Opinion ID: 667573
Heading Depth: 2
Heading Rank: 3

Heading: The PADC's Implementation of the 1987 Act

Text: 14 In November 1988, acting under its statutory mandate, the PADC issued a prospectus inviting entrants for its development competition. The prospectus indicated that the PADC would evaluate proposals according to eight selection criteria, and announced that the PADC will select the developer whose submission, in its sole judgment, best satisfies all of the selection criteria. J.A. 452. 15 Most of these criteria--like the applicant's responsiveness to the PADC's development program, the estimated cost of the applicant's proposal, the capability and experience of the development team's members, the track record of the applicant's construction manager, the applicant's ability to adhere to the PADC's schedule, and the proposed architectural design--were rather obvious. But the remaining two criteria were less predictable. Because the federal government would not be paying the development costs up front, the PADC recognized that some form of financing would be necessary, both for the construction period and for the remaining years during which the government was paying rent. Since the cost of the financing would affect the government's rental rate, the government was interested in selecting a developer who would obtain the cheapest possible financing. One of the PADC's eight criteria therefore focused on the applicants' financing proposals. In addition, the PADC announced that it would review each applicant's affirmative-action plan. 16 Seven development teams submitted proposals before the application deadline. Oral presentations were scheduled for October 4 and 5, 1989. But the PADC eventually began to doubt the wisdom of treating each applicant's financing proposals as part of his overall package. By unbundling the financing from the development competition, the government could combine the best design and development with the thriftiest financing arrangements. Accordingly, on September 29, 1989, the PADC sent letters notifying all the applicants that it might uncouple the two aspects by deleting the financing criterion from the development competition. It invited each applicant to address the matter in its oral presentation and to explain the impact, if any, on the applicant's development proposal. J.A. 773. 17 Saratoga voiced no opposition to deleting the financing criterion and did not suggest that deletion would have any effect on its development proposal. See J.A. 774 (letter from Saratoga's partner responding to PADC's September 29 notification); J.A. 948-50 (transcript of Saratoga's responses to questions at oral presentation). But Saratoga now contends that the PADC's eventual decision to delete the criterion--a decision formally made on October 18, 1989, only minutes before the corporation voted which applicant to select--violated federal procurement law because the PADC gave the applicants no time to alter their proposals in response. 18 At the same time as it deleted the financing criterion, the PADC's Board of Directors adopted a resolution calling upon the winning developer to make good-faith efforts to include minorities and women from the losing development teams. J.A. 1066. Saratoga suggests that the effect of this resolution was to downgrade the importance of the affirmative-action criterion; on this theory, Board members might have voted for a development team with a mediocre affirmative-action plan in the expectation that the team would be able to raid the groups assembled by its competitors. Again, Saratoga claims that the last-minute decision constituted an illegal modification of the selection criteria. 19 Saratoga asserts several other possible illegalities. For instance, Saratoga complains that the PADC offered no explanation for its decision to select the Delta Partnership as the winning developer. Saratoga also raises questions about the completeness of the administrative record and contends that the district court erroneously cut off discovery by granting summary judgment.II. Alleged Violations of Procurement Law 20 The Federal Acquisition Regulations system (FAR), collected in title 48 of the Code of Federal Regulations, applies to wholly owned government corporations like the PADC. See 48 CFR Sec. 2.101 (defining executive agency to include any wholly owned Government corporation within the meaning of 31 U.S.C. Sec. 9101); 31 U.S.C. Sec. 9101(3)(H) (defining wholly owned Government corporation to include PADC). For most negotiated contracts--that is, contracts awarded without using sealed bidding procedures, cf. 48 CFR Sec. 6.401(a)(3)--the FAR requires an agency's contracting officer to solicit bids through a written request for proposals (RFP). See id. Sec. 15.402. Agencies can amend RFPs once they are issued, but amendments sometimes require the agency to extend the deadline for proposals. See id. Secs. 15.410(a), 15.606. 1 According to the FAR, The contracting officer shall not award a contract unless any amendments made to an RFP have been issued in sufficient time to be considered by prospective offerors. Id. Sec. 15.410(b). This provision apparently applies to negotiated construction contracts no less than to other sorts of negotiated contracts. See id. Sec. 36.101. 