236904, 89-2

12

conclusion was not compelled by the evidence, and we decline to

overturn the court's finding.13 

III.

PROCUREMENT

Appellants next confront CICA directly by arguing that

the shared acquisition of specialized medical resources14 for mutual

use under § 8153 is not a "procurement" within the meaning of

CICA,15 but more closely resembles a lease or sale of government

property. The VA cites several decisions of the Comptroller

General to this effect.16 In particular, the VA directs this
C.P.D. ¶ 242 (Sept. 18, 1989) (NASA did not procure property or services

within the meaning of CICA by permitting private contractor to use government

satellite). 

The degree of deference to be paid to decisions of the Comptroller

General is a matter of some dispute. According to one treatise: 

There is an increasing tendency on the part of United

States district courts and United States Circuit

Courts of Appeal to refer bid protest cases to the

General Accounting Office because of that agency's

"special competence and experience." This tendency is

not followed in the United States Claims Court, which

is the most prestigious court in the area of

government contracting. It would seem that the United

States Court of Appeals for the District of Columbia

Circuit is of the view that a decision of the General

Accounting Office may not be reversed unless it is

"arbitrary and capricious," Steinthal & Co., Inc. v.

Seamans, 455 F.2d 1289 (D.C. Cir. 1971). However, the

majority of district courts are of the opinion that

the decisions of the Comptroller General are advisory

only and are not binding upon the court. 

McBride & Touhey, 1A GOVERNMENT CONTRACTS at § 7.10. Appellants urge us to

afford Chevron deference to Comptroller General decisions interpreting

statutes entrusted to the GAO by Congress. See Chevron U.S.A., Inc. v.

Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S. Ct. 2778, 81

L.Ed.2d 694 (1984). Even our pre-Chevron decisions indicate that "[w]hen

actions of procurement officials have been expressly validated by considered

decision of the GAO or are in compliance with a reasonably consistent pattern

of GAO determinations, the court should be extremely reluctant to overturn

such decisions." Kinnett Dairies, Inc. v. J.C. Farrow, 580 F.2d 1260, 1272

(5th Cir. 1978). See also J.H. Rutter Rex. Mfg. Co., Inc. v. United States,

706 F.2d 702, 711 (5th Cir.), cert. denied, 464 U.S. 1008, 104 S. Ct. 526, 78

L.Ed.2d 709 (1983) ("[D]ecisions of the Comptroller General are entitled to

special deference given the complexities and intricacies of government

purchasing decisions."). 

13

court's attention to Surface Alloys Corp., B-222703, 86-2 C.P.D.

¶ 7 (June 25, 1986). That case involved a controversy not unlike

this one. The U.S. Navy purchased a complicated piece of equipment

known as an ion implanter and leased it to a private company that

was performing research and development under a Navy contract.

Another company protested this action, arguing that it gave the

Navy's contractor an unfair competitive advantage. The Comptroller
 

17 Such donations are authorized at 38 U.S.C. § 8303. The amount of

the donation at issue in this case (fifty percent of the purchase price of the

accelerator) is consistent with the pilot program established by Congress. 

See Conf. Rep. No. 363, 99th Cong. 1st Sess. at 22. 

 

18 VA's brief takes pains to observe that "there is as yet

no agreement to procure such services [from Cabrini]. If the VA

contracts for such services from Cabrini, that would be a

procurement, and Rapides might well have standing to challenge

it." VA contends, however, that under § 8153, such a transaction

would still not be subject to CICA. 

14

General dismissed the protest, holding that the lease was not a

procurement under CICA. 

While the district court in this case did not define

"procurement" for purposes of CICA, its holding rests on the tacit

assumption that a procurement has taken place. The question thus

remains: Did the VA "procure" goods or services from Cabrini and

in so doing run afoul of CICA? 

