Opinion ID: 211919
Heading Depth: 2
Heading Rank: 3

Heading: Prior Litigation in the Court of Federal Claims

Text: Although this is the first time this court has directly considered the issue of DESC's liability for its use of a market-based EPA clause,3 the Court of Federal Claims has addressed the parties' arguments in nine cases prior to the two that serve as the basis of this appeal.4 In the first such case, MAPCO, 27 Fed. Cl. at 409-10, the court adopted Appellants' arguments and held that the meaning of established prices in FAR § 16.203-1(a) is limited to contractor's established prices by reference to the language of FAR § 16.203-3. In addition to the cited regulatory history of the FAR and its connection to the DAR, the court based its decision on sections of the FAR that provide standard language for EPA clauses. Id. at 410. The court cited the following language from FAR § 52.216-2 as evidence that the terms established price and contractor's established price are used interchangeably in those clauses: 3 This court has previously addressed the appropriate valuation methodology for assessing a damages award to a fuel supplier stemming from DESC's use of the market-based EPA clause. Barrett Refining Corp. v. United States, 242 F.3d 1055 (Fed. Cir. 2001). However, in Barrett, the government did not contest liability either before the Court of Federal Claims or on appeal. Barrett, 242 F.3d at 1064; Barrett Refining Corp. v. United States, 42 Fed. Cl. 128, 130 (1998). 4 Sunoco, Inc. v. United States, 59 Fed. Cl. 390 (2004); Navajo Ref. Co., L.P. v. United States, 58 Fed. Cl. 200 (2003); Williams Ala. Petroleum, Inc. v. United States, 57 Fed. Cl. 789 (2003); Calcasieu Ref. Co. v. United States, 2003 WL 22049528 (Fed. Cl. July 31, 2003); Berry Petroleum Co. v. United States, No. 02-1462 (Fed. Cl. June 10, 2003) (bench ruling); Phoenix Petroleum Co. v. United States, No. 97-315C (Fed. Cl. April 30, 2003); La Gloria Oil & Gas Co. v. United States, 56 Fed. Cl. 211 (2003); Gold Line Ref., Ltd. v. United States, 54 Fed. Cl. 285 (2002); MAPCO Ala. Petroleum, Inc. v. United States, 27 Fed. Cl. 405 (1992). 04-5064 10 (a) The Contractor warrants that the unit price stated in the Schedule for [offeror insert Schedule line item number] is not in excess of the Contractor's applicable established price in effect on the contract date for like quantities of the same item. . . . The term established price means a price that (1) is an established catalog or market price for a commercial item sold in substantial quantities to the general public, (2) meets the criteria of subsection 15.804-3 of the Federal Acquisition Regulation (FAR), and (3) is the net price after applying any standard trade discounts offered by the Contractor. Id. (emphases added). Of the ten cases after MAPCO where the Court of Federal Claims has reached the issue of the legality of DESC's EPA clause, nine, including the two instant cases, applied the reasoning of MAPCO and concluded that DESC's use of a market-based EPA was not authorized by the FAR.5 Additionally, in Barrett Refining Corp. v. United States, 242 F.3d 1055, 1064 (Fed. Cir. 2001), this court presumed without deciding that the holding of MAPCO was correct. One decision of the Court of Federal Claims has held differently. In Williams Alaska Petroleum, Inc. v. United States, 57 Fed. Cl. 789 (2003), the court rejected Appellants' argument and the reasoning in MAPCO as contradictory to the plain meaning of the words used in the regulation. Id. at 796. The court in Williams dismissed Appellant's interpretation of the FAR in light of the DAR on the grounds that [t]here is no more reason to say that the DAR contains an implicit term than to make that claim about the FAR. Id. Applying the caveat that price adjustments based on established prices . . . be restricted to industry-wide contingencies as articulated in FAR § 16.203-2, the court held that FAR § 16.203 not only permits adjustments to a 5 Sunoco, 59 Fed. Cl. at 394-95; Hermes, 58 Fed. Cl. 3, 11-12; Tesoro, 58 Fed. Cl. at 68-70; Navajo Ref., 58 Fed. Cl. at 205; Calcasieu Ref. 2003 WL 22049528 at ; Berry Petroleum, No. 02-1462 (Fed. Cl. June 10, 2003) (bench ruling); Phoenix Petroleum Co. v. United States, No. 97-315C, slip op. at 4 (Fed. Cl. April 30, 2003); La Gloria, 56 Fed. Cl. at 214-15; Gold Line, 54 Fed. Cl. at 295. 04-5064 11 contractor's established prices to be based on market indexes, but in fact requires it. Id. at 797.