21 The district court concluded that the PADC's selection criteria were the functional equivalent of an RFP, and that the PADC's last-minute deletion of the financing criterion and adoption of the affirmative-action resolution violated Sec. 15.410(b) because no entrant had the time or opportunity to consider these amendments to the selection criteria before the contract was awarded. 777 F.Supp. at 38. In addition, the district court hinted that the PADC's last-minute actions also violated the Competition in Contracting Act of 1984 (CICA), Pub.L. No. 98-369, 98 Stat. 1175 (codified at 41 U.S.C. Secs. 253 et seq.), whose procurement procedures apply to wholly owned government corporations by virtue of 40 U.S.C. Sec. 472(a). See 777 F.Supp. at 37-38. The court granted summary judgment for the government only because it concluded that these violations did not prejudice Saratoga. Id. at 37-39 (citing Kentron Hawaii Ltd. v. Warner, 480 F.2d 1166 (D.C.Cir.1973)). 22 We do not believe that the PADC's process for selecting the Federal Triangle developer was governed by the FAR and the CICA at all. Congress stipulated that the competition for this project shall be conducted in accordance with the existing policies and procedures of the Corporation for a development competition , 40 U.S.C. Sec. 1104(a)(3) (emphasis added), which we understand to refer to the only procedures the PADC ever characterized as procedures for a development competition--namely, those used for private development initiated by the PADC. See Development Policies and Procedures at iii (indicating that PADC's procedures for development competitions applied only to permanent private development activity in the area under the jurisdiction of the Corporation, not to new development undertaken by the Corporation itself). 23 The district court assumed that the PADC's existing procedures for a development competition had to include compliance with the FAR and the CICA. 777 F.Supp. at 37 n. 4; see also J.A. 1074 (GAO letter making same argument). But this simply is not true. To be sure, the PADC--as a wholly owned government corporation--is subject to those authorities. But the FAR applies only to acquisitions, defined as the acquiring by contract with appropriated funds of supplies or services (including construction) by and for the use of the Federal Government through purchase or lease.... 48 CFR Secs. 1.103, 2.101. Likewise, the CICA applies only to government procurements. 2 These words describe what the PADC does when it acts as a developer in its own right, choosing contractors to construct public parks and the like. But when the PADC conducted development competitions to select developers for projects like Market Square and the Lansburgh, it was not acquiring or procuring anything; far from expending public funds to purchase public property, the PADC was simply offering developers the right to spend their own funds on private projects. The laws and regulations guiding government construction contracts had no bearing on those procedures. 24 Nor did the PADC follow the CICA and the FAR voluntarily in conducting its development competitions. As the government explained in its brief below, 25 PADC follows the CICA and FAR when it uses appropriated funds to construct parks or other public improvements or obtain professional services. However, PADC never has followed the CICA and FAR in any of its previous four development competitions where property for private development (with private funds) is offered through sale or lease. Instead, PADC has followed its own policies and procedures in development competitions. 26 J.A. 316 n. 11. 27 Saratoga insists, however, that when Congress directed the PADC to use its existing procedures for a development competition to select the Triangle Project's developer, it intended not to supplant the CICA and the FAR but rather to impose an additional requirement: Congress wanted the PADC to follow not only the CICA and the FAR, but also its own procedures for development competitions. Yet the CICA itself seems to rule out this position. In a savings clause, the CICA specifies that its competition requirements do not apply in the case of procurement procedures otherwise expressly authorized by statute. 41 U.S.C. Sec. 253(a). In the Federal Triangle Development Act of 1987, Congress not only authorized but directed the PADC to follow its own Policy and Procedures Regarding Development Competitions. As for the relevant provisions of the FAR, Saratoga asserts that they implement the CICA, see Appellant's Reply Brief at 4, and so they would apply here only if the CICA did. Cf. Koh Systems, Inc., 88-2 BCA (CCH) p 20,664. 28 The context in which Congress acted fortifies our conclusion that Congress intended 40 U.S.C. Sec. 1104(a)(3) to supplant the CICA and the FAR. The Federal Triangle project was something of a hybrid. Though it was publicly funded in the sense that the government would eventually pay all the development costs in the form of rent, title to the building could actually be in private hands for the first 35 years. 