For the answer, one must first examine the Memorandum of

Understanding between Cabrini and the VAMC. It outlines several

stages for the acquisition and mutual use of the linear

accelerator: (1) the actual purchase of the accelerator by the VA

from the manufacturer; (2) a financing arrangement whereby Cabrini

will donate one-half of the accelerator's cost to the VA;17 and

(3) the joint use of the machine by the VA and Cabrini under the

terms of the sharing agreement to be negotiated at a later date.18

The VA emphasizes that the accelerator was purchased from the

manufacturer using competitive procurement procedures, whereas the

financing and shared use of the VA-owned accelerator is akin to a
 

19 Cabrini takes a slightly different position: that the VA's

procurement of the linear accelerator "has not been challenged" so that CICA

applies -- if at all -- solely to that portion of the MOU by which Cabrini is

to provide accelerator-related services to VA clients. 

15

lease or sale of government property.19 For its part, Rapides

argues that the transaction must be viewed as an integrated whole:

the shared acquisition of property (the linear accelerator) as well

as services (including Cabrini's facilities, personnel and other

specialized medical services). To bolster its argument, Rapides

cites Motor Coach Industries, Inc. v. Dole, 725 F.2d 958 (4th Cir.

1984) and Yosemite Park v. United States, 582 F.2d 552 (Ct. Cl.

1978). 

In Motor Coach Industries, the Fourth Circuit held that

a trust formed by the Federal Aviation Administration to fund

ground transportation improvements at Dulles International Airport

was public in character, so that CICA applied to all such

improvements financed by that trust. To fund the trust, the FAA

agreed to waive air carrier fees at Dulles provided that the

airlines deposited equivalent funds in the trust. After analyzing

the trust's purpose, the court declared it to be a disguised

"purchasing agent" created to circumvent normal appropriation

channels and the federal procurement process. Id. at 968. While

Rapides insists that the VA-Cabrini sharing agreement is also an

"end-run" around the procurement requirements of CICA, id., Motor

Coach Industries is plainly distinguishable. Unlike the FAA trust,

the circumstances surrounding the sharing program do not suggest

any attempt to evade statutory purchase requirements. The question
16

here is whether the sharing agreement expressly permitted by § 8153

was for that reason not required to comply with CICA. Further, the

VAMC-Cabrini agreement does not resemble the concession contract at

issue in Yosemite Park. The National Park Service contracted

directly for transportation equipment and services under the guise

of a "concession" agreement conferring federal tax breaks on the

contractor. In holding that the contractor was bound by federal

procurement laws, the court rejected the NPS's efforts to evade

those requirements by labeling what was in fact "the purchase of

services" as a "concession." 582 F.2d at 558-59. The common

thread in both cases, absent here, is an arrangement by the federal

government to pay money or confer other benefits in exchange for

goods and services. Under the MOU, and under § 8153, the VA

received a donation of money from Cabrini in exchange for the

shared use of a linear accelerator purchased and owned by the VAMC.

Rapides nonetheless insists that the definition of

"procurement" under CICA is broad enough to encompass the VAMCCabrini sharing agreement. What is at stake here, Rapides insists,

is no less than "a sole-source joint purchase and shared use

agreement that falls squarely within the statutory definition of

procurement." And there lies the rub: Rapides pins its hopes on

a statutory definition of "procurement" that is inapplicable to

CICA. Specifically, Rapides cites 41 U.S.C. § 403, which provides

in relevant part:

As used in this chapter -- 
 

20 See, e.g., 41 U.S.C. § 253(g)(5) (Supp. 1992) (providing that

"[i]n this subsection, the term 'small purchase threshold' has the meaning

given such term in section 403(11) of this title"). Rapides' reliance on

Hayes v. U.S. Postal Service, 859 F.2d 354 (5th Cir. 1988), is similarly

misplaced. Hayes interpreted the definition of "procurement of services"

under the Contract Disputes Act, 41 U.S.C. § 601 et. seq., rather than CICA. 

Id. at 355-56. Hayes also deals with a "procurement" of suggestions by the

government from its employees. 

17

(2) the term "procurement" includes all

stages of the process of acquiring property or

services, beginning with the process of

determining a need for property or services

and ending with contract completion and

closeout[.]

(Emphasis added.) The crucial phrase in this passage, "As used in

this chapter," means that § 403(2) applies exclusively to Chapter

7 of Title 41. Chapter 7, The Office of Federal Procurement Policy

Act, 41 U.S.C. § 401 et. seq., establishes the Office of Federal

Procurement Policy within the Office of Management and Budget "to

provide overall direction of procurement policies, regulations,

procedures, and forms for executive agencies in accordance with

applicable laws." 41 U.S.C. § 402(b). In contrast, the full and

open procurement requirements of CICA § 253(a) are set forth in

Chapter 4. It stands to reason that the definition of procurement

for purposes of Chapter 7, which establishes an agency in the

executive branch whose mission is to oversee federal procurement

policy, is considerably broader than the definition of procurement

subject to the particularized bidding and negotiation requirements

specified by CICA. Indeed, had Congress wanted the definition of

procurement articulated in Chapter 7 to apply to Chapter 4, it

could have done so in express terms.20
 

21 See 48 C.F.R. 2.101 et. seq. (defining terms used by the FAR). 

18

If anything, Congress' efforts to define "procurement"

for purposes of the Office of Federal Procurement Policy Act

suggest that the meaning of this term differs elsewhere in Title

41. CICA itself does not define procurement. Nor, for that

matter, does the Federal Acquisition Regulations System (FAR), of

which 48 C.F.R. 806.302-5(b) -- the VA's rules exempting the

sharing program from CICA -- is a part.21 However, there can be

little doubt that the word procurement is widely understood, by

lawyers and laymen alike, to denote the process by which the

government pays money or confers other benefits in order to obtain

goods and services from the private sector. Black's Law Dictionary

defines "procurement contract" as "[a] government contract with a

manufacturer or supplier of goods or machinery or services under

the terms of which a sale or service is made to the government."

BLACK'S LAW DICTIONARY 1208 (6th ed. 1991). Rapides does not

dispute that the VA procured the linear accelerator from a private

manufacturer, in a procurement process that complied with CICA.

What Rapides fails to explain is why an agreement over future

access to government-owned property, albeit property purchased

partly with a private donation from Cabrini, justifies expanding

the definition of "procurement" beyond its generally understood

meaning. Rapides tries to sidestep the issue by asserting that it

would have given a larger donation to the VAMC to purchase the

accelerator, although the district court made no findings on this

point. But this does not change the fact that the VA never
19

intended to procure the accelerator from either Cabrini or Rapides.

To repeat, the classic procurement involves the government's paying

money or conferring other benefits in return for the acquisition or

use of private property or services. This is decidedly unlike the

agreement at issue here in which the VA has received money from a

private hospital and used it to purchase a linear accelerator from

the manufacturer, in exchange for letting that hospital share its

use. 

IV.

EXPRESS AUTHORIZATION

 Finally, even assuming that the VAMC-Cabrini sharing

agreement is a "procurement" for purposes of CICA, we are persuaded

that 38 U.S.C. § 8153, which authorizes the VA to enter into such

arrangements, is a procurement procedure "expressly authorized by

statute" within the meaning of CICA § 253(a)(1) and therefore is

not subject to the Act's full and open competition requirements. 

As has been already noted, Congress originally enacted

what is now § 8153 in 1966, nearly two decades before the passage

of the Competition in Contracting Act. In 1985, the year after

CICA's enactment, Congress expanded the sharing program by

appropriating up to $10 million for a pilot program to facilitate

sharing agreements like the one later negotiated between Cabrini

and the VAMC. Congress evidently saw no reason to revisit § 8153
 

22 The sharing program as enacted by Congress was not subject to

competitive procurement requirements. The Comptroller General later

recognized the VA's authority under what was then § 5053 to approve such

sharing arrangements on a non-competitive basis. See Veterans Admin. No., No.