3 Indeed, the prime mover behind the legislation assured his colleagues that [i]t will cost no Federal funds to build--apparently because the building will house several federal agencies that are currently paying rent elsewhere, and this consolidation was projected (apparently unrealistically) to save significantly more money than the Federal Triangle project would cost. See 133 Cong.Rec. S22,021 (Aug. 3, 1987) (remarks of Sen. Moynihan). Most significantly, rather than treating the project as a normal federal office building to be constructed by the GSA or the GSA's contractors, Congress entrusted it to the care of a corporation whose primary success had come in superintending private projects. As a result of this mixture of private and public elements, Congress could rationally have instructed the PADC to use either of two possible sets of procedures: Set A, applicable to the selection of contractors for public projects, or Set B, applicable to the selection of developers for private projects. Yet there was no overlap between Set A and Set B; that is, the PADC had never followed its rules for a development competition when acting subject to the CICA and the FAR, and it had never followed the CICA and the FAR when conducting a development competition. In this context, we decline to hold that when Congress told the PADC to use Set B, it really meant that the PADC should use both sets. 4 29 We note that in several respects the FAR is actively in tension with the PADC's procedures for a development competition. For instance, the PADC's procedures call for the corporation to reject all submissions that do not comply with the mandatory requirements of the prospectus. J.A. 465. Under the FAR, however, a proposal can be within the competitive range--the collection of all proposals that have a reasonable chance of being selected for award, 48 CFR Sec. 15.609(a)--even though it contains a deficiency, defined as something that fails to satisfy the Government's requirements, see id. Sec. 15.601. Far from rejecting such submissions, the contracting officer generally is supposed to alert the offerors to any deficiencies so that they have an opportunity to satisfy the Government's requirements. Id. Sec. 15.610(c)(2). 30 Quite apart from such specific tensions, the general tenor of the PADC's procedures is far less rigid and bureaucratic than that of the FAR. Chapter 1 of the FAR, which sets forth the basic government-wide acquisition regulations, occupies nearly 1500 densely printed pages in the Code of Federal Regulations; the PADC's Policy and Procedures Regarding Development Competitions are set out in five typewritten sheets. The FAR requires construction solicitations to be issued on Standard Form 1442, Solicitation, Offer, and Award (Construction, Alteration, or Repair), 48 CFR Secs. 36.701(b), 53.301-1442; the solicitation must include a variety of boilerplate provisions, see, e.g., id. Secs. 15.407 & 22.407, 5 and is structured in such a way that the government forms a binding contract simply by accepting a responsive proposal. See id. Sec. 15.402(d); cf. id. Sec. 15.611(c). By contrast, the PADC's procedures for a development competition simply call on the Corporation to issue a prospectus that describes the Corporation's selection criteria; the PADC's selection of the winning developer does not itself form a contract, but only launches a period of exclusive negotiations in which the parties attempt to arrive at a formal agreement. J.A. 464-67. 31 More generally, Congress's entire scheme for the Federal Triangle project represented a rejection of normal procurement processes. This rejection started with Congress's decision to entrust the project to the PADC, for the default statute says that [n]o public building shall be constructed except by the [GSA] Administrator. 40 U.S.C. Sec. 601. Similarly, the GSA ordinarily is barred from entering into leases that bind the government for longer than 20 years. Id. Sec. 490(h); 48 CFR Sec. 570.103. Accordingly, when Congress wanted the normal rules to apply to the Federal Triangle project, it specifically said so, as in its requirement that the project meet the construction standards applicable to federal buildings. Id. Sec. 1104(d). 32 For these reasons, we conclude that 40 U.S.C. Sec. 1104(a)(3) supplanted the FAR and the CICA, and that those authorities did not govern the PADC's selection of the Federal Triangle developer. We also reject Saratoga's argument that the GSA's execution of a lease with the winning developer violated 40 U.S.C. Sec. 618(b), which provides that the GSA may acquire a leasehold interest in any building which is constructed for lease to, and for predominant use by, the United States only by the use of competitive procedures required by [CICA]. Just as Congress overrode the FAR and the CICA when it enacted Sec. 1104(a)(3), it obviously overrode Sec. 618(b) when it directed the GSA to enter into a lease with whichever developer won the PADC's development competition. 40 U.S.C. Sec. 1105. 33