B-115559.2, 81-2 C.P.C. ¶ 369 (Nov. 2, 1981). 

20

after CICA's enactment because the sharing program had historically

been operated on a sole-source basis.22 

Moreover, the language of § 8153 is inconsistent with the

district court's conclusion that the VA's sharing arrangements must

be achieved competitively. For instance, § 8153(b) provides that

reimbursement for the shared use of equipment must be based "on a

methodology that provides appropriate flexibility to the heads of

the facilities concerned," taking into account "local conditions

and needs and the actual cost to the providing facility of the

resource involved." This bears little resemblance to competitive

bidding procedures in which the participating government agency

attempts to ensure a steady supply and minimize its costs without

taking into account added considerations affecting private

contractors. Further, § 8153(e) directs the Secretary of Veterans

Affairs to notify Congress annually "on the activities carried out

under this section." The reporting requirement, which permits

Congress to monitor sharing arrangements such as that between

Rapides and the VAMC, would suggest that Congress sought to ensure

fairness and efficiency in such unique arrangements by means other

than competitive bidding. 

We also disagree with the district court as to the proper

role of 48 C.F.R. 806.302-5(b), which provides that "[s]haring

contracts negotiated under [§ 8153] are approved for other than
 

23 See Conf. Rep. No. 363, 99th Cong., 1st Sess. at 22; and S. Rep.

No. 99-129, 99th Cong., 1st Sess. at 88-89. 

 

24 Nor are we alone in reaching this conclusion. The Comptroller

General determined in this dispute that § 8153 sharing arrangements are not

subject to the full and open competition requirements of CICA. See Rapides

Regional Medical Center -- Reconsideration, No. B-242601.2, 91-1 C.P.D. ¶ 614

(June 28, 1991). The district court's opinion does not refer to this

decision, and it is therefore unclear what, if any, deference it paid to the

GAO's analysis and considered judgment. 

21

full and open competition." Admittedly, this regulation, which was

implemented after CICA's enactment, "is not a statute." 783

F.Supp. at 1008. But while the district court correctly observed

that this regulation was promulgated after the enactment of CICA,

the court erred by implying that the VA was attempting to

circumvent Congressional intent by exempting the sharing program

from § 253(a)(1). On the contrary, the VA regulation was

implementing Congress' post-CICA appropriations legislation that

expanded funding for the sharing program so long as non-federal

sources agreed to finance at least 50 percent of the cost of

acquiring advanced medical equipment.23 We therefore can discern

no valid reason why 806.302-5(b) should not be controlling.24

Rapides is certainly correct that "[t]he VA cannot unilaterally

exempt itself from the Congressional mandate of the CICA," but such

is not the case here. That Congress did not specifically exempt

the sharing program from CICA in 1990, when it amended what was

then § 5053, is not especially surprising given that Congress had

created and maintained that program by means other than full and

open procurement. Congress retained for itself the "measuring

stick," 783 F.Supp. 1008, by which to evaluate the success of the

sharing program now recodified at § 8153: annual reports from the
22

VA tracking activities under the program. Section 8153(e), which

reflects Congress' willingness to exercise its oversight function,

belies the district court's claim that the VA was attempting to

circumvent Congressional priorities by promulgating 806.302-5(b).

In view of the plain language of § 8153, its pre-CICA

legislative history, and the 1985 appropriations legislation

expanding the existing sharing program (and which 48 C.F.R.

806.302-5(b) was intended to implement), it must be concluded that

the VA's sharing program is expressly authorized by statute within

the meaning of CICA § 253(a)(1) and therefore does not trigger the

Act's full and open competition requirements. 

V.

CONCLUSION

For all the foregoing reasons, we REVERSE the district

court's decision. The permanent injunction barring the VAMCCabrini Memorandum of Understanding is VACATED.